How important is manufacturing?

An advance copy of Peter Marsh’s forthcoming¬†The New Industrial Revolution: Consumers, Globalization and the End of Mass Production has landed on my desk, and it looks tantalizing. This dreary grey constant rain (known as a drought here in southern England) has sent me to the new Donna Leon novel,¬†Beastly Things, for some comfort reading, but as soon as I’ve read that I’ll turn to the Marsh book.

Paging through it, I spotted a chart showing the share of world manufacturing output accounted for by the leading industrial economies. The proportions are:

China 19.4%, US 18.2%, Japan 10.9%, Germany 6.1%, Italy 3.1%, Brazil 2.7%, S Korea 2.6%, India 2.5%, France 2.4%, UK 2.3%

It was a bit of a surprise that the UK featured at all, so much do we talk down our manufacturing sector, and also that we fare as well as France, where they obviously talk up manufacturing instead. I would have expected S Korea to rank a bit higher. Italy is another surprise, ahead of France and the UK by a bit. Russia is striking by its absence, a resource-based economy. Indonesia and Turkey are presumably climbing fast from a low base. Anyway, I’m looking forward to reading it.

 

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10 thoughts on “How important is manufacturing?

  1. I wonder how much of China’s manufacturing is relocated from the West to fulfil the promise of ‘globalisation’, i.e. the balancing of wages across the globe?

    • Until 2008, the world market was expanding significantly so an increase in China’s share of the total did not have to mean an absolute decline elsewhere

  2. I wonder how much of China & India’s GDP is due to them not competing on a level playingfield with the West – enviromnetal emmision targets, employmnet law, Human rights?

    • They are low cost but low productivity too so their real terms advantage has been exaggerated – I think the kind of regulations you refer to contribute to high productivity, high value added activities.

  3. Given that manufacturing is a product of oil and that oil is a finite resource, isn’t a league table of who uses most a bit silly?

    Perhaps better measures could be something like % of home grown food & % reduction in consumption of finite resources etc….

    • Manufacturing output is positively correlated with living standards, whereas % of home grown food is not – indeed, North Korea might top that league for all I know.
      One of the points of my last book, The Economics of Enough, is that asset measurement including natural resources is important for sustainable growth, but GDP and manufacturing output are also key measures of economic success.

  4. There is an interesting HoC Library paper which presents a long-term view of this data (1970-2010) at http://www.parliament.uk/briefing-papers/SN05809. For the UK you see a relative decline in the late 70s and early 80s as expected as well as a resurgence in the ealy and late 90s, which I’d not have suspected. Italy is doing also well in the early 90s.
    That might be driven by the fact UN national accounting stats use US$ exchange rates rather than PPPs (as OECD). Also Chinese data is awkward as they group manufacturing with mining and utilities unlike the other countries.
    What is interesting is ‘Manufacturing gross value added per head’ where Switzerland is doing consistently well while the drop of the UK in the last decade was steeper than e.g. France.