Though it may seem counterintuitive, imports are vital to U.S. manufacturing, explains Heritage Foundation economist Terry Miller.
Citing a new report by the St.Louis Federal Reserve Miller says:
Intermediate goods imports and capital goods imports are the lifeblood of U.S. manufacturing. Without them, manufacturing output is impossible. In fact, goods imports account for a far greater share of U.S. manufacturing value added than do exports.
Statists often favor subsidizing exports as a way to bolster the economy, but Miller says this kind of intervention can dangerous. “Export promotion is misguided at best,” he says, “and seriously harmful if policies include restrictions on imports or manipulation of currency to cheapen the value of the dollar.”
To boost the manufacturing sector, Miller suggests the Obama administration remove government restrictions on commerce instead of focusing solely on exports:
Exports are not the path to manufacturing success. Foreign trade helps build the U.S. economy more when we find new markets in which to buy raw materials and capital goods than when we push for new markets in which to sell the things we make.
Learn more about the importance of economic freedom to economic growth in Heritage’s Index of Economic Freedom.
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