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Sherry M. Stephenson
Senior Fellow
International Centre for Trade and Sustainable Development

Services have enabled manufacturing in the U.S. to become more efficient and competitive

Services have enabled manufacturers to take advantage of cutting edge technologies and become more productive. Services have also enabled manufacturers to grow the value of their operations from the initial stage of designing their products to the final stage of getting their products to their customers. Manufacturing has become a complex mix of many types of services, automation, and computer-driven production, with a large and growing share of value derived from the services components.

Consumer and capital goods increasingly embody a greater percentage of services. Manufacturing companies have increased their reliance on services for their inputs, and services constitute a significant portion of their outputs and revenue. Rather than thinking of manufacturing and services as separate economic activities in today’s economy, it is much more realistic and essential to think of them as having become inextricably intertwined. Manufacturing companies are now great users, producers and traders of services. It is in fact efficient services that make U.S. manufacturing more productive and give it a competitive edge in global markets. A new term, “servicification,” has been coined to describe the increasing use of services by manufacturing firms in their purchases and production, as well as their exports, pointing to the integrated role that services play in every step of the process (Swedish National Board of Trade). This is part of an overall global trend as noted in a recent OECD study on services and manufacturing which found that in the digital age, “services are part of a ‘business ecosystem’ where collaboration with customers, partners and contractors is the key to innovation and productivity.” (OECD 2017 study)

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in PECC Forum 1323

Peter F. Cowhey (University of California, San Diego), 
Jonathan D. Aronson (University of Southern California)

Digital technologies are becoming critical to every facet of the world economy. These digital technologies are the “digital DNA” that unleashes dazzling changes in the information, communication, and production capabilities that are transforming how the world works. We call this the information and production disruption. The IPD is rapidly altering the dynamics of firms, how markets perform, and the potential for stronger economic growth and social prosperity. Government policy makers with an eye to the future are searching for policies to leverage the best potential of these disruptions, but have yet to determine how to reconcile seemingly contradictory policy challenges. We offer recommendations for global economic governance that provide a new foundation for problem solving to cope with messy problems that inevitably accompany large-scale change. Despite the current political headwinds we show how trade policy can be the key platform for enabling an extensive complementary set of regulatory and nongovernmental actions to govern the IPD productively.

Scholars, government officials, and corporate executives have acknowledged to us that the disruption is occurring but that it is difficult to grasp because it is so multifaceted. This diffuseness makes it hard to distill the first priorities necessary for governance reform. We respond to this challenge by clarifying the fundamentals on how the IPD is altering national and global patterns of innovation. We choose this leverage point because economists agree that innovation—which we define as the commercialization of new knowledge—is central to global growth and prosperity.

...
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in PECC Forum 1035

Pamela Mar
Director of Sustainability
Fung Academy/ Fung Group

 

Insights: In Conversation With

Pamela Mar looks at how Asia's manufacturers can survive, and prosper, amidst changing markets and technological disruption.

Writer’s Note:

APEC officials were in Vietnam for the 2nd Senior Officials Meeting in preparation for the APEC Leaders’ summit to be held in Vietnam later this year. Connectivity was high on the agenda, as it is viewed as an essential driver for deepening regional economic integration, which is one of APEC’s four key priorities. APEC has launched a 2025 Connectivity Blueprint and is following this up with mid-term goals for 2020.

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in PECC Forum 1118

Pamela Mar
Director of Sustainability
Fung Academy/ Fung Group

 

Insights: In Conversation With

Pamela Mar outlines the challenges faced by Asia's production centers in a world where connectivity has become more critical.

Writer’s Note:

APEC officials were in Vietnam for the 2nd Senior Officials Meeting in preparation for the APEC Leaders’ summit to be held in Vietnam later this year. Connectivity was high on the agenda, as it is viewed as an essential driver for deepening regional economic integration, which is one of APEC’s four key priorities. APEC has launched a 2025 Connectivity Blueprint and is following this up with mid-term goals for 2020.

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in PECC Forum 1376

Hugh Stephens, Vice-chair, CANCPEC
Distinguished Fellow, Asia Pacific Foundation of Canada /Executive Fellow, School of Public Policy, University of Calgary

When U.S. President Donald Trump pulled the plug on U.S. participation in the Trans-Pacific Partnership in January, it was a bad day for Canadian supporters of the TPP.

But now it seems the TPP may still live under another guise, often referred to as the TPP 11. New studies have shown that even without U.S. participation, a transpacific agreement based on the new rules negotiated in the original TPP will still bring gains to all the partners. More important, moving ahead with the TPP 11 would constitute a global signal that trade liberalization is still vital for economic growth, and that preservation of open markets through multilateral agreements is the way of the future, rather than Mr. Trump’s protectionism or preference for zero-sum bilateral deals.

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in PECC Forum 880

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