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MIT Technology Review
January 4, 2013
Quoted: Richard Hausmann
The U.S. has lost millions of manufacturing jobs since 2000. Industries have moved offshore. America’s trade deficit in physical goods is $738 billion a year.
So what’s the path forward?
Countries trying to understand what’s next for their export industries often call Ricardo Hausmann. The Harvard economist and onetime planning minister for Venezuela has developed a kind of economic aptitude test for nations. Using complexity theory and trade data, Hausmann looks at what a country is good at making and predicts what types of more valuable items it could produce next.
That sounds plain enough, but the results of Hausmann’s analyses are often surprising. A country with a competitive garment industry might want to move into electronics assembly—both need an industrial zone with quality electrical power and good logistics. A country that exports flowers may find it has the expertise in cold-storage logistics necessary to spark an export boom in fresh produce.
Hausmann, who is director of Harvard’s Center for International Development, spends much of his time helping nations that are just beginning to modernize their industries, such as Angola and Nigeria. MIT Technology Review asked him what his research methods predict about opportunities for manufacturing in the United States.
Why has the number of American manufacturing jobs been decreasing so quickly?
The fundamental reason is that productivity in manufacturing has been rising rapidly and demand for manufactured products has been growing more slowly. To supply the stuff that people want requires fewer jobs.
And then, manufacturing is becoming feasible in more parts of the world. There is more competition, including from countries with much lower wages. As they emulate American production, they take market share.