While these propositions are impossible to verify 

 empirically, they are widely held and provide a basis 

 in self-interest for U.S. foreign assistance in general 

 as well as specifically with respect to 



industrialization. A special basis in self-interest is 

 provided by the fact that the developing countries, 

 containing two-thirds of the world's population, 

 represent an enormous potential market for U.S. exports 

 as well as a critical source of raw materials and other 

 imports of benefit to the United States. 



Concerns of U.S. Labor 



A more difficult question of mutual interest is 

 posed when the very success of technology transfer from 

 the United states leads to increased competition, both 

 at home and abroad, with the products of U.S. industry. 

 The history of first, Japanese, and more recently 

 Taiwanese, Korean, and some Latin American transitions 

 from nascent to competitive industrial production in 

 some sectors dramatizes the issue. 



The U.S. labor movement, once a leading supporter 

 of free trade and generous in its advocacy of 

 technology transfer, today expresses the view that 

 American jobs can be threatened when certain types of 

 industrial technology are transferred overseas. 

 Therefore, labor is pressing both industry and 

 government to take actions that will prevent a loss of 

 U.S. industrial employment. whether or not this 

 concern is well founded is a matter on which most 

 economists and labor leaders have real differences of 

 opinion. Nevertheless, the perception that American 

 jobs can be threatened as a result of technology 

 transfers raises issues for which no satisfactory 

 resolutions are at hand. 



The predominant U.S. policy to date has been to 

 rely on the validity of the economic theory of 

 comparative advantage and, in foreign assistance as in 

 trade policy, to opt for measures that seek the 

 greatest mutual gains from economic interdependence. 

 Thus U.S. policy has generally recognized that trade is 

 a two-way street: that a large country such as the 

 United States cannot increase restraints on imports 

 without eventually inducing counter restraints on its 

 exports and triggering a decline in the rate of world 

 economic growth (as well as hurting U.S. consumers) . 

 In this context, it is significant that U.S. exports to 

 developing countries grew rapidly between 196 5 and 

 1975, and that the United States has been selling those 

 countries more manufactured goods than it has been 

 purchasing (Table 1) . As incomes in those nations 

 continue to rise, the United States can expect to 



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