What's New about Recent United States Foreign Economic Policy?
| Published date | 01 June 1972 |
| Author | Grant L. Reuber |
| DOI | 10.1177/002070207202700209 |
| Date | 01 June 1972 |
| Subject Matter | Article |
GRANT
L.
REUBER
What's
new
about
recent
United
States
foreign
economic
policy?
The
history
of economic
policy
is
one
of
lengthy periods
of
gradual
evolution
punctuated
now
and
then
by
more dramatic
changes.
When
they
occur,
these
episodes
usually do
not
represent
a
reversal
in
the
apparent
trends
in
policy
but
rather
a
rapid
acceleration
in
these
trends
which,
for various
reasons,
may
have
been
slow
to
re-
flect
changing
economic
and
political
circumstances.
Thus,
what
at
first
blush
may
look
like
a
new
policy
departure
in
another
light
may
be
seen
as
overdue
catching
up,
the
pressure
of
economic
and
political reality
having
finally
built
up
to the
point
where
it
bursts
through
the
obstacles
that
have
unduly
constrained
the
pace
of
policy
adjustment.
This
general
pattern
is
evident in
the recent
history
of
United
States
policies
vis4-vis
the
rest
of
the world.
The
policy framework
that
emerged
after
World War
ii
was
based
on
an
implicit
bargain
between
the
United
States
and
its
western
allies
(including
Japan)
whereby
the
former
assumed
most
of
the
burden
of
defending
the
West,
made
available
substantial
resources
for
international
re-
construction and
development,
and
provided
relatively
easy
access
to
the
rich United
States
market
in
return
for
strong
support
in
advancing
United
States
interests
around
the
world.
Underpinning
this
arrangement
was
the
assumption
that
through
co-operation
and
Professor
of
Economics,
The
University of
Western
Ontario,
London;
author
of
several
books
of
which
the
most
recent
is
Capital
Transfers
and
Economic
Policy:
Canada
z95z-62
(with
R.E.
Caves)
(Cambridge,
Mass,
i97o).
I
gratefully
acknowledge
the
helpful
comments
and
suggestions
made
on
an
earlier
draft
of
this
paper (written
before
the settlement
of
18
December)
by
several
members
of
the
Department
of Economics
at
The
University
of
Western
Ontario and
by
a
number
of
Canadian
officials
who,
unfortunately,
must
remain
anonymous. Final responsibility for
what
is
said,
as
always,
remains
with
the
author.
288
INTERNATIONAL
JOURNAL
closer
economic
and
political
integration
the
interests
of
all
partici-
pants
in
the
bargain
would
be served
and
the
West
as
a
whole
strengthened.
With
the
passage
of
time the
basis
of
this
implicit
bargain,
and
its
rationale,
have
been
eroded
by
changing circum-
stances.
As
a
consequence,
policies
in
the
United
States
and
else-
where
have
been modified.
For
the
most
part,
however, policies
have
been
adapted
slowly
with
the
result
that
in
many
cases
they
had
become
unrealistic
and
unsatisfactory.
President Nixon's
dramatic
initiatives
during
1971
in both
the
political
and
economic
spheres
have
broken through
a
heavy
crust
of
inertia
constraining
policy
adjustments.
In
this
perspective,
his
initiatives
are
generally
to
be
welcomed
as
opening
the
way
to
a
major and
long overdue
updating
of policies
in
several
areas.
The
main
causes
for
concern are
(a)
whether
the
policy changes
adopted
are
appropriate
to
present
and
prospective
circumstances,
and
(b)
how
to
prevent
the
current
open
season
on
policy
from
being exploited
by
narrow
national
vested
interests
and
the
moss-back
fringe
found
in
every
country.
ECONOMIC
POLICY
Cause for
concern on
both
counts
is
evident
in
the
area
of
interna-
tional
economic
policy.
It
has
been
increasingly
apparent
in
recent
years
that
Europe
and
Japan
now are
in
a
position
to
shoulder
most,
if
not
all,
of
the
burden
of
providing
for
their
own defence
and that
the
share
of
this
cost
that
the
United
States
continues
to
bear
-
ad-
mittedly
of
its
own
volition
-
is
difficult,
if
not
impossible,
to
justify.
It
has also
been
evident
that
the
international
monetary
system
required
more
basic
reforms
than
were
being
contemplated
prior
to
mid-1
9
71
in order
to
provide
for
greater
flexibility
in
foreign-ex-
change rates
and
easier
balance-of-payments
adjustment.
As
well,
evidence
accumulated
over
the
past
decade
has
raised
serious
doubts
about
the
effectiveness
of
foreign
aid
in
achieving
its
alleged objec-
tives;
nor
has
it
been clear
that
developed
countries
other
than
the
United
States
should
not
supply
a
larger
share
of
total aid
flows.
In
the
field of
foreign
investment
the
last
decade
has
seen
an
enormous
growth
in
international
capital
flows,
the
development
of
much
closer
integration
among
international
capital markets,
and
grow-
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