For the most of 2013 and in his State of the Union address this year, President Obama has supported the idea that investment in the manufacturing sector is a part of the solution to the high unemployment figures in the US. This type of thinking might have worked in the 1950’s when employment in a factory was reasonably accessible but it doesn’t account for the changes to the US and global economy.
The first graph below shows the % of manufacturing that makes up US GDP. Would it be better to focus on services? Do the US have a comparative advantage in manufacturing anymore? Investment in manufacturing does not actually create the jobs that it once did. Would it therefore be better to focus on the service sector industry (education and medical +12.2%) as that has been the growing sector from 2008 to 2013 whilst manufacturing has been in significant decline -12.5% see second graph below.