Recently the University Of York hosted a talk by Ha-Joon Chang on deindustrialisation. The title of the talk was: Manufacturing Matters – The Myth Of Post-Industrial Knowledge Economy.

picture credit: Ingrid Kvangraven

You will find a lot of emphasis on manufacturing in Nicholas Kaldor and Wynne Godley’s work. Why is manufacturing important? Wynne Godley emphasised the supremacy of manufactured products over services in exports, since it’s more difficult to export services. Nicholas Kaldor also suggested increasing returns to scale in manufacturing.

We are frequently told that manufacturing lost its importance. Ha-Joon Chang’s talk is precisely in debunking this myth. As Wynne Godley emphasised, while the share of manufacturing in GDP has fallen, the share of imports has risen a lot. Ha-Joon Chang also points out another important point that superficial reading of data might mislead. So because of offshoring and how the data is recorded by national accounts, it might look like there is no manufacturing happening. For example—and the real thing is more complicated—Apple manufactures phones, computers, etc., in China and it is recorded as an export of services in U.S. balance of payments and hence not as manufacturing in the production account of U.S. national accounts.

You can view the talk on YouTube. It has slides and audio.