MIT Future of Manufacturing Lit Review pt3

3 Reports Summarized: National Science and Technology Council – A National Strategic Plan for Advanced Manufacturing February 2012.... 7-10 David Autor, David Dorn, Gordon Hanson - The

The Future of U.S Manufacturing – A Literature Analysis (Part III)

2012

Kathryn Hewitt – Intern,

MIT Washington Office, Spring 2012

(with additional entries from

Queenie Chan - Intern,

MIT Washington Office, Summer 2012)

Table of Contents

Foreword 3 Reports Summarized:

National Science and Technology Council – A National Strategic Plan for Advanced

Manufacturing (February 2012) 4-6

Susan Helper, Timothy Krueger, and Howard Wial, Metropolitan Policy Program at

BROOKINGS – Why Does Manufacturing Matter? Which Manufacturing Matters? A Policy Framework (February 2012) 7-10

David Autor, David Dorn, Gordon Hanson - The China Syndrome: Labor Market Effects of Import Competition in the United States (MIT Economics paper August 2011) 12-13

Connect Innovation Institute – Two Systems of Innovation: Recommendations for Policy Changes to Support Innovation, Production and Job Creation (February 2012) .14-15

Council on Competitiveness – U.S Manufacturing Competitiveness Initiative: Make an

American Manufacturing Movement (December 2011) 16-19

Information Technology and Innovation Foundation – Worse than the Great Depression: What the Experts are Missing about American Manufacturing Decline (March 2012) 20-24

Institute for Defense Analyses – Emerging Global Trends in Advanced Manufacturing (March 2012) 25-27

Gregory Tassey, “Beyond the Business Cycle: The Need for a Technology-Based Growth

Strategy” (NIST working paper Feb 2012)……….28-31

Susan Houseman, Christopher Kurz, Paul Lengermann, and Benjamin Mandel 2010

"Offshoring and the State of American Manufacturing." Upjohn Institute Working Paper No

10-166 (Kalamazoo, MI: W.E Upjohn Institute)……… 32-33

Jonas Nahm and Edward S Steinfeld, Scale-Up Nation: Chinese Specialization in Innovative Manufacturing (MIT working paper March 12, 2012)……….34-37

U.S Department of Commerce, Economics and Statistics Administration, The Benefits of Manufacturing Jobs (May 9, 2012).……….38-39

Steering Committee for the Advanced Manufacturing Partnership (for PCAST), Capturing Domestic Competitive Advantage in Advanced Manufacturing (July 17, 2012)……… 40-42

Additional Suggested Reports to Review 43

Foreword

The following is a summary and analysis of reports issued by various institutions looking at the topic of advanced manufacturing and its future in the United States Atthis pivotal point in America’s manufacturing history, decisions are being made as a result of several study findings The following analysis looks at both studies and their findings along with policy recommendations There is heavy attention given the critical, emerging trends in advanced manufacturing, how they align with the investment and growth interests of nations around the world, and what the industry

is expected to look like several decades down the road The end of the report

contains a page with several suggested further reports to review

This summary was prepared by Kathryn Hewitt, Intern, MIT Washington Office, Spring 2012; it was supplemented with additional summaries by Queenie Chan, MIT’13, Intern, MIT Washington Office, Summer 2012

This summary is preceded by two similar reports issued earlier by MIT Washington

Office: Future of U.S Manufacturing – A Literature Review, Parts I and II Link to these

previous MIT Washington Office summaries: http://web.mit.edu/dc/policy.html (available under “Policy Resources” - “Manufacturing”)

National Science and Technology Council - A National Strategic Plan for

Advanced Manufacturing (February 2012)(interagency group including NIST, NSF, DOD, DOE)

(http://www.whitehouse.gov/sites/default/files/microsites/ostp/iam_advancedmanuf acturing_strategicplan_2012.pdf)

The National Science and Technology Council (NSTC) issued a plan documenting

“the fundamental importance of advanced manufacturing” to the nation’s

competitiveness and security and setting forth key objectives and priorities for federal policy in this area

The acceleration of innovation for advanced manufacturing requires bridging a number of gaps in the present U.S innovation system, particularly the gap between research and development (R&D) activities and the development of technologies innovation in domestic production of goods This strategic plan “lays out a robust innovation policy that would help to close these gaps and address the full lifecycle of technology.” It also incorporates intensive engagement among industry, labor,

academia, and government at the national, state and regional levels Partnerships among diverse stakeholders, varying by location and objective, are a keystone of the strategy

Manufacturing as a percentage of total GVA (Source: OECD, Industry and Services,

STAN database, 2008)The strategy seeks to achieve five objectives These objectives are interconnected; progress on any one will make progress in the other seems easier A large number of Federal agencies, coordinated through the NSTC, have important roles to play in the implementation of the strategy

Objective 1: Accelerate investment in advanced manufacturing technologies,

especially by small and medium-sized manufacturing enterprises, by

fostering more effective use of Federal capabilities and facilities, including early procurement by Federal agencies of cutting-edge products

Objective 2: Expand the number of workers who have the skills needed by a

growing advanced manufacturing sector and make the education and trainingsystem more responsive to the demand for skills

Objective 3: Create and support national and regional public-private,

government-industry-academic partnerships to accelerate investment in and deployment of advanced manufacturing technologies

Objective 4: Optimize the Federal government’s advanced manufacturing

Of particular interest are four categories of investment that “help to position

promising, nascent technologies for broad adoption and commercialization”:

1 Advanced Materials

2 Production Technology Platforms

3 Advanced Manufacturing Processes

4 Data and Design Infrastructure

The appendix of the strategy also contains a skills competency model framework for Advanced Manufacturing The model was developed through collaborating efforts of the DOL Employment and Training Administration (ETA) and other industry

organizations The updated model was completed in 2010 and has acquired new information on Sustainable and Green manufacturing with an update in key

behaviors in several competency areas

Susan Helper, Timothy Krueger, and Howard Wial - Metropolitan Policy

Program at BROOKINGS - Why Does Manufacturing Matter? Which

Manufacturing Matters? A Policy Framework (February 2012)

Manufacturing matters to the United States because it provides high-wage jobs,

commercial innovation (the nation’s largest source), a key to trade deficit reduction, and a disproportionately large contribution to environmental sustainability The manufacturing industries and firms that make the greatest contribution to these four objectives are also that that have the greatest potential to maintain or expand

employment in the United States Computers and electronics, chemicals (including pharmaceuticals), transportation equipment (including aerospace and motor vehicle

performance by adopting “high-road” production, in which skilled workers make innovative products that provide value for consumers and profits for owners.

Analysis

In asking the main question: Why does manufacturing matter? A few data points are helpful to understand the answer

• Manufacturing today accounts for 12 percent of the U.S economy and about

11 percent of private-sector workforce

• Manufacturing provides high-wage jobs

• Manufacturing is the major source of commercial innovations and is essentialfor innovation in the service sector

• Manufacturing can make a major contribution to reducing the nation’s trade deficit

• Manufacturing makes a disproportionately large contribution to

environmental sustainability

From a policy development perspective it is useful to identify the major factors that

seem to determine which industrial cities are likely to make a successful transition away from their manufacturing foundation, while still acknowledging these

economic “roots” And in reading the papers above and others, these factors seem to coalesce around the following:

• Education/training: those industrial cities that have outperformed their

peers have done a better job of identifying and developing the skills required

by employers;

• Taking a regional perspective: those cities that have performed better than

average have looked beyond their city limits for solutions to their problems; this willingness to engage in active, positive collaboration with other cities and towns in the same “economic region” seems to have paid dividends for all

of the participants;

• Access to Capital: “resurgent” and “resilient cities in general, have done a

better job of identifying and developing multiple sources of economic

development capital including private investment and philanthropic sources

of capital;

• Leadership: while difficult to measure, the impact of effective leadership was

easy to see in terms of the performance of resurgent cities This leadership can originate in the public or private sector and is very often a combination ofboth centers of influence

Many thought the U.S was losing manufacturing jobs because of increased

manufacturing productivity This study contends, however, that the historical

pattern of productivity gains leading to job growth not contraction remains in effect.American manufacturing will not realize its potential automatically While U.S manufacturing performs well in wages and productivity compared to the rest of the U.S economy, it performs poorly compared to manufacturing output in certain other high-wage countries American manufacturing needs strengthening in four key areas

1 Research and development

2 Lifelong training of workers at all levels

3 Improved access to finance

4 An increased role for workers and communities in creating and sharing in thegains from innovative manufacturing

These problems can be solved with the help of public policies that do the following:

• Promote high-road production

• Include a mix of policies that operate at the level of the entire economy, individual industries, and individual manufacturers

• Encourage workers, employers, unions and government to share

responsibility for improving the nation’s manufacturing base and to share in the gains from such improvements

This study does not necessarily suggest the U.S manufacturing will dominate the global economy the way that it once did, but manufacturing remains a segment of our economy that is of critical importance and deserving of focus

David Autor, David Dorn, Gordon Hanson - The China Syndrome: Local Labor Market Effects of Import Competition in the United States (MIT Economics

paper August 2011)

(http://www.google.com/url?

sa=t&rct=j&q=&esrc=s&source=web&cd=1&cts=1331666601611&ved=0CCgQFjAA&ur l=http%3A%2F%2Fecon-www.mit.edu%2Ffiles%2F6613&ei=fJ5fT-

zWEoTb0QH46czMBw&usg=AFQjCNH5H3-e2o-5HpC5OZl7apGaIPXf3Q)

Abstract

“We analyze the effect of rising Chinese import competition between 1990 and 2007 on local U.S labor markets, exploiting cross-mark variation in import exposure stemming from initial differences in industry specialization while instrumenting for imports using changes in Chinese imports by industry to other high-income countries Rising exposure increases unemployment, lowers labor force participation, and reduces wages in local labor markets Conservatively, it explained one-quarter of the

contemporaneous aggregate decline in U.S manufacturing employment Transfer benefits payments for unemployment, disability, retirement, and healthcare also rise sharply in exposed labor markets The deadweight loss of financing these transfers is one to two-thirds as large as U.S gains from trade with China.”

Summary

There are two main parts to the paper The first, and main, conclusion is that areas most impacted by Chinese imports have lower labor force participation and reduced wages in both manufacturing and non-manufacturing firms

China accounted for over 40% of U.S imports in four 4-digit SIC industries (luggage, rubber and plastic footwear, games and toys, and die-cut paperboard) and over 30%

in 28 other industries, including apparel, textiles, furniture, leather goods, electrical appliances and jewelry

The impact on wages and employment-to-population ratios spread across both manufacturing and manufacturing sectors There are real costs, real losers to

non-international trade, and the frictions that prevent these workers from being

reabsorbed into the economy are also real The costs are, at the least, more term than is most commonly assumed

medium-One of the main points in this paper as well is how clear it is that the normal

compensation for losses from trade mechanisms—especially the Trade Adjustment Assistance Act (TAA)—amount to little more than rounding errors The real

mechanisms for redistribution effects from trade losses are workers going on

disability and health insurance compensation Food stamps play a major role, and the growth of food stamps over the past two decades could be thought of as part of trade policy in addition to welfare policy

These amounts are just redistribution, not economic gains or losses in themselves However, if you assume redistribution is a leaky bucket, the deadweight losses are about equal to the trade gains The gains from trade with China are between $32 and

$61 per person The deadweight losses are estimated at $52 from the transfer

mechanisms in place This is a provocative framing and numerical analysis One

conclusion is that since the consequences of trade are very real, and the frictions involved in adjusting in the short and medium term are serious, the government needs to back its free trade regime with serous employment subsidies and

mechanisms for coping with the consequences of trade Another avenue of research that is important is the assumption that reduced employment from trade situation istemporary and the gains from trade are permanent Are these, particularly the first, reasonable assumptions? Under what conditions might they break down?

Main Conclusions

The analysis finds that exposure to Chinese import competition affects local labor markets along multiple margins beyond its impact on manufacturing employment Consistent with standard theory, growing Chinese imports reduce manufacturing employment in the exposed markets More interesting is the conclusion that it also triggers a decline in wages that is primarily observed outside of the manufacturing sector Reductions in both employment and wage levels lead to a steep drop in the average household earnings in affected regions

To summarize, studying labor markets in regions of U.S where Chinese produced goods have captured markets, they found widespread patterns of rising

unemployment and reduced wages not only in the affected manufacturing sectors but in a wide range of dependent and related job sectors, in both services and

production They found that the gains from trade were almost equally offset by deadweight losses, particularly through a rise in transfer payments for

unemployment, health and disability insurance and food stamps required to cope with employment declines The losses from trade tended to disproportionately impact particular affected production regions, resulting in significant disruptions there

This last conclusion emphasizes the importance of rising transfer payments though multiple federal and state programs The largest of these transfers are federal

disability, retirement and in-kind medical transfer payments Unemployment

insurance and income assistance programs play an important role, however

secondary Overall, the increase in U.S importance of Chinese goods during the past few decades have ultimately caused a hindrance to regional employment and

household incomes These negative effects extend outside manufacturing and into the livelihood of worker and households in affected fields besides manufacturing

Dan Breznitz andPeter Cowhey, Connect Innovation Institute - America’s Two Systems of Innovation: Recommendations for Policy Changes to Support

Innovation, Production and Job Creation (February 2012)

white-paper-0212.pdf)

(http://www.connect.org/programs/innovation-institute/docs/breznitz-cowhey-The report by Dan Breznitz and Peter Cowhey, writing for Connect’s Innovation Institute, evaluates the bipartisan consensus in Washington when it comes to the promotion of innovation Most would agree that innovation is key to creating and maintaining new jobs and to boosting America’s competitiveness

The report outlines a strategy for manufacturing products and production

innovation based on the interdependence of services and manufacturing in a new global setting This strategy focuses on four building blocks that are critical to the future of American firms These four building blocks are:

1 Shared production assets: firms need to fund and use assets held in common

by a variety of contractual and institutional mechanisms

2 Effective innovation network structures: markets, contracts, and firms no longer provide adequate “glue” for effectively linking together pools of

innovators

3 Flexible business models: restructuring the traditional definitions of supply and demand functions in markets is often as important as an innovative product

4 Specialized financial institutions: risk assessment capacity and

lending/investment models appropriate to different types of innovation.Research was conducted to focus on the concern of the growing inability of the U.S innovation system to orchestrate the move from novel-product-innovation to novel-production located in the U.S The report feels our concerns should be that:

a High value-added innovations are no longer yielding the production and job base for American we assumed that they would be

b The supply base of small and medium firms for middle value-added products which could benefit from supply chain factors is both dwindling and not trulyinnovative

c The changing mix of skills necessary for production and incremental product innovation in the small and medium enterprises (SME) supplier base falls outside of the range of core skills in the traditional production shops

d Our system of financing innovation has become increasingly fragmented, focusing on specific financial vehicles, which in turn specialize primarily in just one kind of innovation or one specific set of companies, and then

necessitate a financial exit within a relatively short time frame

The second part of the report discusses the need to update the conventional model ifany viable solutions are going to transpire These recommendations for the

Conventional Model are mainly focused on the financing end of both public and

private sectors.

1 The U.S Government funding for research and development is inadequate in size and has become too bureaucratized and conservative to allow clusters to achieve their potential

2 The funding mechanism for startup and fast growth tech companies is no longer robust Our practitioners focused on two problems

a The ability to fund commercial innovation at early stages is a growing problem

b Besides the initial money to start up, the struggle to keep the best people during the early stages of growth was crucial to success

3 Concentrate on improving financing for the scale up of startup firms When startup firms begin to scale up for large undertakings, especially production, they need to look for new sources of financing They face problems with regard to commercial lending and funding from large (multinational)

The U.S has all the necessary factors to continue to lead the world in innovation, while enjoying its job growth benefits However, it is imperative to have a model thatfits the needs of production firms, to achieve it within the next few years

Summary:

To summarize, Breznitz and Cowhey argue that the U.S needs to better link the two

systems of innovation it maintains The first, the novel and breakthrough

product/technology innovation system includes university research supported by

R&D agencies – it is often known as the “pipeline” system, and uses “technology

push” to implement its advances The second, the process and incremental

innovation system, emphasizes engineering enhancements to products and

technologies including the way they are produced, distributed, and serviced, and isdominated by industry Both are vital, yet our current technology policy model paysgreat attention to the former and little to the latter; the first system rarely comes tobear to assist the second Manufacturing historically fallen into the second category,considered engineering/process and industry dominated, although, as has beendemonstrated repeatedly over the decades, it can be novel and breakthrough as well

It has never been the focus of a major federal R&D effort This is part of the reasonwhy the U.S continues to innovate technologies yet the product evolution occursabroad The authors suggest we should work to unify our systems, and bring theremarkable innovation talent in the first to support the second, as well as the first.This innovation organization reform is an important part of what we mustaccomplish if we to implement new manufacturing technology paradigms

Council on Competitiveness - U.S Manufacturing Competitiveness Initiative: Make an American Manufacturing Movement (December 2011)

(www.compete.org/images/uploads/File/ /USMCI_Make.pdf)

The report by the Council on Competitiveness on America’s call to action in the manufacturing movement looks to address urgent macro-economic problems and submitting a solution to several challenges facing the US today The report

summarizes five challenges, along with solutions, to the domestic manufacturing movement, while outlining the five priority recommendations stemming from the challenges and solutions presented

This report is in entirety based domestically It looks to the involvement of the President, Congress, the public sector, education sector, and business sector to implement what is seen as not only a solution, to the manufacturing decline looming

on the horizon but also, to the ever daunting economic and job crisis facing the US today Further more, the report places a heavy emphasis on the national conversion which will need to take place for a flourishing manufacturing sector to emerge and turn things around on the home front

Where America Falls Short:

1 Production at scale for innovative start-ups:

a Risk capital firms regularly condition investing in a start-up on a commitment to produce overseas U.S tax policy, regulatory delays, structural costs and more competitive offshore incentives are commonly cited as threats to the capital firm realizing a return on its investment

2 Domestic expansions and retooling of existing facilities:

a Tight credit lending, uncertainty over future U.S policies and competitive structural costs are casing many firms to delay investment

non-or increase capacity overseas

3 Attracting production facilities to serve global markets:

a Although the United States remains competitive as a global

manufacturing export platform for several key products, many suspectAmerica underperforms in drawing investment for this purpose Across the globe, some manufacturing has to be performed in-country

to serve that market Manufactured goods in other sectors, however, are also produced for global or regional export, not all of which is low-margin or labor intensive In these cases, the less competitive U.S tax, regulatory and structural environments likely causes a loss of

investment

Five Challenges and Solutions to Make an American Manufacturing Movement

1 Challenge: Fueling the Innovation and Production Economy from Start-up to Scale-Up

a Solution: Enact fiscal reform, transform tax laws and reduce

regulatory and other structural costs and create jobs

i Congress should require agencies to begin reducing the costs and burdens of current and proposed regulations

ii Congress should immediately reform section 404 of the Sarbanes-Oxely Act to increase entrepreneurs’ access to U.S public capital markets and grow new companies

iii Congress should reduce the costs of tort litigation from the current level of almost two percent of GDP—some $248 billion

—down to one percent by 2020

iv Congress and the administration must take action on fiscal reform to achieve $4 trillion in debt reductions by 2021

2 Challenge: Expanding U.S Exports, Reducing the Trade Deficit, Increasing Market Access and Responding to Foreign Governments Protecting Domestic Producers

a Solution: Utilize multilateral for a, forge new agreements, advance IP protection, standards and export control regimes to grow high-value investment and increases exports

i Industry CEOs and government leaders should elevate and advance U.S technical standards and the voluntary consensus standards-setting process

ii Congress and the administration should ensure the President’s Export Control Reform Initiative is completed by the end of

2012 and push for improved foreign export control systems.iii Focus on actions to encourage China make permanent the special intellectual property rights campaign it ran from October 2010 to June 2011

3 Harnessing the Power and Potential of American Talent to Win the Future Skills Race

a Solution: Prepare the next generation of innovators, researchers and skilled workers

i Congress should implement immigration reform to ensure the world’s brightest talent innovate and create opportunities in the United States

ii Congress, states, academia, industry and national laboratories should renew efforts to expand STEM education and create opportunities to integrate into the workplace

iii The Small Business Administration should create a program modeled after the SCORE program for retired business executives to mentor and counsel entrepreneurs

vi Academia, industry and government should launch the American Explorers Initiative to send more Americas abroad tostudy, perform research and work in global business.

vii Congress should create opportunities and incentives for older Americans to remain vibrant contributors in the workforce

4 Challenge: Achieving Next-Generation Productivity through Smart Innovationand Manufacturing

a Solution: Create national advanced manufacturing clusters, networks and partnerships, prioritize R&D investments, deploy new tools, technologies and facilities, and accelerate commercialization of novel products and services

i Congress, the administration, industry, academia and labor should develop partnerships to create a national network of advanced manufacturing clusters and smart factor ecosystems

ii Congress, the administration, national laboratories and universities should advance the U.S manufacturing sector’s use

of computational modeling and simulation and move the nation’s High Performance Computing capabilities toward Exascale

iii The U.S Department of Commerce through the Economic Development Administration, in partnerships with the Council

on Competitiveness should expand the Midwest Project for SME-OEM Use of Modeling and Simulation through the National Digital Engineering and Manufacturing Consortium (NDEMC)

iv Accelerate innovation from universities and national laboratories by facilitating greater sharing of intellectual property and incentivizing commercialization

5 Challenge: Creating Competitive Advantage through Next Generation Supply Networks and Advanced Logistics

a Solution: Development and deploy smart, sustainable and resilient energy, transportation, production and cyber infrastructures

i Congress should increase the number of public-private infrastructure partnerships and explore opportunities to privatize large infrastructure projects

ii Congress should authorize the Export-Import Bank to fun domestic infrastructure projects

iii Congress should develop and implement a national strategy to reduce overall energy demand by rewarding efficiency and improving transmission infrastructure

iv Congress and the administration should create a Joint Cyber Command to import cyber infrastructure and protect

traditional defense, commercial and consumer interests

Priority Recommendations from the Five Challenges

1 Congress should permanently replace the current world-wide double

taxation system with a territorial tax system to facilitate the repatriation of earnings and restructure the corporate tax code to increase investment, stimulate production at scale and neutralize sovereign tax incentive

investment package

2 Congress, the administration and industry should intensify efforts to support the President’s goal to double exports from $1.8 to $3.6 trillion and reduce the trade deficit by more than 50 percent

3 Federal, state and local governments along with high schools, universities, community colleges, national laboratories and industry should prioritize Career and Technical Education (CTE) programs and push for greater

integration of community colleges in the innovation pipeline

4 Congress and the administration should leverage R&D investments across thefederal research enterprise to solve challenges in sustainable smart

manufacturing systems and to ensure a dynamic discovery and innovation pipeline

5 Congress and the administration should drive the private sector to develop and utilize all sources of energy on a market basis while enforcing efficiency standards to ensure a sustainable supply of energy to manufacturers

Information Technology and Innovation Foundation (ITIF) - Worse then the Great Depression: What the Experts Are Missing about American

Manufacturing Decline (March 2012)

about-american-manufacturing-decline)

(http://www.itif.org/publications/worse-great-depression-what-experts-are-missing-The erosion of American manufacturing in the past decade has been far more severe than commonly recognized, with sharp declines not only in employment but also in output, according to a new report by the Information Technology and Innovation Foundation (ITIF)

“Worse than the Great Depression: What the Experts Are Missing about American Manufacturing Decline” debunks widely held myths about productivity gains,

restructuring, and a manufacturing renaissance, and reveals the stark reality of a historic decline in U.S competitiveness and unprecedented deindustrialization The report explains what the United States is experiencing is not merely another boom and bust cycle but a structural decline more akin to what Britain experienced in the 1960s and 1970s when it lost its industrial leadership

“What we discovered flies in the face of nearly all the reporting and commentary on manufacturing and reveals a disturbing truth,” said ITIF president Robert Atkinson, the report's chief author “U.S manufacturing jobs have been lost not simply because the sector is more productive It is producing less And unlike some high-wage nations, America is not replacing low-value-added manufacturing with high-valued-added manufacturing or opening new plants to replace closed ones There is

difference between restructuring and decline American manufacturing is in

decline.”

From January 2000 to January 2010, the United States lost one-third of its

manufacturing jobs, almost 5.5 million This is likely the highest rate of

manufacturing job loss in American history, exceeding even the rate of loss in the Great Depression In addition, economy-wide job losses in the past decade were far more concentrated in manufacturing than during the Great Depression But unlike the period after the Depression or in the recoveries from recessions after World War

II, the recent rebound in manufacturing has been far weaker than portrayed by recent news reports, and comes off the steepest decline of any post-war recession

In the face of these unprecedented losses, expert opinion has been remarkably blasé,attributing the massive job loss to manufacturing's superior productivity

performance That view is based almost entirely on one number - change in real manufacturing value added as a share of GDP But the report finds that U.S

government data significantly overstates this macro number, in part by vastly

overstating value-added growth in the computer and electronic products sector and

by miscalculating the price of imports of intermediate manufacturing inputs

U.S government statistics significantly overstate the change in U.S manufacturing output, and by definition productivity, in part because of massive overestimation of output growth in the computer and electronics sector

According to the U.S Bureau of Economic Analysis, growth of output in the computerand electronics sector accounted for more than all the output growth in U.S

manufacturing In other words, collectively the other 18 U.S manufacturing sectors produce less today than they did in 2000 In fact, when measured accurately, real