As one of a rare group of economists who believe that "manufacturing matters" for the health of the American economy, I was heartened to hear President Obama emphasize manufacturing in his State of the Union address. During the last two years, the manufacturing sector has led the economic recovery, expanding by about 10 percent and adding more than 300,000 jobs. Though there are economists who do not share my view, I believe that a strong manufacturing sector matters for several reasons.
First, economists agree that the United States must rebalance growth away from consumption and imports financed by foreign borrowing toward exports. Manufactured goods account for about 86 percent of merchandise exports from the United States and about 60 percent of exports of goods and services combined. American manufacturing exports are becoming more attractive as a result of rising wages abroad, the decline in the dollar"s value, increasing supply-chain coordination and transportation costs, and strong productivity growth in American manufacturing.
Germany and Japan, two high-wage countries, have maintained substantial shares of manufacturing in their economies, and are major exporters of manufactured goods to emerging market economies. Like manufacturing in these countries, manufacturing in the United States can win larger shares of global export markets with the right policies in place.
Second, on average manufacturing jobs are high-productivity, high value-added jobs with good pay and benefits. In 2009, the average manufacturing worker earned $74,447 in annual pay and benefits compared with $63,122 for the average non-manufacturing worker. In that year, only about 9 percent of the work force was employed in manufacturing, down from about 13 percent in 2000. The fall in manufacturing employment during the 2000s was a major factor behind growing wage inequality and the polarization of job opportunities between the top and bottom of the wage and skill distribution, with a hollowing out of middle-income jobs.
Third, manufacturing matters because of its substantial role in innovation. American leadership in science and technology remains highly dependent on R. & D. investment by manufacturing companies, and the social returns to such investment are substantial, far exceeding the returns to the companies that fund it.
American multinational companies that account for about 84 percent of all private-sector business R. & D. in the United States still place about 84 percent of their R. & D. activities in the United States, often in clusters around research universities. But this share is gradually declining as American companies shift some of their R. & D. to Asia in response to rapidly growing markets, ample supplies of technical workers and engineers and generous subsidies. Congress"s failure to extend and broaden the R. & D. tax credit, as President Obama has urged, is also encouraging companies in the United States to look to other countries offering far more generous R. & D. tax incentives. Which of the following statements is true according to last two paragraphs
A．Manufacturing sector doesn"t get as much return from scientific research as it deserves. B．Most of multinational companies" initiatives in R. & D. nowadays are based in emerging countries. C．Preferential tax code gives an effective incentive for companies to conduct R. & D. D．President Obama, realizing the innovative capacity of manufacturing, has issued a series of R. & Ｄ. tax credits.