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Old Macdonald's Big Asian Friend


Economic Trends

OLD MACDONALD'S BIG ASIAN FRIEND

Japan's appetite for U.S. foodstuffs

When the U.S. recently unveiled plans to slap punitive tariffs on some $2 billion worth of Chinese exports to the U.S., Beijing responded by threatening similar action against U.S. products--notably American agricultural exports. Despite China's massive food needs, however, economist Joseph P. Quinlan of Dean Witter Reynolds Inc. thinks that this is one threat that shouldn't give U.S. farmers too many sleepless nights.

For one thing, he notes that roughly 75% of U.S. farm exports to China consists of wheat, grains, cotton, soybean oil, and other bulk items. Since these are internationally traded commodities and Chinese needs will still add to global demand, any decline in U.S. exports to China should be largely offset by rising shipments to other nations.

More important, says Quinlan, China is hardly a large or critical market for American agricultural products. In 1995, it imported just $2.7 billion worth of American farm products, or 4% of total U.S. agricultural exports of $66 billion.

Indeed, it's not China but Japan that constitutes America's hottest and largest agricultural market, accounting for roughly a quarter of total U.S. exports last year. By the same token, the U.S. today is Japan's top food supplier, providing nearly 30% of the country's imports of foodstuffs--including a rapidly growing volume of high-value consumer-oriented food products.

Last year, for example, Japanese purchases of U.S. fresh fruit and pet foods rose by 16% and 26%, respectively. And Japan's appetite for American snack foods, vegetables, meat, and dairy products grew by 30% to 35%.

"The Chinese mainland," says Quinlan, "is a market of the future for U.S. farmers, but Japan is a market for today, and a darn good one at that."BY GENE KORETZReturn to top

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WALL STREET'S BUDGET GIFT

Capital gains slash the deficit

The stock market's massive surge last year did more than gladden the hearts of investors. Evidently, it also helped make a sizable dent in the federal budget deficit for fiscal 1996.

The Treasury reports that individual tax payments in April were up an eye-popping 47% over last April's record $73.4 billion take--an increase that mainly reflects a huge pickup in capital-gains tax payments from profit-taking investors. With the deficit for fiscal 1996 now running 42% below its year-earlier level, economist Donald E. Maude of Scotia Capital Markets (USA) Inc. thinks that the shortfall for the full fiscal year will come in close to $125 billion--down 23% from fiscal 1995's $163 billion.

None of this means that the deficit won't grow again in future years. But right now, it indicates that this year will not only see the smallest deficit in 14 years but will mark the first time since at least the 1930s that the federal deficit fell four years in a row. And in a Presidential election year, that's not something the Administration is likely to let the voting public forget.BY GENE KORETZReturn to top

WHERE CATHOLIC SCHOOLS SHINE

In urban minority communities

Are parochial schools better than public schools? Strong evidence that they may be comes from numerous studies that indicate that students attending Catholic high schools do better than their peers in public schools. In a new study tracing a group of students since the 1970s, however, University of Chicago economist Derek Neal concludes that this impact is exaggerated.

Neal does find that students attending Catholic high schools are more likely to graduate than similar students in the public system. And they are also more likely to attend and graduate from college and to earn higher wages. But this positive effect is most notable among urban minorities.

In suburban and rural areas, Neal finds that attending a Catholic high school confers little or no benefit on either whites or minorities compared with similar students in public schools. But in urban areas--in counties with over 250,000 people--the probability for blacks and Hispanics of graduating from high school rises dramatically from about 62% to at least 88%. Urban white students attending Catholic schools also do better, but their gains are much more modest.

Thus, says Neal, Catholic high schools do not appear to be superior to public high schools in general. Rather, his study suggests that they are "similar in quality to suburban public schools, slightly better than the urban public schools whites attend, and much better than the urban public schools many minorities attend."BY GENE KORETZReturn to top


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