My argument had been that if we were moving up the value chain successfully we’d see higher productivity, and we don’t.
My intuition is that something to do with knowledge/skill/synergy goes away if you move too much manufacturing away, which makes the manufacturing that remains less productive. For example, there are efficiency gains from having factories close to suppliers; if the parts manufacturers move to China, then the auto manufacturers in the US don’t get to have the same tight feedback loops with them, and so become less productive per worker and per dollar of capital, because the benefits of proximity don’t show up in either of those categories.
My argument had been that if we were moving up the value chain successfully we’d see higher productivity, and we don’t.
My intuition is that something to do with knowledge/skill/synergy goes away if you move too much manufacturing away, which makes the manufacturing that remains less productive. For example, there are efficiency gains from having factories close to suppliers; if the parts manufacturers move to China, then the auto manufacturers in the US don’t get to have the same tight feedback loops with them, and so become less productive per worker and per dollar of capital, because the benefits of proximity don’t show up in either of those categories.