Current Issues in Economics and Finance

Is the United States Losing Its Productivity Advantage?

September 2007 Volume 13, Number 8
JEL classification: F0, O4

Authors: Mary Amiti and Kevin Stiroh

Strikingly high rates of labor productivity growth in China, India, and other emerging economies have prompted concerns that U.S. workers and firms are losing ground to their competitors in world markets. A closer look at the evidence, however, suggests that rapid foreign productivity growth will bring gains as well as losses to the U.S. economy. Some import-competing firms may be compelled to restructure or leave the market, but consumers will benefit from lower import prices and more import varieties, and U.S. exporters may gain access to cheaper intermediate products from abroad.

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