 Does the Import Invasion Explain the Mysterious Disappearance of Productivity Growth in U.S. Manufacturing?Robert J. Gordon and Kenneth Ryu No 21651, CEPR Discussion Papers from Centre for Economic Policy Research Abstract: Why did U.S. manufacturing productivity stop growing after 2010? Productivity growth disappeared, evaporating from an annual rate of +3.3 percent during 1987-2010 to -0.3 percent from 2010 to 2023. This paper shifts attention from 2010 as the start of the puzzle to a decade earlier when output stopped growing. This cessation of output growth in 2000 is attributed to the invasion of imports that closed domestic plants, destroyed jobs, and squeezed profits. Then followed a chain of causation that ultimately undermined productivity growth – from falling capacity utilization, to lower investment in fixed capital and R&D, and to an erosion of innovation. Beyond the import invasion, the paper identifies a set of handicaps ranging from self-inflicted wounds to short-sighted government policy. Corporate funds were diverted from productive investment to share buybacks. Investment was distorted by environmental, health, safety, and fuel economy regulations. Other issues with government policy include a substantial reduction in public R&D and a failure to develop training programs to alleviate a decades-long shortage of skilled labor. JEL-codes: O3 (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:21651 Ordering information: This working paper can be ordered from Access Statistics for this paper More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK. |
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