Can An Economy Succeed Without A Big Manufacturing Base?

[Tired of Waiting]

Can An Economy Succeed Without A Big Manufacturing Base?

If we define Manufacturing as something we can put on a ship and export, then I would say that an economy without a big manufacturing base can succeed in the short term as long as the economy with a big manufacturing base invests its trade surplus by buying debt in the other.

Actually our manufacturing output/person is much greater than China's.

I don't know how to copy/paste a table in this forum (see the mess below), but the original table is at http://www.ourfuture.org/blog-entry/2009104319/g20-manufacturing-output-capita

________________________________________________________________________________

G20 Population* 2008 GDP** 2008 Mfg output** Mfg:Population Mfg:GDP

Germany 82,140,000 3,649,468,713,255 767,173,986,290 9,340 21%

Japan 127,704,000 4,910,691,611,512 1,044,573,591,840 8,180 21%

Italy 59,855,000 2,303,058,798,157 381,043,924,161 6,366 17%

United States 304,060,000 14,096,716,929,022 1,830,682,964,800 6,021 13%

Canada 33,311,000 1,502,198,148,431 195,141,329,938 5,858 13%

United Kingdom 61,399,000 2,666,266,099,179 323,014,231,511 5,261 12%

France 62,048,000 2,856,528,838,542 306,279,105,638 4,936 11%

South Korea 48,607,000 929,123,721,319 230,763,192,037 4,748 25%

Australia 21,374,000 1,016,897,316,528 100,814,383,824 4,717 10%

Mexico 106,350,000 1,081,683,289,858 196,798,970,122 1,850 18%

Russian Federation 141,800,000 1,676,587,800,343 256,176,482,781 1,807 15%

Argentina 39,876,000 333,322,390,163 70,904,305,110 1,778 21%

Turkey 73,914,000 741,448,415,136 117,362,508,155 1,588 16%

Saudi Arabia 24,646,000 467,600,800,000 38,736,800,000 1,572 8%

Brazil 191,972,000 1,595,497,752,838 237,337,404,166 1,236 15%

China~ 1,325,640,000 4,327,024,438,542 1,399,427,894,063 1,056 32%

South Africa 48,687,000 276,445,740,280 46,691,753,078 959 17%

Indonesia 228,249,000 510,779,261,184 139,528,690,939 611 27%

Iran 71,956,000 346,611,390,279 36,510,371,841 507 11%

India 1,139,965,000 1,253,859,848,115 188,135,054,712 165 15%

Edited July 3, 2011 by Tired of Waiting

[Tired of Waiting]

Britain is the most advanced nation in the world for exporting services. And it seems our economy sucks compared to nations that just went for boring old manufacturing.

This table surprised me:

http://www.ourfuture.org/blog-entry/2009104319/g20-manufacturing-output-capita

According to it we have the worlds 6th highest manufacturing output per head of population, at US$5,261/person. And very similar to Italy (3rd), USA (4th), Canada (5th), France (7th), South Korea (8th), and Australia (9th).

By the way, China is way down, at only US$1,056/person.

[Tired of Waiting]

You're so transparent. You finally got to the stat you always wanted to put out and that was we manufacture more (at current overvalued levels of Sterling versus Yen) than China per head.

What?!

You are completely mistaken AK. Firstly, I though this manufacturing topic was/is interesting, and started this thread thinking about Britain. I was not thinking about China. Secondly, I did not know these "stats". Reading this thread, and a couple of posters mentioning China, I remember that I had heard recently that our manufacturing output was still high, and then, today, I Googled about it, and found these numbers. It is not me who are obsessed with China. I'm sorry but you may be projecting.)

And I still hold the service versus manufacture to be a false division...not that one is less important than the other. You don't seem to be registering this view preferring to continue with the arguments you wanted to have, rather than the one actually presented to you

I am not "ignoring" it. I didn't reply to it 'cause I agree that they overlap.

Anyway - to go back to your original question. "Can an Economy Succeed without a Big Manufacturing Base". I think the answer has clearly been shown that in today's world, for an economy the size of the UK's, the answer is clearly 'NO'. Because most tradables are not pure services. And most traded services are associated and inter linked with manufactures.

Yes, I think manufacturing is very important. Though I think services are as important or even more so, such as education, health, science and technology research and development, etc.

[Injin]

If you were my father's generation, they would be surprised and ashamed we were languishing in sixth and falling. Where is your ambition man?

I suppose they had dropped competitive sports at your school and sixth was 'good'. Everyone gets a prize.

Anyone who understand sports gets that it's who makes the rules who determines the winners and losers.

As regards the OP -

Perfectly possible to have an economy with no manufacturing base. What is missing is a proper definition of what wealth is. Wealth is that which people voluntarily agree is valuable.

So if everyone gave each other back rubs because that was their ultimate pleasure while only eating food grown from trees in nature, that would be an economy.

[shipbuilder]

Firstly, remember that the 2 most socially important activities in life are both services: health and education. Yes, they don't generate wealth immediately, or directly, they must be paid for by the tax-payers, but without them we would have middle-ages' levels of wealth.

And isn't scientific knowledge/know-how also service? From GM food to the IT industry, I think the wealth generated by knowledge part of it is probably greater than from the physical production of stuff.

No one can teach you or cure you for free - they need to be paid and live, so you need to be able to offer them something in exchange. This is simply a process, not a judgement on what's important or right.

You've actually illustrated my argument. Yes, those things enable wealth, but someone must be creating it somewhere first by production. One can't really work without the other, but production must come first to pay for the others. Again, some people may take that as a value judgement, but I don't and I think too many arguments (public vs private sector, for example) get too hung up on it.

As to your second part, again it's not a matter of which creates more wealth, I'm just making the point that manufacturing has to happen somewhere to generate the wealth to employ the services, hence the original question is a nonsense.

Edited July 3, 2011 by shipbuilder

[shipbuilder]

Yes, I think manufacturing is very important. Though I think services are as important or even more so, such as education, health, science and technology research and development, etc.

I think the point you're missing is that neither is more important, they both depend on each other, one can't really survive without the other. However manufacturing must be part of the mix, somewhere, (which make the original question a nonsense) unless, as Injin said, we decide we're only going to live off what is free in nature.

[erranta]

<br />On a weak news Saturday, a very engaging debate between 2 brilliant economists:<br /><br />Topic: <b>Can an economy succeed without a manufacturing base?</b><br /><br />Source: <a href='http://www.economist.com/debate/days/view/714' class='bbc_url' title='' rel='nofollow'>http://www.economist...e/days/view/714</a><br /><br /><br /><br /><br /><br /><br /><br />

He's a stooge working for the illuminati/Synagogue of Satan to implement their NWO Globilisation.

As the Bible warns - if it ain't Christ who returns & implements world peace (after a load of stuff has come to pass) it can only be the antichrists & their minions implementing their evil. (which is fascinating)

An internationally renowned economist, Jagdish Bhagwati takes conventional wisdom—that globalization is the cause of several social ills—and turns it on its head. Properly regulated, globalization, he says, is the most powerful force for social good in the world.

Often controversial and always compelling, Bhagwati cuts through the noise on this most contentious issue, showing that globalization is part of the solution, not part of the problem. Anyone who wants to understand what’s at stake in the globalization wars will want to read In Defense of Globalization.

http://www.cfr.org/economics/defense-globalization/p6769

Here's some more bullshite from him - cos UK is already a 'service' economy and all we have had for years is downward pressure on wages due to outsourcing and import of foreigners who will work for lower salary which is a fortune in their home countries!

His proven wrong 'conclusions' are oozing with typical Uni Prof 'incestuous groupthink'

First, all empirical studies, including those done by some of today’s top trade economists (such as Paul Krugman of Princeton and Robert Feenstra of the University of California, Davis), show that the adverse effect of trade on wages is not substantial. My own empirical investigation concludes that the effect of trade with poor countries may even have been to moderate the downward pressure on wages that rapid unskilled labor-saving technical change would have caused.

Second, the same goes for the econometric studies by the best labor economists regarding the effects of the influx of unskilled illegal immigrants into the US. The latest study by George Borjas and Larry Katz of Harvard also shows a virtually negligible impact on workers’ wages, once necessary adjustments are made.

Can it be that globalization has reduced the bargaining ability of workers and thus put a downward pressure on wages? I strongly doubt this. First, the argument is not relevant when employers and workers are in a competitive market and workers must be paid the going wage.

http://www.cfr.org/business-and-foreign-policy/technology-not-globalization-driving-wages-down/p12337

[Tired of Waiting]

I think the point you're missing is that neither is more important, they both depend on each other, one can't really survive without the other. However manufacturing must be part of the mix, somewhere, (which make the original question a nonsense) unless, as Injin said, we decide we're only going to live off what is free in nature.

Exactly. It has to be done somewhere. The question in the OP is if it has to be a big part of a specific country's economy in order for this country to be wealthy. Or can a country export services instead, and import manufactured goods?

For instance, should we try to increase the share of manufacturing in our GDP? Or the current share is about right? Or should we leave to market forces to decide? Or should we just try to remove blocks, like the greenbelts, as someone mentioned before? (Sorry, I forgot who.)

Or, in the case of a poor country, India is considering the service route option, with IT and medical services. Or should they prioritise heavy industry? Or should they leave to market forces to decide?

[Tired of Waiting]

He's a stooge working for the illuminati/Synagogue of Satan to implement their NWO Globilisation.

As the Bible warns - if it ain't Christ who returns & implements world peace (after a load of stuff has come to pass) it can only be the antichrists & their minions implementing their evil. (which is fascinating)

(...)

Who?! Professor Bhagwati?! He is a great development studies professor! His goal is the public good.

And convergence of interest and economic integration is the best route for world peace.

The most dangerous route is protectionism. It tends to lead to divergence of interests and even wars.

[Injin]

Exactly. It has to be done somewhere. The question in the OP is if it has to be a big part of a specific country's economy in order for this country to be wealthy. Or can a country export services instead, and import manufactured goods?

For instance, should we try to increase the share of manufacturing in our GDP? Or the current share is about right? Or should we leave to market forces to decide? Or should we just try to remove blocks, like the greenbelts, as someone mentioned before? (Sorry, I forgot who.)

Or, in the case of a poor country, India is considering the service route option, with IT and medical services. Or should they prioritise heavy industry? Or should they leave to market forces to decide?

Well I assume by "country" you mean "govenment" and by "government" you mean "tell people what to do at gunpoint."

The answer should therefore be obvious - stop being violent and threatening.

[erranta]

<br /> <img src='http://www.housepricecrash.co.uk/forum/public/style_emoticons/default/ph34r.gif' class='bbc_emoticon' alt='' />

Who?! Professor Bhagwati?! He is a great development studies professor! His goal is the public good.

And convergence of interest and economic integration is the best route for world peace.

The most dangerous route is protectionism. It tends to lead to divergence of interests and even wars.

It's a trick by the Satanists on the Godless and those that have been tricked into not reading the Bible - the Faux peace all leads to moor misery and slavery

Easy to suss - look at the Western countries collapsing(on purpose) with just the 0.1% elite taking more of the Worlds Wealth

This is exactly the kind of rule Sarf America/Russia/China/India/Asia/Middle East/Africa have - with the rest of their populations left fighting for the leftovers)

Because the people became "as one" (all wearing western clothes, western style civilisation, majority speaking English) Tower of Babel (note how each country tries to outdo the other - boasting about building the tallest building in the World)

"because the LORD did there confound the language of all the earth: and from thence did the LORD scatter them abroad upon the face of all the earth."

Are we not meant to be speaking diverse languages,

scattered abroad (with diverse customs,)

so we do not understand each other (language/culture)

- until Christ returns to earth to sort out the mess?

Shins - Shinar >>>

King Of Lagash, son of PELAG (FALIKH), KING OF BABYLON and Lamna Of SHINAR

Bloody fascinating though!

Genesis 11

1And the whole earth was of one language, and of one speech.

2And it came to pass, as they journeyed from the east, that they found a plain in the land of Shinar; and they dwelt there.

3And they said one to another, Go to, let us make brick, and burn them thoroughly. And they had brick for stone, and slime had they for morter.

4And they said, Go to, let us build us a city and a tower, whose top may reach unto heaven; and let us make us a name, lest we be scattered abroad upon the face of the whole earth.

5And the LORD came down to see the city and the tower, which the children of men builded.

6And the LORD said, Behold, the people is one, and they have all one language; and this they begin to do: and now nothing will be restrained from them, which they have imagined to do.

7Go to, let us go down, and there confound their language, that they may not understand one another's speech.

8So the LORD scattered them abroad from thence upon the face of all the earth: and they left off to build the city.

9Therefore is the name of it called Babel; because the LORD did there confound the language of all the earth: and from thence did the LORD scatter them abroad upon the face of all the earth.

[Ruffneck]

A small economy can survive easily without manufacturing so long as they have tourism.

Large economy is impossible to be strong without good manufacturing base.

[erranta]

<br />You sound like a beauty queen. <img src='http://www.housepricecrash.co.uk/forum/public/style_emoticons/default/biggrin.gif' class='bbc_emoticon' alt='' /><br /><br />I think we are all aware of how deeply you hold these beliefs to be true and I don't expect to change your mind one iota but feel moved to refute your fundamentalism. <br /><br />'Protectionism' covers many things - not just exclusions and tariffs. It includes in my book wages, social benefits, currency levels, interest rates, environmental protections. <br /><br />When we do not play on the same field it is a nonsense to think anything we do is 'protectionist' but things that other people do is not. You sound like the BBC.<br /><br />The EU is good in my book because it increasingly levels the playing field allowing for the free movement of goods, people and services. It is harder because adjustments at national level are exercised through deflation but at least that stimulates vigorous debate and thereby education. Unlike here where we inflate away and people are left to wallow in ignorance. <br /><br />Keynes answer between currency blocs was to have a system whereby if a surplus country remains in surplus, its currency level would be adjusted upwards (not by the market but by committee) until that surplus was removed. In that way a stable trading environment could be operated between nations. Regardless of whether that would work or not, the aim must be clear to all if we are not to suffer asset bubbles and financial crises.<br />

As you worship Keynes (he 'created' the IMF scum proved to reduce countries to abject poverty and the World Bank)

He was an obsessive collector of "Newton-the-Magician's" occult stuff - you know the one who sat under Apple Trees (descendants of Newton's apple tree, at the Cambridge University Botanic Garden)

In the second half of his life, Newton moved to London and became Master of the Mint, where he literally had the license to print money. He controlled the entire currency system of the Western World. In this role, Newton outlawed impure metals in currency and moved the pound to the gold standard. Throughout his life he had a philosophy of flow by which all flow had both an identifiable cause and a measurable effect. This principle of ‘causality’ is what struck John Maynard Keynes in his work in economics.

300 years later, it was John Maynard Keynes who collected all Newton’s documents in Cambridge. Keynes saw Newton’s model of flow in finances and used this as the model for a global financial system. While in Cambridge, Keynes made it his mission to collect all Newton’s work, and stated in the presentation of Newton’s Occult work:

“Newton was not the first of the age of reason: He was the last of the magicians.”

– John Maynard Keynes

He created the International Monetary Fund (IMF) to regulate all exchange rates and the means by which currencies were exchanged, and the World Bank to regulate the contribution from this flow to the countries that needed support most to end poverty.

He saw global wealth as possible through a partnership of regulated inflow (the IMF) and responsible outflow (the World Bank).

In other words "Newton the Magician" contacted & delved in places that you are warned not to - so he was mislead (inc Keynes) ideas/policies of which has screwed up the Earth.

[shipbuilder]

Exactly. It has to be done somewhere. The question in the OP is if it has to be a big part of a specific country's economy in order for this country to be wealthy. Or can a country export services instead, and import manufactured goods?

For instance, should we try to increase the share of manufacturing in our GDP? Or the current share is about right? Or should we leave to market forces to decide? Or should we just try to remove blocks, like the greenbelts, as someone mentioned before? (Sorry, I forgot who.)

Or, in the case of a poor country, India is considering the service route option, with IT and medical services. Or should they prioritise heavy industry? Or should they leave to market forces to decide?

But the debate isn't about one specific country, it's about whether it can be applied to countries as a general rule - everyone can't have their manufacturing done somewhere else, so the general rule is no. Really the question needs reworded to make sense.

Assuming we are talking about one country, see post 10 - a country with only services to offer becomes very dependent on other countries for stability - also it leads to a race to the bottom in terms of deregulation, wages and so on to maintain competitive advantage. Having a manufacturing base puts that economy in a much stronger position.

[ccc]

BBC2 on this very subject right now.

[Tired of Waiting]

BBC2 on this very subject right now.

Thanks.

[Guest_ringledman_*]

Thanks.

All the uber-bears will say that our services industries are pointless but we have a lot that we should be proud of.

I am seeing 70% foreign clients in the engineering sphere. Us brits still lead in a number of areas.

More real services (not consumption based) and manufacturing is what is required.

[ccc]

Thanks.

It is Evan Davis so you may want to retract that later.

All the uber-bears will say that our services industries are pointless but we have a lot that we should be proud of.

I am seeing 70% foreign clients in the engineering sphere. Us brits still lead in a number of areas.

More real services (not consumption based) and manufacturing is what is required.

Aye - a nice mix and a bit of variety is probably best. Same with pretty much everything in life.

[Tired of Waiting]

It is Evan Davis so you may want to retract that later.

Aye - a nice mix and a bit of variety is probably best. Same with pretty much everything in life.

Look what we can build if local planners and NIMBYs don't block us.

[Executive Sadman]

Yes, obviously, places like Malta can through Tourism.

Can we, no.

There. A lot quicker than the 'debate' There is no one answer, it depends on conditions.