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Manufacturing and GDP




This chart is a complement to an excellent post by Mark Perry which shows and explains how manufacturing has been shrinking as a share of both U.S. and world GDP for decades, and another post of his which shows the dramatic gains in worker productivity that have enabled manufacturing to decline as a share of total economic activity, even as total manufacturing output, economic activity and living standards have boomed. The chart above highlights how China is an exception to the rule, since manufacturing as a share of China's GDP has been relatively stable for the past four decades.

In this same vein, I would add that agriculture was once about half of total US GDP, whereas now it is only a small fraction, yet we feed ourselves and are a net exporter of food. Here again we see how tremendous productivity gains have enabled us to devote fewer and fewer resources to the production of essential goods. This is as it should be.

There is no decline in US manufacturing, and China is not stealing jobs from us. Global trade is a win-win situation for all.

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