Why does manufacturing matter?
Date posted: August 21, 2012
Manufacturing is relatively a much smaller part of our economy than in the past. Some worry that eventually manufacturing in our country will disappear entirely. What would we lose if this happened? N.C. State University economist Mike Walden responds.
“Well …, there are several reasons to be concerned about the disappearance of manufacturing, and the flipside of that statement is there’s several reasons why we should try to promote manufacturing because of its importance to the economy:
“First, this is clearly a source of jobs. And if you look at the types of jobs and the rate of pay of manufacturing jobs, they tend to be fairly high-paying jobs. So, one reason manufacturing is important is it’s a source of high-paying jobs.
“Secondly, manufacturing products are, of course, by their nature easy to export. And so if we’re worried about lowering our trade deficit — that is, increasing our exports so that we reduce the trade imbalance — manufacturing is a way to do that. And indeed manufacturing has been contributing to that in the recent couple of years.
“And then third, and perhaps most important, manufacturing seems to be a source of a lot of innovation and research. Again, by the nature of that sector, businesses are motivated to try to find better ways of doing things, so they spend a lot of money on research on trying to become more efficient. And there are a lot of spinoffs to other parts of the economy as a result of this.
“So, if you want an innovative economy and you want an economy that’s moving forward and figuring out how to do things more efficiently, manufacturing is a source of that approach.”
Category: Economic Perspective