I am undertaking some research regarding differences between manufacturing sectors across countries.
I have noted that China has taken a lot of the less skilled manufacturing work away from developed countries. It clearly has a comparative advantage with regard to unskilled labour. Generally, it will be difficult for developed countries to compete with the wages of the lesser developed countries.
This has resulted in the decline of manufacturing in some countries such as Australia (12.6% of GDP in 2000 to 6.7% of GDP in 2015) or the US (14.2% to 12.3%). Whereas other developed countries are still able to successfully manufacture. Germany for example has had ~22% of GDP from manufacturing for the last 15 years.
What factors allow manufacturing to succeed in a developed country?
I am expecting it to be related to:
- human capital
- size of domestic market
- trade deals
I am interested in references in particular.