Too many people will likely read the McKinsey Global Institute report, "Trading Myths," and come to exactly the wrong conclusion, especially about the United States. For it is one thing to compare a large group of developing countries, but the reality is that not all these nations are the same in their performance, particularly the United States.
Testimony to House Energy and Commerce Committee on American Manufacturing
Much of the debate around U.S. manufacturing is problematic because the core data on manufacturing output and productivity are flawed. The reality is:
- A large share of manufacturing jobs was lost in the last decade because the United States lost its competitive edge for manufacturing.
- The loss was unprecedented, and it continues to severely impact the overall U.S. economy.
- Regaining U.S. manufacturing competitiveness to the point where America runs a trade surplus in manufacturing products is critical to restoring U.S. economic vibrancy.
- Regaining manufacturing competitiveness will create millions of higher-than-average-wage manufacturing jobs and an even greater number of jobs from the multiplier effect in other sectors of the economy.
- The United States can restore manufacturing competitiveness and balance manufacturing goods trade within less than a decade if it adopts the right set of policies in what can be termed the “four T’s” (tax, trade, talent, and technology).
Why is This so Complicated? Yes, Virginia. We do Need a National Manufacturing Strategy.
Taking issue with the most recent attack on a national manufacturing strategy from liberal blogger Matt Ygelsias, Rob Atkinson points out the current Administration is not only focused on manufacturing. But as the largest traded sector by far, you can’t have a valid traded sector strategy without a specific manufacturing strategy.
Lessons from Foreign Countries on How U.S. States Can Spur Manufacturing
One policy instrument gaining global traction is the use of innovation vouchers (or “innovation checks”) to spur R&D, new product development, and/or innovation activity in SME manufacturers. Almost a dozen countries—including Austria, Canada, Belgium, Denmark, Germany, the Netherlands, Ireland, and Sweden—as well as Iowa in the United States, use innovation vouchers. These vouchers, usually ranging in value from $5,000-$30,000, enable SMEs to “buy” expertise from universities, national laboratories, or public research institutes regarding preparatory studies, analysis of technology transfer, analysis of the innovation potential of a new technology, etc. The intent of the vouchers is both to spur innovation in SMEs and to stimulate knowledge transfer from universities and research institutions to SMEs; they also have an added benefit of more closely aligning the interests of industry and academia in a country.