For 30 years, the economic orthodoxy has been that America should focus on high value-added innovation and leave manufacturing to low-cost countries such as China and Mexico. Simply put, we should “innovate here and manufacture there.”
As it turns out, it doesn’t work that way. In “Reinventing Competitiveness” (American Affairs Journal, Volume III, Number 3 (Fall 2019)), Sridhar Kota and Tom Mahoney argue convincingly that “once manufacturing departs from a country’s shores, engineering and production know-how leave as well, and then innovation ultimately follows.”
Kota and Mahoney explain that America still excels at the scientific research that yields game-changing technologies, such as the lithium-ion battery and the liquid crystal display, and at proof of concept. But we’ve fallen behind in “translational research”: the applied research and engineering that support the product and production process design, development, and enhancement essential to converting scientific breakthroughs into viable commercial products. Moreover, the last 30 years have shown that, contrary to the orthodoxy, translational research and innovation are “best done near the factories themselves” — i.e., let manufacturing go and innovation will eventually follow.
What do we do? The authors propose a National Manufacturing Foundation. The foundation would work with industry and research universities to maximize the competitiveness of American manufacturing by creating a strategic vision for the sector and marshaling the public and private resources necessary to realize that vision, just as the National Institutes of Health does for American healthcare.
You can download the complete article at https://americanaffairsjournal.org/2019/08/reinventing-competitiveness. (An excerpt, titled “Innovation Should Be Made in the U.S.A.,” appeared in The Wall Street Journal, November 15, 2019.) It’s a compelling case for manufacturing excellence as essential to America’s long-term prosperity, and an effective rebuttal to all who still argue that it isn’t.
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