2. Manufacturing still has a productivity and innovation edge
Even as manufacturing's contribution to growth slows in advanced economies, the sector continues to make outsize contributions in productivity, innovation, and trade. In the United States, for example, manufacturing contributes more than twice the expected rate of productivity growth for its level of GDP and employment. One result of this productivity advantage is a massive consumer surplus. While services counted in the U.S. Consumer Price Index have risen by more than 150 percent over the past 25 years, prices of consumer durables (like cars and refrigerators) have risen by one-tenth of that rate.
Even as advanced economies have shifted toward services, manufacturing continues to lead in innovation. In advanced economies, manufacturing companies fund as much as 90 percent of private-sector research and development. Finally, manufacturing continues to dominate global trade: 70 percent of global exports are manufactured goods. These contributions -- in productivity, innovation, and exports -- strongly influence global competitiveness.
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