Lessons for US government from rival manufacturing programmes

28 Aug 13
The US government could do more to ensure that federal projects intended to support manufacturing provide a boost to economic output auditors said after considering other nations’ approaches

By | 28 August 2013

The US government could do more to ensure that federal projects intended to support manufacturing provide a boost to economic output auditors said after considering other nations’ approaches.

The Government Accountability Office examined government support programmes in four countries – Canada, Germany, Japan and South Korea – to compare assistance available for manufacturing industries. 

Its report was compiled following a request from Congress for the GAO to identify foreign programmes that may inform US policy. Over the past decade, the US has lost about one-third of its manufacturing jobs, prompting concerns about the country’s manufacturing competitiveness.

The Global manufacturing report found each country had a ‘varied mix’ of schemes. 

For example, Canada is shifting its emphasis from a research and development tax credit towards direct support to small- and medium-sized enterprises to encourage innovation.

Germany has established applied institutes and clusters of researchers and manufacturers to conduct research and development in priority areas, while Japan has implemented science and technology programmes focused on alternative energy projects as part of its manufacturing strategy. South Korea has substantially expanded investments in research and development, including creating regional innovation centers that provide R&D facilities, business incubation and education assistance to industry.

However, after examining the policies in foreign programmes, the GAO concluded that all four other countries ‘place greater emphasis on commercialisation to manufacturers bridge the gap between innovative ideas and sales’.

By contrast, the US relies heavily on competitive funding for R&D projects with commercial potential, which are critical to economic growth, the report stated.

Although the report made no recommendations following the examination, auditors stated there were lessons from how the competitor nations ‘maintain competitiveness in a rapidly changing global economy’.

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