Abstract
Although the rest of the US economy has shown a strong recovery, the steel industry is still in a recession. Steel shipments are still very low, and industry employment is at a post World War II low. Imports accounted for 26% of US steel consumption in 1984, up from 15% five years ago. The Reagan Administration has responded by negotiating agreements with steel-producing countries to limit exports to the US. Thirty years ago, the US steel industry had a comparative advantage in world steel production, but over the years, technological changes, resource discoveries, and other factors have eliminated the US productivity and resource advantages. Steel is not representative of what is wrong with US industry because it has faced an unusual combination of technological changes and shifting patterns of demand and resource availability. While other industries will not inevitably follow this path, the steel experience does illustrate how quickly a competitive advantage can be lost in the face of external changes.