An empirical examination of the locomotive process and an interpretation of those results in terms of national economic priorities

The effect of United States imports from France, W. Germany, and the United Kingdom on their respective economies seems to have diminished in the 1980*s. The purpose of this work is to discover the nature and extent of that change in the structure of the international economic environment. Using the cusum, cusum-squares, and Chow tests, the locomotive effect of U.S. imports was tested for its structural stability for the period 1970 to 1985 for France, W. Germany, and the United Kingdom.

The results indicated that there had indeed been a decline in the expansionary power of U.S. imports around 1980. For France, this is linked to their inability to devalue the franc (a common measure before the oil crises) and thus lower the leakages of their own imports during domestic expansions. West Germany's refusal to stimulate their economy seems the culprit for them, while for the United Kingdom, an increasing marginal propensity to import due to falling manufacturing competitiveness is deemed the cause. The work concludes on the note that only institutional change within France and the United Kingdom (the two "problem" countries) will lead them to economic success in our increasingly interdependent world.