Corporate Bureaucracies and United States Competitiveness

Two features of the US manufacturing sector during the 1980s are its increased openness to international trade and the rise in nonproduction employment relative to production employment. The latter seems to be due to technological change and/or organisational 'fat'. In this study, the hypothesis that the 'organisational factor' is an important determinant of US export competitiveness and trade in manufactures is tested using industry panel data for 1985-89. The empirical results indicate that, while conventional trade determinants like human and physical capital intensity are still important, technology in both the narrow and wider sense, i.e. R&D intensity and organisational technology, seems to be the major determinant. It is found that large nonproduction employment had a detrimental effect on US export competitiveness. This seems to provide an explanation for the large white-collar layoffs observed since the late 1980s.