| The purpose of this study was to investigate the relationship between the overall economic health of a country and the health of its manufacturing sector. This was an important first step in supporting the hypothesis that a healthy manufacturing sector is the most important sector to promote a healthy United States economy. The primary research was conducted through statistical analysis using STATA12 software, as well as by using the well-known economic modeling software known as Impact Analysis for Planning. As the hypothesis has been supported, it may now indicate that some increased, formal industrial policy, regarding promotion of the manufacturing sector, is needed on the part of the U.S. federal government if economic growth is to be revived. The research has confirmed the hypothesis for the U.S. In addition, it has been shown that similar degrees of relationship exist between GDP growth and the manufacturing sector even when five specific moderating variables were considered. There has been extensive separate research describing the interrelationship between the service and manufacturing sectors, however, care was taken during the research to assess and minimize the degree of multicollinearity between the service sector and manufacturing sector, and the regression results achieved show low levels of multicollinearity. While not indicating real causality, Granger Causality testing was also performed, demonstrating similar levels of forecasting ability for both service and manufacturing sector growth.;The regression results for the United States were then extrapolated to show a continued decline in expected GDP growth, confirming the seriousness of the U.S. economy's condition. The extrapolated values are so low, it indicates that future U.S. GDP per capita may slow and potentially turn downwards.;All the results when taken together have great import. The U.S. economy is already showing a four-decade downward trend in GDP growth, and there is little reason to believe any immediate or long-term turnaround can be expected.;Key Terms: Granger Causality, Human Development Index, IMPLAN, Industrial Policy, Kaldorian theory, Leontief Inverse, Rostow. |
