Growth with Equity Economic Policymaking for the Next Century

by Baily, Martin Neil; Burtless, Gary; Litan, Robert E.

• ISBN13: 9780815707653
• ISBN10: 0815707657
• Format: Paperback
• Copyright: 1993-02-01
• Publisher: Brookings Institution Press

Summary

For nearly two decades the U.S. economy has been plagued by two disturbing economic trends: the slowdown in the growth rates of productivity and average real wages and the increase in wage and income inequality. The federal budget is in chronic deficit. Imports have far exceeded exports for more than a decade. American competitiveness has been a source of concern for even longer. Many Americans worry that foreigners are buying up U.S. companies, that the economy is losing its manufacturing base, and that the gap between rich and poor is widening.In this book three of the nation's most noted economists look at the primary reasons for these trends and assess which of the many suggestions for change in policy - whether for increased tax incentives for investment, education reform, or accelerated research and development - are likely to work and which may not work and could even hinder economic development.The author's discuss a variety of issues connected with deindustrialization and diminished competitiveness, distinguishing between problems that would be of real concern and those that should not. They evaluate explanations for slow growth in aggregate productivity in the United States and its relation to slower growth in other industrialized countries. They discuss the performance of the various sectors of the U.S. economy and systematically examine the evidence for and against the major proposals for correcting the adverse trends in productivity and inequity.Growth With Equity clearly explains how the country can accomplish the challenge of accelerating growth and narrowing the gap that separates the rich from the poor. While recognizing that some of their recommendations may be politically painful, the authors stress the importance of adopting a purposeful, long-range policy to encourage growth, ensure equity, and reduce the government's equity.

Author Biography

Martin Neil Baily Brookings and the University of Maryland Gary Burtless a senior fellow at Brookings Roberte Litan senior fellow at Brookings

Table of Contents

Introduction and Summary	p. 1
Growth and Equity: Compatible Objectives	p. 4
A Framework for Enhancing Growth and Equity	p. 7
A Preview of Our Recommendations	p. 10
Slow Growth and Other Economic Ills	p. 15
The Slowdown of Productivity Growth	p. 15
Why Is Productivity Growth Important?	p. 20
Sources of Productivity Growth	p. 31
Subsidiary Problems	p. 39
Conclusion	p. 46
Inequality	p. 48
Earnings Inequality	p. 50
Family Income Inequality	p. 64
Implications	p. 71
Increasing the Pace of Innovation	p. 74
Sustaining American Strength in Basic Research	p. 74
Lengthening Time Horizons	p. 91
Liability Reform	p. 103
Encouraging Joint Ventures	p. 106
Should America Adopt an Industrial Policy?	p. 107
Conclusion	p. 108
Improving the Labor Market	p. 110
Work Force Preparation	p. 112
Remedies	p. 121
Improvements in Labor Market Institutions	p. 133
Promoting Investment	p. 142
Encouraging Investment	p. 142
Encouraging Investment with High Social Returns	p. 156
Summary	p. 172
Foreign Trade and Investment	p. 174
Promoting Productivity through Freer Trade	p. 175
Promoting Productivity through Foreign Direct Investment	p. 182
New Strategies for Gaining Access to Foreign Markets	p. 190
Helping Displaced Workers	p. 194
An Agenda for Growth and Equity	p. 198
Research from the Center for Economic Progress and Employment	p. 208
Notes	p. 211
Index	p. 233
Tables
Indicators of Quality of Life in the United States, Selected Years, 1960-89
Contributions to Average Labor Productivity Growth, by Type of Contribution, 1929-82
Average Annual Growth in GDP per Hour, by Major Economic Sector, 1948-73, 1973-89
Sources of Family Income Change, by Quintile, 1979, 1989
Government Lists of Important Technologies
Average Annual Hours Worked in Manufacturing, Seven OECD Countries, 1989
Productivity Growth and Trade Data, Selected Periods, 1973-88
Summary of Proposals
Figures
Measures of U.S. Productivity Growth, Selected Periods, 1948-90
Output per Hour and Real Compensation, 1947-90
GDP per Capita for Canada, Germany, and Japan Relative to the United States, Purchasing-Power-Parity Exchange Rates, 1950-90
National Saving and Investment Rates, by Country, 1980-90
Relative Manufacturing Productivity, Four Countries, 1973-89
Share of Global High-Technology Markets, by Country, 1980, 1984, 1990
Import Penetration of U.S. High-Technology Markets, by Type of Import, 1980, 1987, 1990
Share of Manufacturing in the U.S. Economy, 1929-89
Inequality of U.S. Family Income, 1947-91
Rate of Growth in Annual Earnings, Male Workers, 1967-79, 1979-89
Differential in Annual Income between Male High School and College Graduates, by Age, 1978, 1987
Family Income Growth, Selected Parts of Income Distribution, 1973-91
Academic RandD Expenditures, by Type, and Funding, by Source, 1989
Academic RandD, United States and Selected Other Countries, by Field, 1987
Federal RandD Funding, by Function, 1981, 1989
Total and Nondefense RandD Expenditures as Percent of GNP, by Country, 1971-87
Ratio of RandD Spending to Industrial Production, 1960-89
International Performance on Tests in Science and Mathematics, 1980s
Enrollment Rates in Postsecondary Education, Selected Industrialized Countries, Late 1980s
Average Public Spending per Person Age 16-24 for Education and Training
Probability of Receiving Training after Completion of Formal Schooling and Entry into Employment, Young American Men
Net Private Investment and Private and Public Saving as Percent of GDP, 1970-91
Nominal and Real Interest Rates for Moody's AAA Corporate Bonds, 1971-91
Government and Full-Employment Deficits, Actual and Projected, as Percent of GDP, 1970-97
Federal Interest Payments and Budget Deficits as Percent of GDP, 1962-91
Main Components of Federal Expenditures as Percent of GDP, 1962-91
Net Public Capital Stock and Gross Investment as Percent of GNP, 1950-91
State and Local Government Investment in Core Infrastructure Projects, by Type, 1950-91
Federal and State and Local Government Expenditures for Core Infrastructure, 1960-90
Relationship of Trade and Productivity Performance, Selected Periods, 1973-88
Alternative Rates of Return for the United States, 1983-90
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