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Memo: Offshore Profit Shifting and the U.S. Tax Code – Part 2 (Apple Inc.)
Memo: Offshore Profit Shifting and the U.S. Tax Code – Part 2 (Apple Inc.) (PDF)
Source: U.S. Senate Permanent Subcommittee on Investigations
From press release (Sen. Carl Levin (D-MI):
Apple Inc. has used a complex web of offshore entities – including three foreign subsidiaries the company claims are not tax resident in any nation – to avoid paying billions of dollars in U.S. income taxes, a bipartisan investigation by the Senate Permanent Subcommittee on Investigations has found.
The subcommittee will spotlight Apple’s extensive tax-avoidance strategies at a Tuesday hearing. Witnesses will include Apple CEO Tim Cook, other Apple executives, Treasury Department officials and outside experts. Sen. Carl Levin, D-Mich., and Sen. John McCain, R-Ariz., subcommittee chairman and ranking member, respectively, will also issue a 40-page memorandum with findings and recommendations.
The subcommittee, which previously explored tax avoidance by other multinational corporations using offshore subsidiaries, found similar practices at Apple. In addition, the subcommittee review discovered an unusual tax scheme: Apple’s claim that two key offshore companies are not tax residents of Ireland, where they are incorporated, or of the United States, where Apple executives manage and control the companies. One of those Irish subsidiaries has paid no income taxes to any national tax authority for the past five years.
See also: Offshore Profit Shifting and the U.S. Tax Code – Part 1 (Microsoft & Hewlett-Packard)
Twelve Ways to Build Trust in the ICT Global Supply Chain
Twelve Ways to Build Trust in the ICT Global Supply Chain
Source: Brookings Institution
The globalization of commerce and trade has created many benefits. Supply costs have been reduced for many products. Computers and other items can be made of parts from a number of different locales. Countries can specialize in particular goods and companies can focus on the things they do best. Raw materials may come from one area, while manufacturing and production lie elsewhere, and sales and marketing take place in still another place. In this as well as other examples, contemporary commerce involves a complex interchange of hundreds or thousands of individuals, organizations, technologies, and processes across a variety of different continents.
But long supply chains and inadequate or nonexistent product evaluation before deployment, create a situation where widespread vulnerabilities exist in products and networks that can be exploited by others during design, production, delivery, and post-installation servicing. There are industry-wide risks associated with procurement, transportation, and management. Everything from raw materials and natural disasters to market forces, national laws, and political conflict can be problematic. Problems in one area can cascade elsewhere and magnify risks dramatically for the system as a whole.
In this paper, West discusses twelve ways to build trust in the Information and Communications Technology (ICT) global supply chain. With the assistance of a group of leading experts brought together at the Brookings Institution in February, 2013 plus follow-up interviews, he explores the operational threats and technological vulnerabilities that we face, and makes recommendations to identify best practices, standards, and third-party assessment for supply chain assurance.
West argues that vulnerabilities in the supply chain and product development, generally, facilitate a myriad of attack and exploitation techniques, such as unauthorized remote access after product deployment for many malicious activities, degradation of ICT networks, and damage to critical infrastructures. West suggests that developing agreed-upon standards, using independent evaluators, setting up systems for certification and accreditation, and having trusted delivery systems will build confidence in the global supply chain as well as the public and private sector networks that sustain them. These and other types of evaluations make information available to purchasers and therefore give them a firmer basis for product selection.
Global Norms as Global Public Goods
Global Norms as Global Public Goods
Source: Brookings Institution
Global public goods is an intriguing concept; it is an extrapolation of public goods, an idea which has been with us for much longer. Public goods are the opposite of private goods. Once available, public goods are available to all, and not just to those who produced it or paid for it. In a further counterintuitive twist, the consumption of a public good does not decrease what is left for anyone else to consume. In other words, when a loaf of bread is available for sale and I buy that loaf of bread, no one else can have that loaf. But if I live in a country with adequate national defense, the fact that I enjoy security does not diminish the security that can be enjoyed by others in the same country, whether they are taxpayers or not. After it was proposed in 1954, the notion of a public good took hold rapidly and spun an extraordinary literature and policy consciousness. As such, global public goods emerged as a pedagogically seamless and tactically fertile iteration on an already well appreciated phenomenon.
Yet, when we move from the traditional conception of public goods to global public goods, we also encounter challenges that defy simple extrapolation. Public goods emerged out of economics, and one way that the economists thought of public goods were as market failure. Markets, which are enviably efficient in allocating resources for private goods, did not work for public goods. Because public goods were things that everyone could and did enjoy, no single person had enough incentive to pay for optimal supply. It was concluded that public goods would ideally be provided by the state, and paid for through taxes; the optimal level of supply would be decided through societal deliberation and the political process. Along the way, public goods became a key justification for the existence of a state. The paradigm example is national defense. As it would be nonsensical to expect individual families or cities to organize or procure defense for themselves, this needed to be done on a national scale. Once provided, everyone benefitted from the security that national defense made possible, and it was logical that that national defense be paid through taxes. Globally, however, we do not have a one-world government, so how shall we organize the provision of global public goods?
Globalization, Climate Change, and Human Health
Globalization, Climate Change, and Human Health
Source: New England Journal of Medicine
he global scale, interconnectedness, and economic intensity of contemporary human activity are historically unprecedented, as are many of the consequent environmental and social changes. These global changes fundamentally influence patterns of human health, international health care, and public health activities. They constitute a syndrome, not a set of separate changes, that reflects the interrelated pressures, stresses, and tensions arising from an overly large world population, the pervasive and increasingly systemic environmental impact of many economic activities, urbanization, the spread of consumerism, and the widening gap between rich and poor both within and between countries.
In recent decades, international connectivity has increased on many fronts, including the flow of information, movements of people, trading patterns, the flow of capital, regulatory systems, and cultural diffusion. These exponential increases in demographic, economic, commercial, and environmental indexes have been labeled the Great Acceleration. Remarkably, the resultant environmental effects are now altering major components of the Earth system. The current geologic epoch is being called the Anthropocene (successor to the Holocene epoch) in recognition of the global force that Homo sapiens has become, pushing or distorting Earth’s great natural global systems beyond boundaries considered to be safe for continued human social and biologic well-being. The loss of biodiversity, the greatly amplified global circulation of bioactive nitrogen compounds, and human-induced climate change have already reached levels that are apparently unsafe.
These changes pose fundamental threats to human well-being and health. For example, a positive relationship has been observed between regional trends in climate (rising temperatures and declining rainfall) and childhood stunting in Kenya since 1975, indicating that as projected warming and drying continue to occur along with population growth, food yields and nutritional health will be impaired. These human-induced climatic changes often act in concert with environmental, demographic, and social stressors that variously influence regional food yields, nutrition, and health. Furthermore, at the current level of global connectedness and interdependence, the environmental impact of human activity has a wider geographic range, although its influence may be offset somewhat by more effective global alerts and more rapid distribution of food aid. The extreme heat and wildfires in western Russia in the summer of 2010 destroyed one third of that country’s wheat yield, and the subsequent ban on exported grain contributed to a rise in the price of wheat worldwide, exacerbating hunger in Russia (where flour prices increased by 20%) and in low-income urban populations in countries such as Pakistan and Egypt. On the economic front, the recent global financial crisis has underscored the domino-like interdependence of national economies.
CRS — U.S. Manufacturing in International Perspective
U.S. Manufacturing in International Perspective (PDF)
Source: Congressional Research Service (via Federation of American Scientists)
The health of the U.S. manufacturing sector has long been of great concern to Congress. The decline in manufacturing employment since the start of the 21st century has stimulated particular congressional interest. Members have introduced hundreds of bills intended to support domestic manufacturing activity in various ways. The proponents of such measures frequently contend that the United States is by various measures falling behind other countries in manufacturing, and they argue that this relative decline can be mitigated or reversed by government policy.
This report is designed to inform the debate over the health of U.S. manufacturing through a series of charts and tables that depict the position of the United States relative to other countries according to various metrics. Understanding which trends in manufacturing reflect factors that may be unique to the United States and which are related to broader changes in technology or consumer preferences may be helpful in formulating policies intended to aid firms or workers engaged in manufacturing activity. This report does not describe or discuss specific policy options.
The main findings are:
• The United States remained the largest manufacturing country in 2010, although its share of global manufacturing activity has declined in recent years.
• Manufacturing output has grown more rapidly in the United States over the past decade than in most European countries and Japan, although it has lagged China, Korea, and other countries in Asia.
• Employment in manufacturing has fallen in most major manufacturing countries over the past two decades. The United States saw a disproportionately large drop between 2000 and 2010, but its decline in manufacturing employment since 1990 is in line with the changes in several European countries and Japan.
• U.S. manufacturers spend far more on research and development (R&D) than those in any other country, but manufacturers’ R&D spending is rising more rapidly in China, Korea, Mexico, and Taiwan.
• A large share of manufacturing R&D in the United States takes place in high-technology sectors, particularly pharmaceutical and electronic instrument manufacturing, whereas in other countries a far greater proportion of manufacturers’ R&D outlays occur in medium-technology sectors such as motor vehicle and machinery manufacturing.
CRS — IMF Reforms: Issues for Congress
IMF Reforms: Issues for Congress (PDF)
Source: Congressional Research Service (via Federation of American Scientists)
In December 2010, the Board of Governors of the International Monetary Fund (IMF, the Fund), the institution’s highest governing body, agreed to a reform package that addresses two major concerns about the institution: (1) that the size of the IMF’s resources has not kept pace with increased economic activity in the global economy; and (2) that the representation of emerging and developing economies at the IMF does not reflect their growing importance in the global economy. Key parts of the reform package cannot go into effect until a number of IMF countries formally approve the reforms. If enacted, these reforms would increase the size of the IMF’s core source of funding (IMF “quota”), and increase the representation of emerging market and developing countries at the IMF to reflect more accurately their weight in the global economy.
Implementing the Reform Package, and the Role of Congress
IMF rules do not require formal approval of the reform package by all IMF member countries, but the support of the United States, as the largest shareholder at the institution, is necessary. Although many other IMF member countries have submitted their formal approvals for these reforms, to date, the United States has not formally approved these reforms. Under U.S. law, the Administration cannot do so without specific congressional authorization. Appropriations could also be necessary. Although some speculated that the Administration would submit a request to Congress for authorizing the reforms in 2012, no request was made. Some speculate that the request could come in 2013 and could be considered in the 113th Congress.
Implications of the Reform Package
Arguments for Reforms:
Proponents argue that the reform package is necessary for maintaining the effectiveness and legitimacy of the IMF as the central institution for international macroeconomic stability. The IMF’s core source of funding needs to be increased, they argue, in order to give the IMF the resources that it needs to respond effectively to financial crises. They also argue that the under-representation of emerging economies at the IMF is broadly perceived as unfair and reduces the support of several member countries for IMF programs and initiatives.
Arguments against Reforms:
Opponents argue that since the IMF has found other ways to supplement its resources during economic crises, the IMF’s core funding source does not need to be increased. Opponents are also skeptical that emerging economies support the existing norms and values of international financial institutions, and that these countries may prefer financial and trade strategies that are less aligned with those of the United States.
Potential Impact on the United States:
Implementing the reforms would not increase total U.S. financial commitments to the IMF and would have little impact on U.S. representation at the IMF. The reforms would require transferring some U.S. financial commitments from a supplementary fund at the IMF (the “New Arrangements to Borrow,” or NAB) to the IMF’s core source of funding (quota). This transfer could require appropriations, depending on how the Congressional Budget Office (CBO) scores the transfer of funds. The share of U.S. voting power at the IMF would fall slightly, but the United States would still maintain its unique veto power over major policy decisions.
Reinforcing Regulatory Regimes: How States, Civil Society, and Codes of Conduct Promote Adherence to Global Labor Standards
Reinforcing Regulatory Regimes: How States, Civil Society, and Codes of Conduct Promote Adherence to Global Labor Standards
Source: Harvard Business School Working Papers
In response to pressure from various stakeholders, many transnational businesses have developed codes of conduct and monitoring systems to ensure that working conditions in their supply chain factories meet global labor standards. Many observers have questioned whether these codes of conduct have any impact on working conditions or are merely a marketing tool to deflect criticism of valuable global brands. Using a proprietary dataset from one of the world’s largest social auditors, containing audit-level data for 31,915 audits of 14,922 establishments in 43 countries on behalf of 689 clients in 33 countries, we conduct one of the first large-scale comparative studies of adherence to labor codes of conduct to determine what combination of institutional conditions promotes compliance with the global labor standards embodied in codes. We find that these private transnational governance tools are most effective when they are embedded in states that have made binding domestic and international legal commitments to protect workers’ rights and that have high levels of press freedom and nongovernmental organization activity. Taken together, these findings suggest the importance of multiple, robust, overlapping, and reinforcing governance regimes to meaningful transnational regulation.
CRS — IMF Reforms: Issues for Congress
IMF Reforms: Issues for Congress (PDF)
Source: Congressional Research Service (via Federation of American Scientists)
In December 2010, the International Monetary Fund (IMF, the Fund)’s Board of Governors, the institution’s highest governing body, agreed to a reform package that addresses two major concerns about the institution: (1) that the size of the IMF’s resources has not kept pace with increased economic activity in the global economy; and (2) that the representation of emerging and developing economies at the IMF does not reflect their growing importance in the global economy. Key parts of the reform package cannot go into effect until a number of IMF countries formally approve the reforms. If enacted, these reforms would increase the size of the IMF’s core source of funding (IMF “quota”), and increase the representation of emerging market and developing countries at the IMF to reflect more accurately their weight in the global economy.
CRS — Offshoring (or Offshore Outsourcing) and Job Loss Among U.S. Workers
Offshoring (or Offshore Outsourcing) and Job Loss Among U.S. Workers (PDF)
Source: Congressional Research Service (via Federation of American Scientists)
Offshoring, also known as offshore outsourcing, is the term that came into use more than a decade ago to describe a practice among companies located in the United States of contracting with businesses beyond U.S. borders to perform services that would otherwise have been provided by in-house employees in white-collar occupations (e.g., computer programmers and systems designers, accounting clerks and accountants). The term is equally applicable to U.S. firms’ offshoring the jobs of blue-collar workers on textile and auto assembly lines, for example, which has been taking place for many decades. The extension of offshoring from U.S. manufacturers to service providers has heightened public policy concerns about the extent of job loss and the adequacy of existing programs to help unemployed workers adjust to the changing mix of jobs located in the United States so they can find new positions.
No comprehensive data exist on the number of production and services workers who have lost their jobs as a result of the movement of work outside U.S. borders. The only regularly collected statistics on jobs lost to the out-of-country relocation of work come from the U.S. Bureau of Labor Statistics’ (BLS) series on extended mass layoffs. Since 2004, BLS has asked firms with at least 50 employees that let go at least 50 workers in layoffs that lasted 31 or more days whether the firms moved the laid-off workers’ jobs out of the United States. Given the series’ exclusion of small companies and focus on large layoffs, it underestimates the number of jobs lost to offshoring.
Researchers have tried to fill this gap by determining which occupations possess characteristics that make them relatively vulnerable to being offshored (e.g., routine task content and able to be performed at a distance from customers due to advances in communications technology) and the number of persons employed in those occupations in a given year. Those studies usually have focused on occupations that provide services. One analysis by the BLS estimated that in 2007, 30 million people were employed in service-providing occupations it found to be potentially offshorable; they accounted for over one-fifth of total employment in that year. The serviceproviding occupations that BLS deemed most vulnerable to being offshored had quite different skill requirements: administrative support occupations (e.g., office clerks) typically have lower education or training requirements than professional and related occupations (e.g., computer programmers). One of the few studies that includes both production and services occupations similarly concluded that, whether measured by education or wages, jobs with offshorable characteristics run the gamut from less to more skilled. According to one of Blinder’s estimates, about 29 million workers were employed in offshorable production and services occupations, or a little over one-fifth of total U.S. employment in 2004.
This approach may overstate the number of jobs that actually have been or will be lost to offshoring because it does not consider other factors that may affect employers’ decisions about the location in which work is performed. Some observers note cases of firms bringing jobs back to the United States for such reasons as dissatisfaction with the quality of service being provided, narrowing of the wage gap between U.S. and some nations’ workers, and increases in the cost of shipping goods to the United States. Others point to strategies that offshore outsourcers have used to work around some obstacles.
CRS — Foreign Direct Investment in the United States: An Economic Analysis
Foreign Direct Investment in the United States: An Economic Analysis (PDF)
Source: Congressional Research Service (via Federation of American Scientists)
Foreign direct investment in the United States has rebounded slowly after falling from the $310 billion recorded in 2008, a record surpassed only by the $320 billion invested in 2000 in U.S. businesses and real estate. (Note: The United States defines foreign direct investment as the ownership or control, directly or indirectly, by one foreign person [individual, branch, partnership, association, government, etc.] of 10% or more of the voting securities of an incorporated U.S. business enterprise or an equivalent interest in an unincorporated U.S. business enterprise (15 CFR §806.15 [a][1]). In 2011, according to U.S. Department of Commerce data, foreigners invested $234 billion in U.S. businesses and real estate. Foreign direct investments are highly sought after by many state and local governments that are struggling to create additional jobs in their localities. While some in Congress encourage such investment to offset the perceived negative economic effects of U.S. firms investing abroad, others are concerned about foreign acquisitions of U.S. firms that are considered essential to U.S. national and economic security.
CRS — U.S. Direct Investment Abroad: Trends and Current Issues
U.S. Direct Investment Abroad: Trends and Current Issues (PDF)
Source: Congressional Research Service (via Federation of American Scientists)
The United States is the largest investor abroad and the largest recipient of direct investment in the world. For some Americans, the national gains attributed to investing overseas are offset by such perceived losses as displaced U.S. workers and lower wages. Some observers believe U.S. firms invest abroad to avoid U.S. labor unions or high U.S. wages, however, 70% of U.S. foreign direct investment is concentrated in high income developed countries. Even more striking is the fact that the share of investment going to developing countries has fallen in recent years. Most economists conclude that direct investment abroad does not lead to fewer jobs or lower incomes overall for Americans and that the majority of jobs lost among U.S. manufacturing firms over the past decade reflect a broad restructuring of U.S. manufacturing industries.
Religion and Political Civility
Religion and Political Civility
Source: Brookings Institution
As communities revise their basic political rules and shape new political institutions, some of the most complex and vexing questions regard religion and what role it should play. On the one hand, there is much to be found in the world’s great religious traditions that strengthens and undergirds citizenship and political civility. Notions of tolerance, compassion, and respect for the rule of law and governing institutions are central to all great faiths.
But difficult issues frequently arise around the question of religion’s role in politics, particularly in the diverse societies that are increasingly the norm in a globalized world. For example, if faith informs public morality, what space is there for those whose religious beliefs are outside the majority—or for non-believers? And while many would agree that religious values can and should infuse political life, the question of whether religious authority has any superior claim to determine or affirm legislation raises a thorny set of issues. What is the appropriate relationship between the state and religious institutions and other faith-based actors? How can the full rights of all citizens—particularly those in the minority—be ensured, and who has the authority to determine the boundaries of citizenship? Given the importance to many of religion and religious values as the fundamental basis for determining right from wrong, what are the respective roles of the state and religious institutions in shaping, implementing, and enforcing both religious norms and secular affairs? Who is authorized to define and speak on behalf of religion? And when, as is inevitable, conflicts do arise over different conceptions of morality, authority, and national priorities, where can we turn to find resources and examples for resolving these disputes judiciously and equitably?
This paper reflects the rich and active discussions that took place on these questions, among others, during the course of the “Long Conversation” on religion, civility, and state-building at the 2012 U.S.-Islamic World Forum.
How Mobile Technology is Driving Global Entrepreneurship
How Mobile Technology is Driving Global Entrepreneurship
Source: Brookings Institution
Darrell West examines mobile entrepreneurship’s key role in expanding opportunities for social and economic development around the world. Examining places like Nigeria, Egypt, and Indonesia, West notes that micro-entrepreneurs generate 38 percent of the gross domestic product, generating new ideas, business models, and ways of selling goods and services.
As part of the Center for Technology Innovation’s Mobile Economy Project, West analyzes the importance of wireless technology for entrepreneurship, how mobile improves access to capital and market information, how it helps entrepreneurs serve broader geographic areas and reach new customers, the manner in which it empowers women and the disadvantaged, and the way mobile payments stimulate economic development.
West offers policy recommendations that outline the steps needed to overcome current barriers to m-entrepreneurship.
Strengthening Pre-Departure Orientation Programmes in Indonesia, Nepal and the Philippines
Strengthening Pre-Departure Orientation Programmes in Indonesia, Nepal and the Philippines (PDF)
Source: Migration Policy Institute
With overseas employment a more permanent feature of the development strategies of a number of Asian states, predeparture orientation programs have emerged as an important tool for the protection of migrant workers. This brief examines the strengths, limitations, and areas for improvement of this intervention, based on findings from field research conducted in Indonesia, Nepal, and the Philippines.
Making Value: Integrating Manufacturing, Design, and Innovation to Thrive in the Changing Global Economy
Source: National Academy of Engineering
Manufacturing is in a period of dramatic transformation. But in the United States, public and political dialogue is simplistically focused almost entirely on the movement of certain manufacturing jobs overseas to low-wage countries. The true picture is much more complicated, and also more positive, than this dialogue implies.
After years of despair, many observers of US manufacturing are now more optimistic. A recent uptick in manufacturing employment and output in the United States is one factor they cite, but the main reasons for optimism are much more fundamental. Manufacturing is changing in ways that may favor American ingenuity. Rapidly advancing technologies in areas such as biomanufacturing, robotics, smart sensors, cloud-based computing, and nanotechnology have transformed not only the factory floor but also the way products are invented and designed, putting a premium on continual innovation and highly skilled workers. A shift in manufacturing toward smaller runs and custom-designed products is favoring agile and adaptable workplaces, business models, and employees, all of which have become a specialty in the United States. Future manufacturing will involve a global supply web, but the United States has a potentially great advantage because of our tight connections among innovations, design, and manufacturing and also our ability to integrate products and services.
The National Academy of Engineering has been concerned about the issues surrounding manufacturing and is excited by the prospect of dramatic change. On June 11-12, 2012, it hosted a workshop in Washington, DC, to discuss the new world of manufacturing and how to position the United States to thrive in this world. The workshop steering committee focused on two particular goals. First, presenters and participants were to examine not just manufacturing but the broad array of activities that are inherently associated with manufacturing, including innovation and design. Second, the committee wanted to focus not just on making things but on making value, since value is the quality that will underlie high-paying jobs in America’s future. Making Value: Integrating Manufacturing, Design, and Innovation to Thrive in the Changing Global Economy summarizes the workshop and the topics discussed by participants.
Manufacturing Opportunity: How America can regain global leadership in manufacturing
Manufacturing Opportunity: How America can regain global leadership in manufacturing
Source: Deloitte
Manufacturing is experiencing a crisis of confidence in the United States. Americans view the manufacturing sector in the U.S. as fragile and unstable. They are concerned about the long-term stability of manufacturing employment and fear that manufacturing jobs will inevitably be moved to workers in other countries. Despite these fears, Americans remain steadfast in their support of manufacturing in the United States and the economic benefits that result.
Today there are new pathways to manufacturing opportunity in America that are both available and achievable. And public policy has a major role to play in supporting these directions.
This report relies on collaborative efforts with a number of organizations working on important issues affecting the manufacturing industry, as well as surveys of American citizens, business and labor leaders, university presidents, and directors of some of the United States’ largest national laboratories. It presents a case for optimism – and for hard work. It examines some of the main challenges facing any attempt to cultivate an American manufacturing renaissance, and highlights recommendations that could help the United States overcome these roadblocks.
Developed and developing world responsibilities for historical climate change and CO2 mitigation
Developed and developing world responsibilities for historical climate change and CO2 mitigation
At the United Nations Framework Convention on Climate Change Conference in Cancun, in November 2010, the Heads of State reached an agreement on the aim of limiting the global temperature rise to 2 °C relative to preindustrial levels. They recognized that long-term future warming is primarily constrained by cumulative anthropogenic greenhouse gas emissions, that deep cuts in global emissions are required, and that action based on equity must be taken to meet this objective. However, negotiations on emission reduction among countries are increasingly fraught with difficulty, partly because of arguments about the responsibility for the ongoing temperature rise. Simulations with two earth-system models (NCAR/CESM and BNU-ESM) demonstrate that developed countries had contributed about 60–80%, developing countries about 20–40%, to the global temperature rise, upper ocean warming, and sea-ice reduction by 2005. Enacting pledges made at Cancun with continuation to 2100 leads to a reduction in global temperature rise relative to business as usual with a 1/3–2/3 (CESM 33–67%, BNU-ESM 35–65%) contribution from developed and developing countries, respectively. To prevent a temperature rise by 2 °C or more in 2100, it is necessary to fill the gap with more ambitious mitigation efforts.
Urban America: US cities in the global economy
Urban America: US cities in the global economy
Source: McKinsey Global Institute
In a world of rising urbanization, the degree of economic vigor that the economy of the United States derives from its cities is unmatched by any other region of the globe. Large US cities, defined here as those with 150,000 or more inhabitants, generated almost 85 percent of the country’s GDP in 2010, compared with 78 percent for large cities in China and just under 65 percent for those in Western Europe during the same period. In the next 15 years, the 259 large US cities are expected to generate more than 10 percent of global GDP growth—a share bigger than that of all such cities in other developed countries combined.
The overwhelming role that cities play as home to the vast majority of Americans but also as a dominant driver of US and global economic growth argues for a keen focus on their prospects. MGI sheds new light on the role cities play in the US economy and gauges how large they loom in the urban world overall.
CRS — Job Creation in the Manufacturing Revival
Job Creation in the Manufacturing Revival (PDF)
Source: Congressional Research Service (via Federation of American Scientists)
The health of the U.S. manufacturing sector is of intense interest to Congress. Numerous bills aimed at promoting manufacturing have been introduced in Congress, often with the stated goal of creating jobs. Implicit in many of these bills is the assumption that the manufacturing sector is uniquely able to provide well-paid employment for workers who have not pursued advanced education.
U.S. manufacturing output has risen significantly over the past two years as the economy has recovered from recession. This upswing in manufacturing activity, however, has resulted in negligible employment growth. Although a variety of forces seem likely to support further growth in domestic manufacturing output over the next few years, including higher labor costs in the emerging economies of Asia, higher international freight transportation costs, and increased concern about disruptions to transoceanic supply chains, evidence suggests that such a resurgence would lead to relatively small job gains within the manufacturing sector. For more on supplychain risk, see CRS Report R40167, Globalized Supply Chains and U.S. Policy, by Dick K. Nanto, and CRS Report R41831, The Motor Vehicle Supply Chain: Effects of the Japanese Earthquake and Tsunami, by Bill Canis.
The past few years have seen important changes in the nature of manufacturing work. A steadily smaller proportion of manufacturing workers is involved in physical production processes, while larger shares are engaged in managerial and professional work. These changes are reflected in increasing skill requirements for manufacturing workers and severely diminished opportunities for workers without education beyond high school. Even if increased manufacturing output leads to additional employment in the manufacturing sector, it is likely to generate little of the routine production work historically performed by workers with low education levels.
As manufacturing processes have changed, factories with large numbers of workers have become much less common than they once were. This suggests that promotion of manufacturing as a tool to stimulate local economies is likely to meet with limited success; even if newly established factories prosper, few are likely to require large amounts of labor.
Spotlight on Statistics: Fashion
Spotlight on Statistics: Fashion
Source: Bureau of Labor Statistics
Throughout history, fashion has greatly influenced the “fabric” of societies all over the world. What people wear often characterizes who they are and what they do for a living. As Mark Twain once wrote, “Clothes make the man. Naked people have little or no influence on society.”
The fashion industry is a global industry, where fashion designers, manufacturers, merchandisers, and retailers from all over the world collaborate to design, manufacture, and sell clothing, shoes, and accessories. The industry is characterized by short product life cycles, erratic consumer demand, an abundance of product variety, and complex supply chains.
In this Spotlight, we take a look at the fashion industry’s supply chain—including import and producer prices, employment in the apparel manufacturing and fashion-related wholesale and retail trade industries, labor productivity in the manufacturing sector and in selected textile and apparel industries, and consumer prices and expenditures on apparel-related items.
