The Innovation Economy
Charting a course for American business
I'd like to think I'm getting a clearer mental picture of the composition of the American economy, or at least what I'd term the "growth vanguard": highly innovative, globally competitive, high technology, high value. Fast Company thinks so too.
Let's think about it in terms of competitive advantage. In the broad sweep of history, the United States enjoyed a significant advantage over the world in consumer and durable goods manufacturing from 1946 through the 60s--Western Europe, due to World War II and the Marshall Plan, was effectively a captive market--due to its well-developed firms and intact industrial infrastructure. Then came 70s stagflation in the developed world, complemented by increasing global competition, particularly from Asia. American economic performance rebounded after the 1980 recession for almost two straight decades, except for the early 90s recession. Much of the gains in employment during this period came from services, particularly professional and financial, driven by a shifting competitive advantage to related to relative variable costs, especially labor. With the millenium came an era of increasing globalization, outsourcing, and intensified competition for the manufacturing which the nation had to a decent degree retained in the 80s and 90s.
My expectation is that, as this decade goes ahead, the United States will see a sort of long-term payoff for globalization. This includes a "reshoring" of some manufacturing, largely high-tech and high-end (read: machinery, chemicals, semiconductors, transportation equipment), as rising labor costs in Asia reduce that region's allure.