--- Seth Ackerman <sethackerman1 at verizon.net> wrote:
>
> 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.
[WS:] True, but that would be easy to detect by looking at the growth of the GDP. The countries inwhich service sector grows faster tham mfg, GDP would also grow faster, whereas in countries where mfg declines and services are growing the growth of the GDP would be small. AFAIK, service secotor in the US grows faster that the GDP.
Furthermore, the GDP growth figures can easily be fudged by the inflation figures - the lower the inflation the higer the real GDP growth. Again, the US is in the forefornt of fudging the inflation figures by using such techniques as substitution of goods in the basket(on the theory that people substitute one good for another if prices are going up) and hedonic valuation of electronics (on the theory that the quality of computers increased but their nominal price remains relatively unchanged.) So it is very likely that if the old methods of inflation estimaton were used, the real GDP of the US would be stagnant or even shrinking, which in turn would exacerbate the loss of mfg.
Wojtek
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