Foreign Economic Policy: Challenges of the 1980s

Abstract

The making of U.S. foreign economic policy is never an easy task. Complex international and domestic aims and interests must be balanced. U.S. farmers want open European markets for their grain but if Europe is pushed too hard on this issue the resulting ill-will may affect European attitudes toward U.S. investment or common security measures. Damage to U.S. textile producers from Asian imports may prompt steps for quotas that in turn alienate friendly governments. Tension is often high when U.S. legislators consider key international bills and broad global and national aims are confounded by specific, well-organized interests. Recent cases in point are the acrimonious affray over the expansion of resources for the International Monetary Fund and demands for "reciprocity" in export access. In the 1980s similar skirmishes are likely to abound, and mount in scale, because of the growing and unavoidable integration of the U.S. economy with the economies of the rest of the world. In his recent study of long-run economic growth in the world's major market economies Angus Maddison calls the period 1950-1973 the "Golden Age."' During this span output per person rose by 3.8 percent per year. This was 2.4 times the average rate of growth of the capitalist world since 1820. A primary source of this unprecedented prosperity was the expansion of international trade. Exports of the chief industrial economies grew at the rate of 8.6 percent per year and multiplied more than six-fold.2 This rate was also more than twice that of the long-term his-