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U.S. Needs a New Strategy To Revitalize Manufacturing: Report

By Ideas Lab Staff January 14, 2013

In a policy brief for the Wilson Center, Kent Hughes lays out the importance of investment in the U.S. manufacturing sector.

The largest chunk of private sector spending in research and development comes from manufacturing, says Kent Hughes, director of the Program on America and the Global Economy at the Wilson Center. Innovation at home, he argues, is critical, otherwise even more innovation as well as jobs and profit will develop overseas at the U.S.’s expense.

The broad reach of manufacturing into the American economy touches a greater skilled workforce, yet with companies shifting overseas, slow economic growth and manufacturing’s share of the workforce declining, the employment numbers in this sector have also been hit hard.

But, Hughes writes, focus on advanced manufacturing and “broader application of information technology”, alongside more additive manufacturing and advances in 3-D printing, could herald a renaissance for the industry.

There are several steps the U.S. can take to improve the manufacturing environment, Hughes notes. Among them, understanding overseas competition. “Knowledge of overseas strategies can inform everything from the U.S. research agenda to the need for new investments,” he writes.

Other recommendations: improving state and federal policies for education and training and promoting exports and new technologies.

Also importantly, to develop a manufacturing strategy formed by macroeconomic policies that facilitate steady growth and encourage exports and investments; policies that support research and development; and a level playing field.

“U.S. competitors may take a decidedly different approach in which government guidance, undervalued currencies, trade barriers, export subsidies and intellectual property theft play major roles,” Hughes writes. He urges the Trans-Pacific Partnership (TPP) ┬ánegotiations to bring about an agreement that would establish new rules to fundamentally support the economy.

TPP talks are ongoing, with the administration hoping to secure an agreement by the end of this year. Analysts have called the possibility of the agreement, the largest and most important trade talks in the world.