In This Review

The Pacific Basin: New Challenges to the United States
The Pacific Basin: New Challenges to the United States
Edited by James W. Morley
Academy of Political Science, 1986, 179 pp

Several economists focus on the opportunities and challenges for the U.S. that arise from the growing American interaction with the Pacific economies. U.S. trade with the Pacific is now greater than that with any other region of the world and it is also growing more rapidly. The problems, according to Hugh Patrick, are twofold. More than half the U.S. trade deficit is with the Pacific countries, most notably, of course, with Japan. The second challenge is the need for "structural adjustment" of those American industries that have lost long-term competitiveness. Patrick sees the solution to the trade deficit in reducing the value of the dollar and in reducing the government budget deficit so as to lower interest rates and discourage foreign capital inflow. He also thinks that Japan and Western Europe need to reverse policies of fiscal restraint so as to help replace the U.S. as the locomotive for world growth.