1. THE UNITED STATES: 1

2. Phases of economic development n Revolution--1890: catch up to core European economies technologically n 1890--1940:industrial concentration & modern corporation n 1945--1970:rapid ec. growth & hegemony over world economy n 1970--1990: deteriorating performance n 1990’s: mixed performance

3. WWII --late 1960s (HEGEMONY) n WWII consequences – GNP trends n 1929$100B n 1939 $91B n 1944 $210B – role of government--public spending n 1940 $9B n 1945 $98B n >1/3 of all mfg. structures and equipment existing in 1945 was constructed by government

4. 1. Economic Growth put at head of U.S. political agenda n gov’t involvement in economy did not decline/govt expenditure as % of GNP rose ---12% (1940)--- 25% (1950)--- 35%(1965) n gov’t agrees to give private sector public money to produce growth (tax shift) n economic consequences – mixed performance in 1950s – productive capacity nearly triples in 1960s

5. Bases of economic growth n consumer durables n residential construction n role of suburbanization backed by government policy – FHA mortage guarantees – IRS deducts mortgage interest – interstate highway system

6. 2. Business/labor relationships n period of so-called SOCIAL CONTRACT between big business and big unions n business concedes higher wages and control over working conditions n labor agrees not to strike (to keep producing)

7. 3. Dominating role of U.S. in World Economy n 1950--just under 50% of world industrial production. Still over 40% in 1963 n 1971 U.S. share of all FDI is 50% n FDI by U.S. corporations was encouraged by U.S. tax policy n U.S. firms (and workers) earn SUPERPROFITS thanks to technology and worker productivity edge

8. Pillars of the Post-war American Economic Advantage (Dertouzos, 1989. Made in America) n Sheer size of the American market n technological superiority n skill level of American workers n U.S. affluence n American managers

9. U.S. and the World Economy: early 1970s to early 1990s n THESIS: U.S. displayed relatively poor performance n primary indicators – temporal comparisons: 50s and 60s vs. 70s and 80s – cross-national comparisons: U.S. vs. other industrialized countries

10. Temporal--real wage trends

11. Growth in Median Family Income

12. Comparative--- Growth in real compensation

13. Annual growth in per capita GNP, 1980-92

14. Alternative Perspectives on relatively weak economic performance

15. 1. A catch up and convergence phenomenon n attributable to: – technological borrowing from the leader – transfers of labor from agriculture to industry – greater willingness of less well-off to work harder and divert resources from consumption to investment

16. 2. evidence of relative economic failure and decline in economic competitiveness n Example – John Agnew, 1987. The United States in the World Economy. Chapter 4.

18. Level 1 n Increased foreign investment by U.S. TNCs n increased competition by foreign- based TNCs n increased dependence on foreign sources of raw materials n drain on U.S. economy of defense spending n priorities of domestic Keynesian policy

19. Level 2 n Decline of U.S. relative labor productivity n loss of technological leadership n increased openness to foreign competition