"U.S. International CompetitivenesS" challenges the common assertions concerning causes of America's growing trade deficit. The authors' unique empirical analysis of industry specific trade flows using numerous explanatory variables provides a vigorous test of the view that deficit growth is primarily due to unfair foreign trade practices, overzealous antitrust laws, slack U.S. management, and other microeconomic factors. Their conclusions on the actual culprits offer a sobering reassessment of current and proposed trade policies. American and foreign public policy makers, as well as trade and industrial organization scholars, will find this volume to be enlightening and provocative reading.

The first two chapters establish the parameters and theoretical background for the study. The authors then review the microeconomic explanations for sudden trade deficit growth, identify industry characteristics included in the study, and specify the model to be tested. Turning to an examination of the empirical results, they initially look at whether changes in industry characteristics over time could have increased the deficit. They then highlight microeconomic explanations for changes in the U.S. trade balance. Concluding chapters present detailed case studies of particular industries as well as the policy implications to be drawn from the study.

This study synthesizes and summarizes the theoretical arguments and empirical evidence that suggest that competition works remarkably well to reduce costs and improve efficiency and innovation, even in an arena where competition has typically been ignored--government-financed services. The arguments and data marshaled here, drawn primarily from the American experience, portray the substantial benefits to consumers and taxpayers that can result from efforts to increase competition in commercial services previously operated as government monopolies.

Competition in Government-Financed Services will help fortify the efforts of competition advocates, both in the United States and in the emerging market economies of Eastern Europe and the developing world, to get on with the job of strengthening competition and opening their systems to market forces.