Effect of Defense Spending on the Trade Performance of High-Technology Industries.

摘要

Defense spending is often cited as a factor which influences the performance of particular industries. This study examines the large increases in U.S. defense spending during the late 1970s and early 1980s to determine whether these changes affected the trade performance of U.S. high-technology industries. The U.S. surplus in high-technology trade decreased sharply from 1980 until 1986, when it recorded a small deficit for the year. The research approach was to identify 'defense-competing' industries--industries that use many of the same scarce inputs as the defense industry, and must compete with the defense industry for those inputs. Large increases in defense spending might create pressure for higher prices for scarce inputs, and result in higher costs for defense-competing industries in the United States. The focus of this study is on labor inputs, since unlike intermediate products, additional supplies of labor do not readily flow from foreign sources to the United States. Therefore, domestic--but not foreign--labor costs are likely to increase, and this would raise the costs of U.S. defense-competing industries relative to foreign industries. This foreign cost advantage could potentially lead to lower levels of U.S. exports and higher levels of U.S. imports in the affected industries.