Innovation and Entrepreneurship in the Global Economy
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Innovation and Entrepreneurship in the Global Economy

Knowledge, Technology and Internationalization

  • New Horizons in Regional Science series

Edited by Charlie Karlsson, Urban Gråsjö and Sofia Wixe

Innovation and entrepreneurship are the prime drivers in the global economy. This scholarly book identifies some of the key forces behind innovation and entrepreneurship at the same time as it closes the gap between science and technology R & D, innovation, entrepreneurship, productivity growth, and internationalization. The expert contributions explore the underlying forces and add substantial theoretical and empirical knowledge to the current state-of-the-art in several research fields including the economics of innovation and entrepreneurship, regional economics, economic geography and international economics.
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Chapter 11: Manufacturing renaissance: return of manufacturing to western countries

Sam Tavassoli, Babak Kianian and Tobias C. Larsson

Abstract

This chapter argues that the location of manufacturing is gradually shifting to the west again, exemplifying the ‘manufacturing renaissance’. Such a claim is based on the recent observed trend and the discussion is contextualized within the established theory that has been able to explain the location of manufacturing, that is, the product life cycle (PLC) model. Then the chapter identifies and discusses the four main drivers of this new phenomenon: (i) rising wage levels in emerging economies; (ii) falling quality of business milieu in emerging economies; (iii) emergence of new process innovations in western economies; and (iv) rising demand for western-made manufacturing. Finally, it is noted that the return of manufacturing should be kept in proportion to the amount of manufacturing activities that are still being offshored to less developed countries (LDCs), and not all industries are coming back to the west at the same pace.

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