ABSTRACT
A growing debate on American competitiveness and productivity has focused attention on manufacturing and manufacturing innovation (Cohen and Zysman 1987; Cohen et al. 1984; Krugman and Hatsopoulos 1987; Scott and Lodge (eds.) 1985). The scale and composition of the trade deficits of the past few years are the most prominent indicator that the competitive position of the American economy is weakening (Kremp and Mistral 1985). The debate is about why the deficits have developed and what they mean. Our position is that much of the problem lies in an erosion of American manufacturing skills and capacities. If our position is correct, traditional economic remedies cannot in themselves reverse the decline in America’s position in the international economy.
