The Big Ideas

'Why manufacturing matters to economic superpowers'

Financial Times

Rana Foroohar | Financial Times
'Why manufacturing matters to economic superpowers'
'Why manufacturing matters to economic superpowers'
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April 11, 2021
BIG IDEA | ‘Whether such reshoring matters for national economies depends very much on the industry.’

‘Manufacturing matters. Part of that is down to its disproportionate benefits to the economy.’

  • ‘In the US, for example, although manufacturing represents just 11 per cent of gross domestic product and 8 per cent of direct employment, it drives 20 per cent of the country’s capital investment, 30 per cent of productivity growth, 60 per cent of exports and 70 per cent of business R&D.’
  • ‘Manufacturing’s share of the economy in many other developed countries is far higher.’

‘Whether such reshoring matters for national economies depends very much on the industry.’

  • ‘A study by MGI finds that 16 of the 30 main manufacturing sectors in the US stand out for their economic and strategic value, as measured by their contribution to national productivity and economic growth, job and income creation, innovation and national resilience.’

‘President Joe Biden has called for a national review of supply chain vulnerabilities.’

  • ‘His administration has already made it clear that it would like to see more domestic production of semiconductors, medical supplies and other strategically important items.’

‘The US could create, for example, more demand for more expensive, domestically fabricated chips, but only if the government underwrote investment via guaranteed federal procurement of supplies, as it did for semiconductors in the 1950s and 1960s.’

  • ‘Given the push towards “buy American” under Biden, as well as the use of the federal balance sheet to support union labour in government contracts and healthcare infrastructure, that’s not inconceivable.’