Politicians all over the world talk about manufacturing, factories, mining and construction jobs. Prime Minister Modi wants to generate jobs in manufacturing fast. Youth unemployment will be eased by new factory jobs, he thinks. This is a popular but wrong perception of modern 21st century economics.
Manufacturing was the most important growth engine in 20th century. But that is ancient times. Economists must think new directions in a global sense. US president Trump talks about making America great again by restricting imports and have more Americans to get factory jobs. He talks of US trade deficit. But the truth is that US economy has $568 billion surplus in service industry. It has made America rich and closer to good 3.5 percent unemployment rate
Total 84% of jobs they have are in service industry Service industry will include retail clerk, truck driver, architect, banker, doctor, and many more that do not go to factories.
Biggest job creator in India is travel, and India has not fully exploited its capacity to expand travel industry. Information Technology, Financial services and insurance are other giant service providers in India.
Middle income jobs have successfully created great Indian middle class the world is counting on.
A US Federal reserve report released recently says that global spending that went towards service not goods bought, from 50% in 1970 to 80% in 2015. Policy makers in India will do a good service to the motherland if they understand and grasp this report carefully.
Manufacturing is necessity, yes. But it stops capital spending and generating after a certain point of economic growth. Manufacturing becomes comparatively more primitive with low wages.
As an economy advances it depends less on manufacturing good and more on servicing.
Jobs making steel or mining coal should not overpower our mental faculties for jobs of a nurse in a hospital, a software developer, movie set designer or the engineer that devises new methods to find and dig more oil and gas. Physical contribution in making a car are little now – not just chassis and engine and wheels. There are thousands of computer codes that make the car run. Our mindset must change over manufacturing versus service industry.
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