United States economic competitiveness: An empirical analysis

The purpose of this research is to examine empirically U.S. economic competitiveness and its implications for national policy. Three variables--standard of living, productivity, and trade balance are employed to represent U.S. competitiveness. The research uses twenty-four independent variables to represent the determinants of competitiveness. Generally speaking, these twenty-four variables can be categorized into four basic dimensions--the economic dimension, the technological dimension, the educational dimension, and the human resources dimension.;The research utilizes time-series data from 1960 to 1986. The procedure of 'first difference' is adopted to remove nonstationarity from the data set. Then, factor analysis is employed in order to simplify and summarize these independent variables. Finally, the multiple regression analysis is used to test the relationship between the dependent variables and the factors.;The major findings of this research are as follows. First, trade balance is not a suitable indicator of U.S. competitiveness. Second, two factors--labor cost/educational efforts and interest rates are not stable variables in the multiple regression analysis. The model produced by this research can only be used for explanatory purpose. Finally, the best predictors of competitiveness in this research are technological innovation, labor cost/educational efforts, and interest rates.;The research findings suggest that the United States must reduce interest rates in order to create a favorable macroeconomic environment. The United States must reduce its labor cost to match its productivity performance. The United States also should improve its educational system and to provide incentives to its own citizens to enter science and engineering fields. Most importantly, the United States must reallocate its valuable resources and put much more emphasis on the commercial utilization of technologies.