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Manufacturing is still critical to the economy United States. Clyde Prestowitz, says it's time to start realizing the positive spillovers that manufacturing creates... Read more  

Events & Activities

Stephen Olson at Chinese Development Institute Conference


 Clyde Prestowitz giving presentation to CDI...


Steve Olson teaching trade negotiations at the Mekong Institute...


Stephen Olson to speak at upcoming workshop organized by the International Institute for Trade and Development on 

"Economics of GMS Agricultural trade in goods and services towards the world market"

Chiangmai, Thailand Sep 8-12.

Book Reviews & Citations

(08/01/05) Three Billion New Capitalists reviewed in the New Zealand Management

(08/01/05) Three Billion New Capitalists reviewed in the New Zealand Management
Three Billion New Capitalists: The great shift of wealth and power to the East
By: Clyde Prestowitz
Publisher: Basic Books

Depending on ones perspective and priorities, this is an encouraging or depressing book. For those concerned about the United States seemingly unlimited power and penchant for throwing its ideological weight around, its reassuring to be told that Americas economic decline is now irreversible. But if one is concerned about the consequences for the western world, and certainly for New Zealand, should the American century turn to very runny custard, then the book is scary reading.

Clyde Prestowitz, president of the Economic Strategy Institute in Washington DC, argues that American policymakers seem oblivious to the looming crisis; they are not making the connections, and joining the dots that the author does in this absorbing, thought-provoking and very readable book.

Prestowitz argues that the United States is in serious trouble for a number of connected reasons. The US trade (current account) deficit was about $650 billion in 2004, financed by huge overseas borrowing, and mortgaging large US assets to foreign lenders. Their coffers awash with dollars, the worlds central banks are beginning to question Americas ability to fulfill its international financial obligations. There is now, for the first time since the end of the Second World War, an alternative to the dollar as the worlds money and already many countries are upping their euro reserve ratios at the expense of the US currency.

Even if the US dollar devalues dramatically, America may not have the capacity to raise its exports sufficiently to balance the trade accounts. Manufacturing, the biggest part of US trade, accounts for just 12.7 percent of American GDP less than health care and more and more important industries are relocating factories overseas.

In addition to the largely ignored fragility of the US economy, Prestowitz argues, three billion new capitalists have joined the worlds economy since the fall of the Berlin Wall in 1989 and their impact is only just beginning to be felt.

Services, research and development in which the West now leads the world, could all follow manufacturing to Asia, he writes. Whether slowly or quickly, the forces now bringing wealth and power to the East will also bring crisis and painful adjustment to the West.

Three Billion New Capitalists analyses the crisis in detail and ponders how the inevitable adjustments can be managed to minimise the pain. IFG

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Latest Publications

The Betrayal of American Prosperity.

The Trans-Paific Partnership and Japan.

Making the Mexian Miracle.

Industrial Policy and Rebalancing in the US and China.

The Evolving Role of China in International Institutions.


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