Balance of Trade and Share of Global Manufacturing

Last time, we looked at manufacturing output per capita in the world's largest 20 economies. Taking at a smaller set of countries this time, I wanted to see how their ratio of exports to imports measured up against their share of global trade and the percentage of national GDP generated by their manufacturing industries over the last 30 years in five year intervals stepping back from 2008.

Included are China and the US, and five other countries with roughly US-equivalent standards of living: Canada, France, Germany, Japan and the United Kingdom.

The chart below puts the relative size of a country's manufacturing sector next to its export strength and share of world GDP. Looking at the balance of trade figures, only Canada, China and Germany are doing better at selling more than they buy than they were 30 years ago. Yet the three listed countries with a positive balance of trade, China, Germany and Japan, all have manufacturing sectors in excess of 20 percent of GDP. Of those, it's encouraging to see Germany having steadily improved their balance of trade while setting themselves up to meet their Kyoto emissions targets early.

There are countries that are in the business of "cashing out their intellectual assets" through outsourcing, and those who aren't. Productivity gains that decrease the manufacturing job pool aren't the only problem with keeping productive industries up and running.

Next time we'll take a look at how some of these measures compare with the number of manufucturing jobs.

By The Numbers

All figures, such as GDP and manufacturing GDP are from United Nations statistics. The world GDP and world manufacturing figures used to calculate the first row in the table were arrived at by adding entries for GDP and manufacturing output for all countries respectively, then using that number to calculate the percentage of global output generated by manufacturing activity. These figures have then also been used to calculate figures throughout the chart as described below.

(I have issues with the term 'world GDP', but it seems to get the point across.)

For each country, there's an export/import ratio, calculated by using UN reported figures for total exports and imports. Numbers greater than one indicate a positive balance of trade, numbers less than one indicate that a country is buying more than they're selling.

The following three rows for each country allow you to compare the percentage of national GDP generated by manufacturing, the percentage of global manufacturing output their national industry represents, and then their GDP as a percentage of world GDP.

Regarding China, as noted in this article about the largest manufacturing countries from 1990-2008, China's UN-reported data doesn't separate out manufacturing from mining and utilities. Figures for China's manufacturing sector are therefore inflated, as are the ratios calculated from them. The Curious Cat entry suggests that through 2005-2007, the manufacturing share of this figure should have been 78%, so we can guess that their recent numbers, at least, are off by a little over 20%.

Views expressed on this page are those of the authors and not necessarily those of Campaign for America's Future or Institute for America's Future