Saving and investment in a global economy

"The emergence of large trade imbalances among the industrial countries during the 1980s - particularly the massive deficit of the United States and the surpluses of Germany and Japan - has led to growing disenchantment with the international economic system. But while many critics point to unfair trade practices as the cause of these imbalances, others contend that this emphasis is misplaced." "In this provocative book by one of the nation's leading economists, Barry Bosworth argues that trade disparities are not the result of external infractions, but rather a reflection of domestic failures. He shows that the United States, for example, with its large government budget deficit and low rate of private saving, must borrow abroad to finance its investment. Similarly, trade surpluses of countries such as Japan reflect a surplus of national saving over domestic investment, rather than restrictive trade practices." "Bosworth explains that large trade imbalances became possible in the 1980s because of the development of an international capital market that greatly reduced the barriers to borrowing and lending across national borders. The result is an international system in which natio