The U.S. must take a new commerce perspective in regard to the changes taking place in the world economy.
Blueprint for an American comeback
When we read the manuscript of Joel Kotkin and Yoriko Kishimoto's new book, we were struck by its fresh perspective on the economic future of the United States. The rise of the Pacific Rim countries, the authors argue, presents historic opportunities as we begin our third century. -- The Editors
As it enters its third century under the Constitution, the United States confronts unprecedented questions concerning its essential character, its mission as a nation, and its ultimate destiny. Until this decade, Americans comfortably identified themselves as the vanguard of a European-based Western civilization that since the 1600s has imposed its will on the other peoples of the world.
Today that once-supreme confidence in the superiority of the West no longer conforms to reality. In 1900, Europe itself accounted for more than 36% of world trade and controlled much of the commerce of Asia, Africa, and North America. Today, however, its great empires are only a memory. By 1980 Europe's share of world commerce had shrunken considerably.
The world's economic center lies not along either side of the Atlantic, but among the cities and states of the Pacific Rim, which account for an increasingly large share of international commerce. This shift in economic power from the Atlantic to the Pacific, however, need not be bad news for America. Nothing about it automatically consigns this country to second-class status as an economic power. On the contrary, the vast changes taking place in the world economy present historic opportunities for the United States.
The evidence of a changed world is everywhere. In 1960, America's trade with Asia was just over half its trade with Western Europe; within 20 years, trade with Asia was the larger. By 1986, U.S. trans-Pacific commerce reached $215 billion, exceeding by more than 50% its trade with Western Europe. And if our trade with Asia keeps growing at current rates, according to a report by the President's Commission on Industrial Competitiveness, by 1995 it will be twice that with the Atlantic-facing world.
The first order of business in building a successful American future lies in redefining our relationship with the East. The Pacific Rim represents the crucible of the new economic forces. With the highest economic growth rates in the world, this region since 1960 has notably boosted its share of the international economy. As late as 1960, Japan's gross national product was smaller than that of Great Britain, France, or West Germany. By 1986, it was 30% more than that of Britain and France combined and more than twice that of West Germany.
Today Japan stands behind only the United States as the free world's foremost economic power and has emerged as a financial leader. In the late 1980s, Japan also has control of more than one-quarter of international banking assets -- slightly more than the United States.
But even as Japan stretches for the economic pinnacle, its place as number one in Asia is rapidly being challenged by other ascendant nations. From grinding poverty only a quarter of a century ago, the newly industrializing economies of Asia -- Hong Kong, Taiwan, Singapore, and South Korea -- have enjoyed the developing world's fastest economic advances. Once destitute, South Korea now boasts an economy larger than such industrialized European nations as Denmark and Austria. Korean officials believe this is just the beginning. "We'll overtake Britain in less than 20 years," predicted Yu Hee Yol in 1986, while director of technology transfer at South Korea's Ministry of Science and Technology.
Although still desperately poor, China is also emerging as one of the world's largest and fastest-growing economies. Between 1977 and 1985, China doubled its GNP in constant dollars. In 1985 alone, China's growth was larger than the entire GNP of South Korea.
The past decade hasn't been nearly so bright for Western Europe. In the wake of the great "European miracle" of the postwar years, the 1970s ushered in a period of decline on the continent, with Europe's economic growth rates falling well below those of both Asia and the United States. Once the dominant traders of the world, Western Europeans today trade mostly among themselves, and increasingly with the controlled economies of Eastern Europe and particularly the Soviet Union.
Even the much-discussed plans for European economic unification in 1992 cannot obscure the harbingers of continental decline: a decade of flat levels of industrial investment, rising unemployment, slow growth rates, and fading technological leadership. And even if somehow Europe can correct its current economic deterioration, demographic trends seem almost certain to reduce its role as a marketplace. In its era of great expansion during the eighteenth and nineteenth centuries, Europe experienced an unprecedented population explosion, both creating a large urban work force and spurring the colonization of much of the globe. Today large-scale immigration, mostly from Asia and Latin America, keeps the U.S. population growing, but Europe's reluctance to admit newcomers consigns it to a rapidly aging, and eventually shrinking, population.
Since 1975, West Germany has suffered a net loss of about one million people. By the turn of the century, most other major Western European nations -- including Great Britain and perhaps even Italy and France -- are also likely to begin to experience population decreases. Demographers estimate that by 1990 Europe may account for less than 10% of the world's consumption of goods and services, a figure that could drop to little more than 6% early in the next century. The era of Europe as the home of the world's preeminent metropolitan areas is also coming to a close. According to a United Nations estimate, by the year 2000, 6 of the 10 largest cities in the world will be on the Pacific Ocean; none of them will be European.
