De-industrialization, accelerated by the financial crisis, is a long term process. The comparative advantage of emerging economies shifted towards more advanced goods and their growing populations commanded an increasing share in global demand. This shift towards a factory-free economy in high income countries has drawn the attention of policy makers in North America and Europe. Some politicians have articulated alarming views, initiating mercantilist or 'beggar-thy-neighbour' cost-competitiveness policies. Yet companies that concentrate research and design innovations at home but no longer have any factories there may be the norm in the future. This volume proposes an economic analysis of this phenomenon and includes 11 contributions which complement each other and tackle the problem from different angles. The evidence in this book suggests that de-industrialization is a process that happens over time in all countries, even China. One implication is that criticism of China is not likely to provide a solution to these long term trends. Another implication is that the distinction between manufacturing and services is likely to become increasingly blurry. More manufacturing firms are engaging in services activities, and more wholesale firms are engaging in manufacturing. One optimistic perspective suggests that industrial country firms may be able to exploit the high-value added and skill-intensive activities associated with design and innovation, as well as distribution, which are all components of the global value chain for manufacturing. Although this ongoing transformation of the industrial economies may be consistent with evolving comparative advantage, it has significant short-run costs and requires far-sighted investments. These include the costs to workers who are caught in the shift from an industrial to a service economy, and the need to invest in new infrastructure and education to prepare coming generations for their changing roles.

An economic analysis of de-industrialization that considers the ongoing transformation of the industrial economies and the consequences for economic policy.

A veteran New York Times economics correspondent reports from factories nationwide to illustrate the continuing importance of industry for our country. In the 1950s, manufacturing generated nearly 30 percent of US income. But over the decades, that share has gradually declined to less than 12 percent, at the same time that real estate, finance, and Wall Street trading have grown. While manufacturing’s share of the US economy shrinks, it expands in countries such as China and Germany that have a strong industrial policy. Meanwhile Americans are only vaguely aware of the many consequences—including a decline in their self-image as inventive, practical, and effective people—of the loss of that industrial base. Reporting from places where things were and sometimes still are “Made in the USA”—New York, New York; Boston; Detroit; Fort Wayne and Indianapolis, Indiana; Los Angeles; Midland, Michigan; Milwaukee; Philadelphia; St. Louis; and Washington, DC—Louis Uchitelle argues that the government has a crucial role to play in making domestic manufacturing possible. If the Department of Defense subsidizes the manufacture of weapons and war materiel, why shouldn’t the government support the industrial base that powers our economy? Combining brilliant reportage with an incisive economic and political argument, Making It tells the overlooked story of manufacturing’s still-vital role in the United States and how it might expand. “Compelling . . . demonstrates the intimate connection between good work and national well-being . . . economics with a heart.” —Mike Rose, author of The Mind at Work

How corn is harvested and made into tortillas.