--- Seth Ackerman <sethackerman1 at verizon.net> wrote:
.
> But again, you run
> up against the same problem: It's just as hard to
> measure the US share
> of world services as of mfg (probably harder,
> actually), because of the
> presumed lack of consistent cross-national price
> data.
[WS:] That is a big problem indeed. While your position to measure US GDP (or its components) vis a vis that of the world is in theory correct, in practice it is fraught with problems so severe that is renders this approach highly questionable. I am not sure how you can compare output (or value added) cross-nationally indepenedntly of currency exchange rates, which may be kept atificially skewed to facilitate international trade. For example, if the Renminbi is undervalued vis a vis the USD to promote China exports to the US, China's industrial production would be undervalued vis as vis that of the US as well. Any change in that exchange rate e.g. as a result of political manueivering may look like increase or decrease of the US share of world's GDP (or value added of its mfg sector.) Furthermore, I doubt that it is possible to determine "real" exchange rate, because that would require prior knowledge of the actual value of each country's output, which as the above indicates, is impossible without knowing the "real" exchange rate. It is a chicken and egg situation.
For that reason, the approach I am sugesting i.e. comparing the growth rates of sectors of an economy vis a vis that of that economy as a whole (GDP) seems to be more grounded in material reality. You can even "standardize" that measure by dividing it by the growth rate of the GDP (ie. delta mfg/delta GDP) and compare it to similar measures for other countries without depending on currency exchange rates. It may not tell you where the US mfg stands vis a vis the global mfg, as you suggested, but it can certainly tell you how it changes relative to mfg sector in other economies.
Wojtek
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