13 February 2012

Manufacturing vs. Industrial R&D

One of the arguments for special government support of manufacturing is that manufacturing is a key to industrial R&D throughout the US economy (e.g., here). The data above comes from BEA and NSF and shows that as manufacturing declined as a portion of GDP from 2002 to 2007, industry R&D nonetheless increased (note: NSF data goes to 2007). Since 2007 manufacturing has continued to decline as a proportion of GDP (to 92 in 2010 in the graph above) while it appears that industrial R&D has tracked GDP (e.g., see here in PDF).

With industrial R&D increasing faster than GDP over the past decade, even as manufacturing fell sharply as a proportion of GDP, I find little support for the argument that support of manufacturing is in some way critical for supporting industrial R&D.

9 comments:

  1. Where are the last 4 years, Roger?

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  2. Roger -

    How are industry and manufacturing defined here? How do they overlap? What about the definitions is mutually exclusive?

    And besides, aren't manufacturing and industry both just other words for service? ;-)

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  3. -2-Joshua

    Thanks, manufacturing according to NAICS and industrial R&D according to the NSF survey methods. It is safe to conclude that manufacturing R&D is a subset of overall industrial R&D.

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  4. Roger: we really, really need data for the last four (4) years! Since the dictator took over.

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  5. -4-jae

    Thanks, according to the post and links 2010 is 92 for manufacturing and ~106 for industrial R&D. Your conclusion?

    (I'd guess 2011 would come in at about 94 for manufacturing and 108 for industrial R&D).

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  6. Roger:

    I guess my conclusion would be that the very short term (3-year) trend you show in R&D shares a lot in common with the global temperature trend. IOW, the short trend many not mean much.

    Unfortunately the red one is still trending, though.

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  7. What sectors are responsible for the uptick in industry R&D spending from 2004-2007? Is it an overall rise in industrial R&D, or are there specific NAICS sectors that stand out and are driving the uptick? This is a pretty short time series, so I'm interesting in the specifics here. A follow up post in order?

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  8. -7-Jesse Jenkins

    Well, since manufacturing broadly is the sector with about 70% industrial R&D, then I think you'll know the answer to your question ;-)

    But as the data shown in this post indicates, the relative decline of manufacturing as a proportion of GDP is perfectly consistent with increasing R&D. So if you want to increase industrial R&D, there are surely better tools than effort to give manufacturing special treatment.

    Of course talking about a sector that lumps in both pharmaceuticals and textiles is probably not the path to wisdom ;-)

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  9. -7-Jesse Jenkins

    From NSF data, R&D intensity of manufacturing sector:

    2002 = 3.7%
    2007 = 4.4%

    Is that increase a good thing? Did it happen while jobs declined dramatically in manufacturing, revenues went up, productivity increased and the sector shrunk as a proportion of GDP?

    Thanks!

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