The soundness of returning to manufacturing through the lens of productivity accounting

Abstract

This article assesses whether the world economy is actually returning to manufacturing, and in particular, whether this is, or would be, economically sound in light of KLEMS productivity accounting. In this paper, the term 'economic soundness' is applied exclusively to situations in which reindustrialization is likely to accelerate economic growth. Environmental, social, and other pertinent issues are not considered. It has been established that the countries under consideration generally did not reindustrialize during the stipulated periods, despite it being economically advisable to do so. Returning to manufacturing may, therefore, become a major growth factor in the post-Covid economic reconstruction (which is being prolonged by the Ukraine-Russia conflict).

Keywords

• gva
• mfp
• productivity
• klems
• decomposition