HOW WELL IS THE UNITED-STATES COMPETING - A COMMENT ON PAPADAKIS

We contend that Papadakis's inferences regarding past and future compe titiveness crises cannot be made on the basis of the evidence she has presented. We support this assertion in three ways. First, we argue th at the import penetration ratio is not a reasonable measure of nationa l competitiveness in international markets. Second, we show that conve ntional macroeconomic models can explain the deterioration in the trad e balance during the 1980s. Third, we present data demonstrating that, as of 1990, the United States had very low unit labor costs relative to other developed countries, and had the highest level of aggregate p roductivity in the world.