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Companies must recognize that offshore manufacturing does not constitute a long-term strategy.
A rebound in the industrial sector has been helping the United States limp out of the recession, but manufacturing does not add many American jobs.
But across the rich and emerging world, falling labour intensity in manufacturing does not appear to limit the contribution of industry to prosperity.
Jeremy Lawson, an economist at BNP Paribas, said in a note to clients that the softness in manufacturing "does not bode well for growth in the second half of the year".
Also, manufacturing does not create many jobs and would thus do little to provide work for the burgeoning population.There are some signs that the government is becoming more realistic in its ambitions.
Japan, which spends a whopping 28.5% of GDP on physical investment, invests a puny 6.6% in intangibles.Another myth that the new study pokes holes in is that the service sector, unlike manufacturing, does not innovate.
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Additive manufacturing doesn't offer anything like that economy of scale.
"There are many areas in the city zoned for manufacturing where manufacturing doesn't exist, and these should now be thoughtfully rezoned for residential or commercial".
"Even though the U.S. is more competitive globally, manufacturing doesn't give you the kind of direct job creation it did in years past," said Joseph G. Carson, director of global economic research at AllianceBernstein, a Wall Street investment firm.
But he has also listened more closely to his political instincts, rejecting the view of many economists, including several on his team, that manufacturing doesn't have an especially dynamic role to play in the nation's economy.
Profitability in manufacturing doesn't look as attractive, he says.
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