The figures for 1962 and 1975 which are used in this analysis are not to be interpreted as predictions of the actual levels of trade to be expected in those years. Following the usage of the Report of the President’s Materials Policy Commission, the situation described with reference to 1975 should be considered as typical of the conditions that can be expected in the final year of a period in which the physical gross national product of the United States will grow to a volume twice that of 1950; the estimate given for 1962 should, similarly, be interpreted as representing the level of imports in some year approximately halfway through this period. The Paley Commission estimated that, unless the rate of growth of the U.S. economy is severely retarded by a major depression, gross national product will, at some time during the decade 1970-80, probably be double what it was in 1950, the exact year depending on minor variations in the possible rate of growth of output per man-hour and on the extent to which changes occur in the length of the average work week.
Two further general comments are necessary to ensure a correct interpretation of the findings. First, although the statistical techniques used in work of this type necessarily yield numerically precise answers, the results should be interpreted merely as indications of the relative orders of magnitude of imports to be expected. Second, despite the large number of assumptions that had to be made, it became increasingly clear in the preparation of the estimates that even relatively large differences in the projections for major commodities did not alter or obscure certain basic trends and regional patterns that clearly emerged.
Mr. Schlesinger, who received his doctorate from Harvard University and who was formerly an economist on the staff of the Federal Reserve Bank of New York, prepared this paper while a member of the Economic Staff of the International Bank for Reconstruction and Development. He is the author of Multiple Exchange Rates and Economic Development, and co-author of Public Finance and Economic Development in Guatemala, and The Pattern of United States Import Trade Since 1923.
Resources for Freedom (A Report to the President by the President’s Materials Policy Commission, Washington, June 1952).
A detailed description of the methods and assumptions utilized to derive the estimates presented in this paper is given in the Statistical Appendix.
Estimated U.S. uranium imports could not, of course, be included in the forecast; although rising imports of this material will probably have only a minor effect on the rate of growth of U.S. imports as a whole, they could have consider-able importance for some regions.
For references, see the Statistical Appendix.
For the data on which comparisons in this and subsequent sections are based, see tables in the Statistical Appendix.
The relative contribution of the Netherlands Antilles to the net dollar earnings of the continental OEEC dependencies was, of course, considerably smaller.
A definition of “future dollar requirements” in these terms is more closely related to a structural, than to a dynamic, concept of ‘‘dollar shortage” because the complex effects of economic growth on the dollar requirements of individual regions are disregarded. Under the per capita formulation used here, the “dollar gap” is roughly defined as the deficiency in the dollar supply necessary to prevent the structural changes wrought by the war from pushing living standards below a socially or politically undesirable minimum.
However, since some IBRD or Export-Import Bank loans are likely to be continued, the rest of the world would, prior to 1962, probably be able to increase imports from the United States somewhat.
An increase of U.S. nonmerchandise imports should also contribute significantly to the closing of the “dollar gap”; the demand for such luxury-type services as tourism tends to rise rapidly when national income increases.
In determining the significance of this estimate for the balance of payments of the rest of the world as a whole with the United States, account would also have to be taken of the extent, if any, to which the increased OEEC exports would merely replace exports from other regions.
J. H. Adler, E. R. Schlesinger, and E. van Westerborg, The Pattern of United States Import Trade Since 1923: Some New Index Series and Their Application (Federal Reserve Bank of New York, May 1952).
Cf. U.S. Bureau of Agricultural Economics, Consumption of Food in the United States, 1909-1948 (Washington, August 1949 and September 1950).
The income elasticity of the demand for imports measures the percentage change in the physical volume of imports associated with a percentage change in real national income or gross national product.
The price elasticity of the demand for imports measures the percentage change in the physical volume of imports associated with a percentage change in the prices of imports relative to the prices of other commodities.