The United States faces an acute set of
challenges as it struggles to restore its economic vitality and role in the
world economy. At the same time, the world must adjust to a new set of rising
powers, most importantly China but with India and several others not far
behind. The United States is highly dependent on global developments for
prosperity and stability, and it is now much more like other countries, for
virtually all of whom such international engagement has been a given throughout
their histories. The United States has gained enormously from this
globalization and is more than $1 trillion per year richer as a result of its
trade integration. At the same time, it has become the world's largest debtor
country.
To resuscitate its economy on a successful
and sustainable basis, the United States must reorient toward the global
economy within which it operates and on which it has become so dependent. Its
goal should be to eliminate its large trade deficit over the next five to ten
years, which would generate 3 million to 4 million very good jobs—about half
the number needed to restore full employment. A feasible strategy for doing so
begins with, and rests primarily upon, getting its fiscal house in order and
substantially beefing up its international competitiveness, which will
encompass a trio of international policy approaches: restoring and maintaining
a competitive exchange rate for the dollar, demanding and achieving full
protection for the intellectual property rights of American firms and workers,
and opening (especially emerging) markets abroad to the wide array of services
sectors in which the United States is highly competitive. There is no
"quick fix," and these issues will be at the forefront of US concerns
for many years, and probably decades, to come.
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