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Policy Brief 14-18

The US Manufacturing Base: Four Signs of Strength

by Theodore H. Moran, Peterson Institute for International Economics
and Lindsay Oldenski, Peterson Institute for International Economics

June 2014


Laments over the decline of the manufacturing base in the United States are widespread. But while manufacturing employment has steadily declined for many decades, more direct measures of manufacturing productivity show that the growth of the US manufacturing sector has actually been strong and not simply in the subsectors affected by computer production. In the last two years, the United States has been doing much better than most of the rest of the world, including China. In addition, the Policy Brief shows that increased offshoring by US manufacturing multinational corporations (MNCs), a phenomenon criticized as contributing to domestic job losses, is actually associated with overall greater investment and increases in jobs at home. New evidence also suggests positive effects of offshoring by US manufacturers on research and development (R&D) spending in the United States. Accordingly, policies aimed at restricting global expansion by US MNCs would be misguided.

Data disclosure: The data underlying this analysis are available here [xlsx].

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RELATED LINKS

Book: Rising Tide: Is Growth in Emerging Economies Good for the United States? February 2013

Book: Outward Foreign Direct Investment and US Exports, Jobs, and R&D: Implications for US Policy August 2013