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It is a pleasure to be with you tonight and to be honored alongside Senator Roth, who has been a strong advocate for free trade and America's leadership in the global economy. I have worked closely with Senator Roth on a number of important domestic and international issues and he has shown real leadership on a broad array of such issues. By honoring me, you honor President Clinton's entire economic policy team, as well as the career men and women in the White House, the Treasury Department and throughout the government with whom I've had the privilege of working the past five years. Most importantly, you honor President Clinton, who deeply understands that we live in a global economy and that our economic well-being depends on strong U.S. leadership and engagement in the global economy.
Yet at a time when our country's economic, national security and geopolitical interests require forward looking international economic policies, public support for such policies may be waning. At the end of last year, for example, Congress failed to grant the President fast track trading authority, even though we risk being left behind as other countries liberalize trade and investment without the United States, failed to approve payment of our dues to the United Nations, even though we risk losing our vote in the General Assembly by the end of this year, and failed to provide funding for the IMF, even though the resources of the IMF are dangerously low as a result of the recent financial crisis in Asia.
Tonight, I want to speak about the importance of building support for forward-looking international policies. The context for my discussion is the emergence of a global economy, which has brought tremendous benefits for workers and businesses, but which has also produced risks and challenges -- challenges that can only be met by spreading the benefits of the global economy and bolstering support for forward looking international policies.
Over the last twenty-five years, vastly increased international flows of trade, capital, and information, along with the development of new technologies, have all contributed to increased integration among the world's economies. Here in the United States, the percentage of our economy that accounts for trade has doubled to 30 percent, demonstrating this integration. The changes have been greatest in developing countries, where nation after nation has embraced market economic reforms, attracting enormous amounts of investment, and fostering growth that has lifted millions out of poverty. And these countries have become more important trading partners to the United States, absorbing 40 percent of our exports. That is why in my tenure as Treasury Secretary I have visited a host of developing and transitional countries, including Vietnam, Brazil, Ukraine, the Philippines, and China, and this summer I will visit Africa -- countries and regions far from the traditional focus of Treasury Secretaries.
The development of the global economy has brought tremendous benefits to Americans. Millions owe their jobs directly or indirectly to trade, and all benefit through the lower prices and greater choice that international competition fosters. Our economic well-being truly is inextricably linked to the rest of the world.
But with the opportunities and benefits, have come new challenges and risks. To help our nation make the most of the opportunities in the global economy, President Clinton has pursued a coordinated international economic strategy. Some have argued that in this world of huge global markets, government has, in essence, become largely irrelevant. And there is no question that the underlying strength of a modern economy is a productive and competitive private sector. But governments have a necessary and vital role in creating the legal, institutional and economic setting in which the ingenuity, skill, enterprise and dynamism of the private sector can flourish and in which the benefits of growth are broadly shared.
With that in mind, the President's international economic strategy has had three basic components: liberalizing trade to open markets to U.S. goods and services; promoting growth and reform in developing countries to help foster the markets of tomorrow and promote political stability; and addressing financial instability, both when it occurs, and in the long term, by developing an architecture of the international financial system that is as modern as the market. These components often overlap and are mutually reinforcing. For example, IMF programs, including the recent reform programs to restore growth and confidence in countries experiencing financial crisis, have long included significant trade liberalization measures because they are critical to prosperous market economies.
Yet, despite the success of the President's international economic policy --and I do believe that it has been a key factor in the nation's current economic success -- we have seen both an erosion of the traditional bi-partisan base of support for international economic engagement in recent years, and, at the same time, a re-ignition of one historical strain in American thought, a rejection of the outside world. This has occurred for at least two reasons: anxiety brought by the rapidity of change in this era of the global economy and dramatic technological developments; and the end of the Cold War, which caused the foreign policy consensus to lose its centerpiece -- the effort to contain Communist expansionism. In this new environment, questions concerning the importance of U.S. leadership have grown.
A great task facing this country today is to rebuild public support for forward looking international policies. Doing so requires meeting two basic challenges.
First, is broadening participation in the benefits of the global economy. The global economy benefits most, but there is a risk that those who are not well-equipped to compete will fall behind. Moreover, the rapid changes of the global economy inevitably create dislocations for some. But the answer to these problems is not a futile effort to try to halt the incredible tide of globalization that has benefited so many. Instead, the answer is to continue to strengthen a domestic counterpart to a forward looking international economic policy that helps to equip all of our people to compete in the global economy, through education and training, special programs for those outside the economic mainstream in our inner cities and distressed rural areas, health care, and the like.
Early in the first term of the Clinton Administration, a reporter from a well-respected European newsmagazine interviewed me. At the end, he said that our economy was doing very well but that ten or twenty years from now we'd be a second tier economy. I said I disagree, but asked why he thought that, and he said because of the state of our public schools and our inner cities. And I believe that these are critical issues that, particularly at a time when the U.S. economy is doing well, we must address.
The second critical challenge we face is to vastly improve the efforts of all of us -- public sector officials, the business community, foreign policy experts -- to communicate with the American public about the dynamics of the new global economy and the importance of U.S. leadership in the global economy to the economic well being and national security of the American people.
Unless there is broad based public understanding of the importance to U.S. interests of strong U.S. leadership in the global economy, we will fail to support the UN and we will lose our vote in the General Assembly at the end of this year; we will fail to support the IMF, and be more vulnerable to economic crises; and we will fail to pass fast track and stand by as the rest of the world moves forward and liberalizes trade, with us on the outside of the tent, rather than the inside. All of this has enormous consequences to our economic well-being and our national security.
Here's where business can play an important role -- you have the understanding of the importance of the global economy and the means with which to convey that understanding. Our leadership in the global economy must be grounded in public support, and what we all need to do is build that public support.
Making the most of the opportunities of the global economy, and minimizing the risks requires us all to work together meet our challenges and to promote public support for our engagement in the world. And our success in meeting that challenge is critical to our country's economic well-being for the years and decades ahead. Thank you very much.