A Strategy for Revitalizing American Manufacturing and Traded Sector Competitiveness

A nation’s traded sector comprises those industries and establishments which compete in international marketplaces and whose output is sold at least in part to nonresidents of the nation. Traded sectors include almost all of a nation’s manufacturing activity, some services (such as software, Internet, and engineering services, and entertainment content like music, movies, and video games), and some of the extraction sectors (e.g., farming or mining).

Because these industries face market competition that is global in nature in a way that non-traded, local-serving industries (e.g., retail trade or personal services) do not, their success is by no means assured. If a company like Boeing loses market share to Airbus, thousands of domestic jobs at Boeing, its suppliers, and the companies the employees spend at will be lost. In contrast, a local grocery store may compete for business with other supermarkets, but it's not threatened by international competition. If Safeway loses market share to Walmart, the jobs will remain in the United States. As such, the fact that the U.S. traded sector has not created a single net new job in 20 years is a core reason for the current U.S. economic malaise. Thus, the international competitiveness of U.S. traded sector establishments (which account for roughly one-third of U.S. GDP) is central to the health of America’s economy.

There is no traded sector more important to the vitality of America’s economy than manufacturing, and in particular advanced, technology-oriented manufacturing. Thus, a strategy for spurring advanced manufacturing in the United States is needed to remain competitive and to achieve balanced terms of trade. The rationale for this strategy is that manufacturing provides large numbers of above average paying jobs; it is the principal source of an economy’s R&D and innovation activity; the health of a nation’s manufacturing and services sectors are complementary and inseparable; and manufacturing is essential to a country’s national security.

This presentation will detail policy recommendations from the Information Technology and Innovation Foundation’s (ITIF’s) report, Fifty Ways to Leave Your Competitiveness Woes Behind: A National Traded Sector Competitiveness Strategy, which presents 50 federal-level policy recommendations to help restore U.S. traded sector competitiveness. The recommendations are organized around policies regarding the "4Ts" of technology, tax, trade, and talent as well as policies to increase access to capital, reform regulations, and better assess U.S. traded sector competitiveness.