Why and How Does Manufacturing Still Matter: Old Rationales, New Realities

The paper aims to contribute to the renaissance of a manufacturing oriented view of economic system. It begins by providing a critical review of the main turning points in the manufacturing versus services debate evaluating the analytical and empirical arguments deployed in favor of each view. It goes on to describe the profound transformations in industrial systems and the redistribution of manufacturing production across countries over the last two decades which challenge some of the assumptions on which the service oriented view is built. This section concludes by reviewing old and new rationales supporting a manufacturing oriented view. The second part of the paper addresses the importance of certain industries, including machine tools to generate industrial capability and why technological linkages stemming from manufacturing industries more generally are key enablers of a country’s systemic capacity to generate technological change. Finally the negative consequences of de-linking manufacturing production from services (off-shoring) are explored highlighting the systematic disruption of the bundle of technological linkages constituting the industrial commons