Trade, Education, Public Infrastructure, Fiscal Policy Pose Biggest Challenges for U.S. Global Competitiveness

(MarketWatch/Business Wire)

New Private Equity Council-Sponsored Study by Noted Economists Baily and Slaughter Offers Recommendations to Maintain and Expand U.S. Economic Leadership

The incoming Obama Administration and the new Congress should invest in worker training and education, pursue trade liberalization, accelerate public and private infrastructure investment, and take steps to rein in exploding health care costs to ensure that America maintains its competitive leadership in the global economy, according to a new study released today by the Private Equity Council.

The study was authored by Martin Baily, chairman of the White House Council of Economic Advisers during the second Clinton Administration, and Matthew Slaughter, associate dean and professor of international economics at the Tuck School of Business at Dartmouth College and a CEA member during the second George W. Bush Administration. The paper examines the forces shaping America’s global competitiveness and identifies policy prescriptions to ensure continued U.S. leadership in the changing global economy. The PEC commissioned the paper to contribute to a debate on competitiveness policy issues and stimulate action on a competitiveness agenda in 2009.

The authors cite major threats to U.S. global economic leadership in the decades ahead: trade barriers, declining graduation rates, deteriorating roads, bridges and other public facilities, scatter-shot tax and spending policies, and the unchecked growth in health care costs.

According to the paper, after a century of development that created the world’s largest economy, the United States since 2002 has experienced significant declines in its productivity growth.(1) The current capital markets crisis and economic recession have exacerbated concerns about U.S. economic strength - in capital markets, financial institutions and the manufacturing sector, with particular concerns raised about U.S. automakers. Read the complete article. The study is available in PDF format at the PEC website.