1. U.S. in the World Economy during the 1990s

2. GOOD NEWS

3. Unemployment Rates, 1988-97

4. INFLATION STOCK PRICES--DOW JONES AVERAGE

5. BAD NEWS Real wages Distribution of economic well- being

6. Two measures of productivity growth, non-farm business

7. Increasing Earnings and Income Inequality Gottschalk and Smeeding. 1997. Cross-national comparisons … Journal of Economic Literature

8. Basic Earnings Distribution Concepts P10P20 P80 P90P50 (median)

9. Earnings Distributions, All Male Workers, Percentiles of Median and Decile Ratios

10. Earnings Distributions, All Female Workers, Percentiles of Median and Decile Ratios

11. Percent of U.S. median earnings earned by workers at the 10th and 90th percentile marks.

12. Changes in Male Earnings Inequality Over the 1980s.

13. Explanations for Improved Performance Lester Thurow, USA Today piece U.S. strengths match up well with strengths needed to do well in 1990s –can open up the new and close down the old rapidly

14. Richard Lester. 1998. The Productive Edge. SPRINGBOARD Trends in Manufacturing productivity growth

15. Average annual productivity growth during business cycles

16. Lester’s methodology Case studies of: Auto industry electric steel production semiconductors electric power wireless communications

17. Projected and Actual U.S. and Japanese Market Shares of Global Semiconductor Industry, 1982-2000. SEMICONDUCTORS

18. INTEL--A ‘best practice’ firm Annual sales equal 1/3 of entire U.S. semiconductor industry Earns highest profits by being first to market with new products uses those profits to outspend competitors to build the next generation of fabs. –1991-96: spent $13B in capital additions

19. Bases for recovery Vertical disintegration gives advantages in: –speed of conversion of new designs into products –flexibility to identify and respond to new market opportunities. Shift from COMMODITY to CUSTOMIZED chips –American firms bet on the right horse

20. Key features of the competitive climate of these industries Blurring of distinction between manufacturing and services rising volatility in the external environment linked to: –rapid technological change –globalization –deregulation forces constant reassessment of:

21. Lessons taught by successful firms Organizational transformation from vertical to horizontal structures commitment to upgrading skills closer relations with suppliers and customers global perspective willingness to listen to an “inner voice”