Measuring Manufacturing: How the Computer and Semiconductor Industries Affect the Numbers and Perceptions

Susan N. Houseman (), Timothy Bartik () and Timothy J. Sturgeon
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Susan N. Houseman: W.E. Upjohn Institute for Employment Research, http://www.upjohn.org/AboutUs/Staff/Houseman
Timothy J. Sturgeon: MIT

No 14-209, Upjohn Working Papers from W.E. Upjohn Institute for Employment Research

Abstract: Growth in U.S. manufacturing’s real value-added has exceeded that of aggregate GDP, except during recessions, leading many to conclude that the sector is healthy and that the 30 percent decline in manufacturing employment since 2000 is largely the consequence of automation. The robust growth in real manufacturing GDP, however, is driven by one industry segment: computers and electronic products. In most of manufacturing, real GDP growth has been weak or negative and productivity growth modest. The extraordinary real GDP growth in computer-related industries reflects prices for computers and semiconductors that, when adjusted for product quality improvements, are falling rapidly. Productivity growth in these industries, in turn, largely reflects product and process improvements from research and development, not automation. Although computer-related industries have driven growth in the manufacturing sector, production has shifted to Asia, and the U.S. trade deficit in these products has soared since the 1990s. The outsized effect computer-related industries have on manufacturing statistics also may distort economic relationships in the data and result in perverse research findings. Statistical agencies should take steps to assure that the influence that computer-related industries have on manufacturing-sector statistics is transparent to data users.

Keywords: Manufacturing; computers; semiconductors; productivity; globalization; global value chains (search for similar items in EconPapers)
JEL-codes: F60 L60 (search for similar items in EconPapers)
Date: 2014-02
New Economics Papers: this item is included in nep-ind, nep-sea and nep-tid
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Citations: View citations in EconPapers (4)

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