In my post of July 7th I postulated that the declining value of the dollar could spur more manufacturing in the United States. I likened such a phenomenon to the dramatic economic gains realized by the "Asian Tigers" in the 1990's. These nations used cheap labor, social reform and exports to drive their emerging economies. My connection (as threadbare as it may be) was this: the slipping value of the dollar could ignite a surge in manufacturing for domestic producers for two distinct reasons.
The first reason is founded on foriegn investment. As the dollar sinks in comparison to foriegn currency, America began incubating regional hubs ripe for foriegn investment in manufacturing. A prime example of this is Daimler's (Chrysler?) construction of automobile plants in Alabama. Yet another example of this is the Honda sheetmetal factory in Rome, Georgia. Production in the US became a viable option, at least in part, due to the devalued dollar. U.S. produced goods in recent history were too expensive for many foriegn markets due to high production costs and the relative strength of the greenback.
I hope that this reiteration of my July 7th post will segway nicely into my next pontification. Even if domestic manufacturing realizes an increase, will this truly lead to economic growth? I am not so sure. As AJ pointed out on his comment of July 8th, energy will play a major roll in the answer to this question. If energy costs increase while the dollar experiences anemia, what possible net economic gains can be achieved by increased domestic manufacturing? (I WILL CONTINUE TO EXPLORE THIS QUESTION!)
I read an interesting article in Manufacturing.net by Tom Raum I find germane to the topics discussed herein. Read it, think on it, post!
