Global Manufacturing and Employment therein

[Diane Monaco]

At 10:49 AM 5/1/2002 -0700, you wrote:
>Article Title:
>World manufacturing employment: The continuing paradox
>
>URL:
>http://makeashorterlink.com/?V3C536AC
>
>With such rapid rates of manufacturing export growth,
>fears of de-industrialisation would appear to be
>misplaced. In any case, such high rates would suggest
>that employment in manufacturing would also have grown
>at reasonably high, or at least positive, rates, over
>this period. However, the UNIDO data on aggregate
>employment in manufacturing over the period 1985-99,
>as described for some countries in Chart 4, suggest a
>very different tendency. In fact, it turns out that in
>most of the countries, aggregate manufacturing
>employment has actually fallen, in some cases quite
>substantially.

It seems to me that there is really no puzzle here, just many fuzzy 
definitions for trade and investment flows between countries.  If goods are 
produced within the borders of a country by a foreign-owned firm and then 
exported out of the country, this flow is recorded in the 
balance-of-payments of the foreign-owned firms's country as an 
export.  Thus, a country can have increased exports without increased 
production (no increased domestic employment) within the borders of the 
country.  Of course there are local content requirements that can make this 
all sort of fuzzy.

This is one outcome of foreign direct investment.  FDI has actually 
increased faster in some instances than trade itself, so global 
manufacturing and employment inconsistencies are really no surprise.  One 
indication of this is to look at the difference between GDP (location 
valued production) and GNP (ownership valued production) in a country like 
China.  There is a great deal of production within the borders of China but 
who OWNS the factors (capital) that produce it?

Diane