U.S. Manufacturing Success Requires Policy Changes

Friday, June 17, 2016

Despite our success, it is true that the U.S. has serious challenges in manufacturing.  For example, in 2000,China replaced the U.S. as the world’s second leading exporter, with the EU as number one.  Today, America’s global market share of manufactured exports ranks third (as opposed to total manufacturing, where we still rank first) because our export share has declined from 19 percent in 2000 to less than 14 percent.  Still, during this period, the absolute dollar value of manufactured exports has steadily increased, though less rapidly than exports from China, India and Southeast Asia.

A healthy manufacturing sector requires policy changes at every level.  As global economic competition heats up, we as a country need to do the following to stay competitive:

  • Improve K-12 education,
  • Reform higher education by expanding access and decreasing costs,
  • Increase private sector R&D investment,
  • Upgrade transportation and telecommunications infrastructure,
  • Expand the use of advanced information technologies in every sector,
  • Reform our immigration laws to make it easy for highly-talented and high-work ethic immigrants to come to the US to improve their lives and ours, and
  • Contain federal, state and local governments from increasing taxes and expanding regulations in ways that dampen investment, kill jobs, stunt innovation and slow economic growth.

More generally, we need pro-growth and pro-investment policies at every level of government – policies that reduce trade barriers, simplify taxes, advance competitive tax and regulatory policies, encourage R&D and pay more attention to improving education, immigration and related talent development and workforce issues.  That’s how we continue to be pace-setters in manufacturing. And that is how we will continue to lead in creating jobs in other sectors as well.

Regardless of the system of economic classification we use to define manufacturing, we cannot forget that in theNew Economy advanced sales and distribution systems (such as Amazon.com or FedEx) and innovative retailing (such as Wal-Mart or Target) or advanced business services (devices, software, cloud computing, mobile internet) create good jobs at good wages and contribute mightily to wealth creation, as enterprises in every sector embed new information and networking technologies to specialize and integrate simultaneously and to win by becoming fast, flexible, focused, networked and global.

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