[lbo-talk] US manufacturing sector

Seth Ackerman sethackerman1 at verizon.net
Sat Jan 12 17:51:25 PST 2008


Doug Henwood wrote:


>I've seen similar
>claims that are based on real output rather than nominal, which is a
>dodgy proposition, given different national treatment of price
>indexes and changing industry mixes.
>

That's a good point. Even if you used nominal values, you'd still have to find a way to convert from one currency to another without the distortions of exchange rate swings. And if you use real values, you've got the problem that the US, unlike most countries, uses hedonic price indexing, which if I understand correctly tends to give a higher rate of price declines in industries experiencing technical progress.


>Here are some WB stats on mfg
>share of GDP. The U.S. has fallen harder, starting from a lower
>level, than the other countries.
>

This is interesting, but it still falls prey to the problem of growing service production. Suppose there are two countries, A and B, which start out in 2000 producing an identical volume of mfg output. Then, in 2000-2007, mfg output grows more rapidly in A than B, but A's service production grows more rapidly by an even larger margin. By 2007, even though A will produce more mfg goods than B, its mfg *share* of output will be lower - not because it produces less manufactures, but because it produces more services.

Seth



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