re: Myths of Manufacturing Productivity

Output counted should only measure the value added - it should not count the entire value (not the same thing exactly but similar - when a HDTV is sold by the plant to a wholesaler and then the wholesaler sells it to a retailer and then the retailer sells it to a customer the economic data does not add those 3 purchases together to get the total value of HDTV sales). The measures are suppose to be the amount added at the point of measure. So the output of the local plant does not count the total value of say the car but the value added at the plant. Obviously, like with most economic measures, this data has plenty of room for error.

While they intend to measure the added value as far, this is not easy and there can be reasons to distort the data (taxes, bonuses…). The VAT, used in Europe, is helpful illustration (both of the concepts and some of the measurement difficulties).

I keep looking for better data (I am actually surprised how sparse the data is given the importance). I would not want to make economic policy with the very incomplete data I have been able to find. Still, my belief is real global manufacturing output is up. And global manufacturing jobs are down. If those statements are right, productivity increase is the only reason - by definition.

When trying to look at country specific measures it does get more difficult - to find data that is obviously clear. Still, based on the data I have been able to find it seems that the USA continues to increase manufacturing output and decrease jobs. This seems right to me though I do agree the data I have seen still leaves questions. Previous posts I have made on the topic include: Manufacturing Value Added Economic Data - Manufacturing Jobs Data USA, China and globally, even manufacturing jobs data can include data quality issues but it is probably cleaner than most of the rest of this data. The data from this Clemson study shows the USA has lost a lower percentage of jobs than most every other country - Global Manufacturing Data by Country

Global data sources certainly still has data quality issues but you can be reasonably certain huge double counting is not going on. If so you would see the global totals increasing hugely. If a GM car was manufactured with 50% Mexican parts and the GM counted 100% of the value and Mexico counted there value then you would have 150% of the total value counted. Which would then mean the global figures would be counted not just increased output but also going up as the countries “over-counted” their output. And remember, in this example Mexican output could include (40% of their 50%) from Brazil…

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