Technology as a % of total GDP
Technology as a share of GDP in Europe 1990: 3%
Technology as a share of GDP in Europe 2012: 12 %
Technology as a share of GDP in North America 1990: 3 %
Technology as a share of GDP in North America 2012: 17 %
Constraints do exist in the definition of the category 'technology'. Bio-technology, ICT, web application and software development, services, training, and consulting in the tech industry need to be included. Numbers collected by governments are usually vague, incomplete or miss parts of the 'tech' nexus within business. But largely we can say that in 2012, 17% of North America's economy is based on and around technology – a 500% increase in 20 years. In North America, this means that roughly 25 million jobs have been created in the tech industry. Technology is now one of the largest market segments in our economy. Retailing for example, is about 14% of GDP. Housing about 15 %. Manufacturing, roughly 16-18%. The mustard seed of tech, falling on barren ground in 1990 has grown into a sizeable entity.
What does it all mean ? The lessons from technology are clear and can be summarized:
Government de-regulation of the telecoms sector unleashed the animal spirits of tech innovation.
Private equity and capital, unchained through a reduction in income, dividend and capital gains tax rates, has been instrumental in creating firms and millions of jobs, not to mention, financing the development of leading edge tech products and ideas.
The shift from low-wage, low value add products, into high-value, higher wage sectors and jobs, is based in part on a digital evolution and at times revolution.
Tech is mainly a manufacturing process – albeit an immature one – and when people say 'we don't manufacture anything', that is simply untrue. We make more than ever with our basic. manufacturing processes with fewer workers, thanks to huge productivity gains. If you add in part of the tech sector, manufacturing is well over 20% of the workforce and probably nearer to 25%.
High taxes on labour, income, and oppressive regulatory fees and laws will force firms to 'offshore' as part of their supply chain process. In the case of manufacturing it is clear that part of offshoring or most of it, is in response to government policy and high tax rates. It is also part of a natural process of economic change.
"Manufacturing’s declining share of GDP over the last forty years is nearly identical to the decline in world manufacturing as a share of world GDP, which fell from 26.6% in 1970 to 16.2% in 2010. Therefore, we can conclude that the declining share of manufacturing’s contribution to GDP is not unique to America, but reflects a global trend as the world moves from a traditional manufacturing-intensive “Machine Age” economy to more a services-intensive “Information Age” economy.
In that case, even if the U.S. was a closed economy with no competition from foreign manufacturers, it would have been inevitable that manufacturing’s share of national income and employment would have followed exactly the same downward trend that prevailed over the last forty years, as the U.S. economy evolved into a modern service-based economy. When we complain that "nothing is made here anymore," it's not so much that somebody else is manufacturing the goods that used to be made here as it is the case that we (and others around the world) just don't need as much "stuff" any more in relation to the overall size of the economy.
....
An alternative explanation is that we really are experiencing an inevitable shift to a post-industrial, Information Age economy where manufacturing’s importance to output and jobs is declining, similar to the trend in agriculture over the last century.”
2 % of the population are farmers making enough food product for both domestic and export consumption. Manufacturing is following the same path. If you want more manufacturing jobs in higher-value added physical products, you need to reform and lessen the burdens of payroll taxes, capital taxes, corporate income taxes, and eco-and other sundry fees. These changes will increase manufacturing opportunities. The same could apply to the world of high tech. Digital technology, which is the basis of many business systems, governmental processes, lifestyles, educational programs, and services such as banking, will not disappear, but only grow in GDP share, and job creation if proper policies are enacted, and if the sector is encouraged to bloom.