786 



-10- 



cures, most of them protectionist in nature, would be worse than the disease. 

 For example, is the current Government pressure to exclude foreign students 

 and faculty from advanced integrated circuit research facilities at 

 universities a wise policy? It is an issue likely to be more rather than less 

 visible in the future. 



Lastly, under the heading of industrial policy must be included the 

 relationship between domestic regulatory policy to protect health and safety, 

 and a nation's international economic position. Already under intense 

 scrutiny, this subject is certain to be the focus of important debate in the 

 next five years. The basic concern is that unequal regulations in different 

 countries can result in substantially different costs of production thereby 

 changing a nation's competitive position. That claim is made now with regard 

 to American environmental and safety regulations that are presumed to have 

 important effects on the U.S. export potential. Equalizing regulations would 

 be one way to deal with the problem when it exists, but that often does not 

 reflect differing conditions in countries, different factors of production, or 

 differing values. Sometimes, regulations can improve competitive position if 

 the costs of compliance are higher in other countries competing in the same 

 market. At times, regulations are simply a disguised trade barrier. Once 

 again, the complexity of the situation does not allow simple judgments or 

 overall generalizations. The positive current account balance of the U.S. in 

 the last months of 1980, in the face of high energy costs and an improving 

 value of the dollar would seem to belie the importance of the negative effects 

 argument, but that does not indicate what the balance might have been in the 

 absence of a regulatory effect. Moreover, the issue is usually cast not only 



