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How Low Can Manufacturing Go?

Posted by: Michael Mandel on November 23

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.

manufacturingshare_6364_image001.gif

(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).

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Reader Comments

Andrey Fedorov

November 27, 2005 04:17 AM

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?

monkyboy

November 28, 2005 01:17 PM

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.

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About

Michael Mandel, BW's award-winning chief economist, provides his unique perspective on the hot economic issues of the day. From globalization to the future of work to the ups and downs of the financial markets, Mandel-named 2006 economic journalist of the year by the World Leadership Forum-offers cutting edge analysis and commentary.

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