Offshoring Bias in U.S. Manufacturing

摘要

American manufacturing experienced a tumultuous decade even before the Great Recession, leading to a dispute over whether the sector has been "hollowed out" by imports, or whether it has developed into a leaner, more efficient industrial sector. It turns out that this dispute has much to teach about how the substitution of imported for domestically produced goods and services—often known as offshoring—can lead to overestimates of U.S. productivity growth and value added. On the one hand, dramatic drops in employment are often taken to portray a manufacturing sector in decline. The precipitous decline in manufacturing employment since the late 1990s is evident in Figure 1. Manufacturing employment never rebounded after the 2001-2002 recession as it had following previous downturns. Indeed, from 1997-2007—that is, in the decade before the 2007-2009 recession-manufacturing employment declined by 20 percent, or roughly 3.4 million jobs. Reflecting plant closures that accompanied the employment declines, the net number of manufacturing establishments fell by 8 percent from 1997 to 2007. The