The share of an economy’s value-added that is generated by manufacturing has been on the decline in the developed world for decades. In a nutshell, consumers increasingly demand services—often new ones—and producers make the necessary accommodations. But manufacturing in the United States plays a significantly reduced role in the economy relative to most of its industrial trading partners. Today, Germany’s and Japan’s manufacturing output relative to GDP stands some 6-12 percentage points higher than the American equivalent.
Such gaps call for political action. America can and should learn from its advanced peers. Whether it is via vocational training, labor relations, or export promotion, government involvement has proven supportive of the vibrant manufacturing tradition that all these countries share.