Advanced Economies Don't Manufacture Goods

Many people believe that advanced economies don't manufacture goods. It turns out that this belief is false. For example, consider the United States. First consider the growth in manufacturing in absolute terms. According to this paper, "U.S. manufacturing output has actually increased dramatically, more than eleven-fold from 1940 to 2000." Not bad for an advanced economy.

But how about manufacturing relative to the rest of the United States GDP? Consider the following:

"manufacturing's share of the U.S. economy, as measured by real GDP, has been stable since the late 1940s.... It is impressive for any private activity to maintain a stable share of GDP, since government spending has risen from about 20 percent of GDP in the early 1950s to 30 percent since the 1980s."

In other words, manufacturing output has actually increased relative to the non-government sectors of the economy during the last half century.

What country has the largest manufacturing output in the world? It's neck and neck between the United States and China, but considering that China has four times as many people, the United States is still doing pretty well.

What about manufacturing output per capita? The advanced economies, such as the United States, Japan, and Germany, have much higher manufacturing output per capita than less advanced economies such as China.

As can be seen from this and numerous other data, the belief that advanced economies don't manufacture is a completely inaccurate myth. Unfortunately that myth seems to be very widespread.