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Professor Mark J. Perry's Blog for Economics and Finance
|Top 15 U.S. November Exports||Millions|
|4||Industrial machines, other||$3,881|
The labor comparative gap that China has had has disappeared because the total costs of production for certain products have moved towards US costs. This is particular where labor costs are a smaller proportion of the total costs. Although readers may be feel that it is an exaggeration to claim that ‘off-shoring’ will immediately be reversed back to ‘on-shoring’, perhaps it is better to suggest that the ‘hollowing out’ of US manufacturing has reached its nadir. The worst of the transition is behind the US all other factors of production being equal. The important driver will be speed of productivity gains between the two countries that encourages CEOs to open and close plants in one or the other, not just the labour cost.Industries like agriculture, coal and mining, oil, aerospace and autos have already shown better growth than people realize (see chart above).