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How Low Can Manufacturing Go?


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November 23, 2005

How Low Can Manufacturing Go?

Michael Mandel

Myth: Manufacturing's share of the economy has been relatively steady over time.

Fact: Manufacturing's share of the economy has been falling since the early 1950s. Moreover, the decline over the past decade hasn't been any steeper than in the past.

Projection: At this rate, manufacturing drops below 10% of the economy by 2013.

(this is based on newly released data from the BEA for 1947-86. Manufacturing value added is measured as a share of current dollar GDP, which is the right measure to assess the economic impact of manufacturing payroll, profits, etc).

02:55 PM

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But the economy is still growing... so what is replacing manufacturing? Is it intellectual "property"? Could it be that as we make less things (relatively), we are making more ideas? And is this one of the reasons for the changes in and intensified debate over copyright law?

Posted by: Andrey Fedorov at November 27, 2005 04:17 AM

It would be interesting to see how much of our remaining manufacturing capacity produces goods for the government...police cars, fighter planes, communications equipment, etc.

Government agencies tend to buy American even though cheaper and better foreign alternatives exist...things might be even worse than the chart implies.

Posted by: monkyboy at November 28, 2005 01:17 PM


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