IMPORT COMPETITION AND MACROECONOMIC ADJUSTMENT IN THE O.E.C.D.
The purpose of this discussion is to develop a macroeconomic model which illustrates the implications of increased import competition for macroeconomic adjustment in the O.E.C.D. Since the mid-1970s, the advanced industrial nations of the O.E.C.D. have undergone various macroeconomic disturbances; the most notable being the oil supply shocks that occurred in 1974 and again in 1979. Economists as well as public policy makers have long been cognizant of the economic adjustments these disturbances have forced upon the O.E.C.D. Meanwhile, on a less dramatic and more gradual scale, many advanced industrial nations have been faced with labor market and balance of payments adjustment as a consequence of greater import competition. This intensified import penetration has appeared in the shape of increased imports of traditional manufactures, such as textiles and wearing apparel, coming from newly industrializing countries.^ Unemployment, declining output and diminishing capital formation have emerged in those traditional manufacturing sectors battered by foreign competition. Simultaneously, certain advanced sectors, in particular those industries producing high technology products, have witnessed sizable employment gains. Therefore, overall employment in the O.E.C.D. has not declined to the extent suggested by the experience in the traditional manufacturing sectors. Moreover, much of the output produced by the advanced sectors of the O.E.C.D. is imported by the newly industrializing countries. Evidence does suggest that newly industrializing countries are becoming important markets for the developed nations, and hence, it seems that both groups of nations are benefiting from increased inter-trade.^ The above mentioned trends have been captured by the theoretical framework developed in the main body of this paper, and as such, it is hoped this framework adds to an understanding of a current and significant macroeconomic phenomenon. ^
WINCZEWSKI, GREG A, "IMPORT COMPETITION AND MACROECONOMIC ADJUSTMENT IN THE O.E.C.D." (1986). ETD Collection for Fordham University. AAI8615694.