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Down, but Not Out: U.S. Remains Competitive in Global Trade

“The U.S. share of world goods trade might be down, but a new study suggests that American competitiveness is not. In the study entitled Why Is the U.S. Share of World Merchandise Exports Shrinking? Federal Reserve Bank of New York economist Benjamin R. Mandel examines the factors driving the sharp drop in the U.S. share of world goods trade. Mandel concludes that the reduction does not signal a broad-based decline in the relative competitiveness of U.S. exporters. Rather, much of the 3.5 percentage point fall in U.S. export share between 2000 and 2010 is attributed to a change in the composition of goods traded internationally and the relatively slow growth of the U.S. economy. Mandel uses a two-pronged approach in examining the role that compositional changes in world exports played in the U.S. relative export performance. First, he identifies the products that contributed most to the decline of the U.S. export share, noting that it was a relatively small group. Next, Mandel calculates the extent to which U.S. manufacturers of each product lost market share to their foreign competitors and the extent to which the product itself simply claimed a smaller fraction of overall world exports. His results show that while the nation did lose ground to competitors in the export of some goods, the shifting make-up of the goods traded globally accounts for a significant part of the U.S. export share losses.”

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