Economics 5 Case Analysis

Unit CaseAnalysis
Read the CASE ANALYSIS: Manufacturing in the United States (page 320).
Write a 3 to 5 page paper (1000 to 1500 words) in APA format in response to the questions:
a. Provide an overview of this case analysis; summarize the key points.
b. Using Figure 13.2 (page 321), how does this data support the case analysis.
c. Estimate how these numbers will look over the next 10 years (2009-2018) based
upon what you have read in this unit.
Below is a recommended outline.
2. Cover page (See APA Sample paper)
3. Introduction
a. A thesis statement
b. Purpose of paper
c. Overview of paper
4. Body (Cite sources using in-text citations.)
ill. Provide an overview of this case analysis; summarize the key points.
b. Using Figure 13.2 (page 321), how does this data support the case analysis.
c. Estimate how these numbers will look over the next 10 years (2009-2018) based upon
what you have read in this unit.
5. Conclusion – Summary of main points
a, Lessons Learned and Recommendations
6. References – List the references you cited in the text of your paper according to APA format.
(Note: Do not include references that are not cited in the text of your paper)
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Migr ion remains a tOPic\~Of serious debate both inside nited States and
between t United States a, d Mexico. Before Septe er 11,2001, it appeared
that the two untries might .each an accord that uld permit Mexican nationals to work in t United States for a limited eriod each year as “guest workers,” but the terrori attack o~ the Unite ates halted the political momentum
toward agreement. Pr ures :!pr an a eement, however, will not go away completely for two essential ~asd).1s. . st, economic changes in Mexico generally
guarantee that a large shar~ ft· labor force will continue Jo be mobile. Older
industries aredi “-,’- — e pmg, u unn-“—s . average worker” therb’~re a limited number of opportunities for significant economicad~cementl t Mexican workers can increase their real
wages by at least~:~~, six time~, if t ‘\I migrate to the United States. This is a
powerf~l driv~parti~ularly whrn f~tl~ economic conditions in ~exico are
uncertain. ~ond, while some ~mencan~~re bothered by the SOCIal and cultural ch
,nges that occur with il1,t creased mI’8t.ation, many powerful economic
inter?tS in .the United States tant access t~~exican labor. Consequently,
M~ICO contmues to push for an agreement to open.the border for at least a pro-/
(ortion of its labor forc.e, and n;any US. interests ‘oo”,~tinue to propose guestworker and temporary VIsaprograms, .
Manufacturing in the United States
In what year did the United States produce its highest output of manufactured
goods? When asked to a large group, the guesses range from the 1960s to the
1990s. The correct answer is usually “last year.” Figure 13.2 illustrates this by
plotting on the right scale the real value added in manufacturing, 1960-2008.
Given that a recession began in 2008, there was a slight downturn since manufacturing is sensitive to the business cycle. As the graph shows, however, there is a
long-run upward trend in manufacturing output that is interrupted briefly by the
occasional recession.
The left scale shows manufacturing employment. Employment peaked in 1979at
19,426,000,and began a long-run decline after that. In 1980 the United States
entered a mild recession, and then a more severe one in 1981-1982.Manufacturing
employment recovered some of its losses in 1984, but continued its trend downward.
Within the story of the growth of manufacturing output, there are a couple
of other stories not directly shown in the graph. First, there is the story of
manufacturing relocation within the United States. Traditional industrial
states in the north central part of the United States, such as Ohio and
Michigan, have seen many jobs leave for other parts of the country. Some
jobs have gone overseas, but quite a few have also gone to southern states
such as South Carolina, Tennessee, and Texas. When coupled with the overall
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Real Value Added and Employment in ManufC’lcturins, 1960···2008
25,000 1800
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20,000 ‘”
= 1400
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-= 15,000 E-o ‘-‘
1000 “1:
= 800
< •….
600 QJ
” – = Q,.
;: 5 5,000
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\C \C \C \C t- t- t- oo 00 00 0- 0- 0- 0- 0 0 0
0- 0\ 0- 0\ 0- 0′. 0- 0′. 0- 0′ 0- 0′ 0- 0- 0 0 0
rl rl rl rl rl rl rl rl rl rl rl rl rl rl N N N
……. Employment — Value Added
Since the late-1970s, manufacturing employment has declined, while manufacturing output has constantly
risen except during recessions.
Source: u.s. Bureau of Economic Analysis; US Bureau of Labor Statistics.
decline in the total number of jobs, the plight of older manufacturing states
has been grim. This has also contributed to the mistaken perception that the
United States no longer has a vibrant manufacturing sector, but the story of
Figure 13.2 is that the United States continues to produce a large and growing quantity of manufactured goods.
TIle second story is the rapid increase in productivity in the manufacturing
sector. Fewer workers but more output means each worker is producing more,
and output per hour worked in manufacturing has increased at a very rapid rate.
This has occurred in part through the application of new technologies and new
processes, and while productivity growth speeds up and slows down, it is usually
much more rapid in manufacturing than in services or agriculture. Hence, even if
we consume the same quantity of manufactured goods, we would expect a
smaller share of the labor force to produce them for us .
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The most common issue in the internal U.S. debate over NAFTA was its effects
on U.S. jobs. Many trade economists were discouraged by this because the key
effect of any trade agreement is the increased productive efficiency that comes