U.S. Trade with the Third World: The American Stake. Occasional Paper 28.

This essay examines the various economic effects of U.S. trade with developing nations to determine whether or not such trade is in the U.S. interest. Expansion of trade with the Third World is very much in keeping with the Reagan administration's economic goals. It stems from the conviction that solution to the problems of poverty and insufficient economic development is to be found in the magic of the market place. U.S. gains from trade include access to needed raw materials, consumer benefits, economic efficiency, and growing markets for U.S. exports. Although U.S. trade with the developing countries is quite favorable (with the exception of oil), it is not sufficient to look exclusively on the positive side. One serious cost to the United States is loss of employment opportunities in declining industries. Study after study identifies the same industries as being most sensitive to import competition: textiles and clothing, footwear, leather goods, and consumer electronics. Compared to a protectionist stance, the article concludes, in the long run, a set of policies to stimulate world trade and distribute its costs equitably carries with it a much greater potential for improving the economic well-being of all nations. (RM)