The Manufacturing Industry: Understanding Its Roles in The Economy

The manufacturing industry is a crucial part of our economy’s growth. The products you see on the market are all thanks to the manufacturing industry. They are innovative and make ideas come to life. Here are some reasons the manufacturing industry is hugely beneficial for us.

Creation of Jobs

One of the most dominant reasons manufacturing is critical is due to the jobs that they offer. Many jobs, both indirectly and directly, rely on manufacturing. For instance, a retail store would not be able to sell anything if they did not have a manufacturer produce their items. The people who work for the manufacturer, moreover, would not have jobs if the retail store did not need clothes.

It accounts for a huge chunk of the economy of many countries. For instance, people who work in a company that provides specialty piping will get more work because manufacturers need their services.

Manufactured Goods Are Necessary for Services

man manufacturing metalsMany services rely on goods, as mentioned. For instance, wholesale and retail are where you buy and sell manufactured products. Real estate is also reliant on manufactured goods because it is buying and selling a physical or “real” asset, like a building. The health industry also needs the manufacturing industry because they need drugs and medical equipment. Without the manufacturing industry, many of the other sectors, like healthcare and retail, would not be able to provide people with their services.

Economic Growth

The primary drivers of economic growth are the growth of the manufacturing machinery output along with the technology improvements with those types of machinery. Think about iPhones, computers, and the Internet, among others. None of them would have been possible without the manufacturing industry. Each piece of machinery that made those things rely on other forms of machinery, so the technologies reproduce themselves. Machines making other machines is a process called exponential growth.

A Multiplier Effect

The manufacturing industry has a high multiplier effect. For example, the economy generates about $1.81 for each dollar that is spent in manufacturing. For each manufacturing worker, four extra employees get hired in another place. It is a path for many people, especially for those that are in the middle class.

If a country has a strong manufacturing base, it has the potential to eliminate war and poverty. Manufacturing can provide more wealth to avoid an imbalance of power that can create conflict, and it gives more middle-class jobs for the middle-class economy.


Manufactured goods are crucial for trade, especially since you cannot get most goods by trading services. Twenty percent of interregional trade is in services, whereas 80 percent is in goods. We need goods because we can use them to trade for foreign goods. Otherwise, we will get a growing and big trade deficit. If that happens, it can lower the value of the dollar. If its value decreases, imports become pricey, then the economy cannot afford to replace the imports.

Every country needs a strong manufacturing industry. The manufacturing industry impacts a lot of the economy and can benefit the citizens.

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