Moreover, switching to labor intensive process will reduce production efficiency and national output will be affected. Capital intensive processes remain most beneficial in the long term and should in my view not be abandoned in the manufacturing sector.
However, the author is right in saying that the monetary bias provided to manufacturing sector in the form of subsidies should be reduced. Many of the developed economies place a larger focus on service industry. The jobs in the Asian countries that were lost due to capital intensive processes adopted in the manufacturing sector should be covered in the service sector. The governments need to encourage – both verbally and financially – innovation and creativity and not treat it indifferently.
The article covers a great amount of the macro economic issues discussed in class such as interest rates, productivity, recession and employment. It also provides an insight into the fact that foreign countries are also facing the troubles that the US is witnessing – perhaps more. To deal with this worldwide catastrophe, the nations need to cooperate with each other and set aside past differences.
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