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Morning Brief: Brookings Maps U.S. Manufacturing

by Renewing America Staff
May 10, 2012

Seattle, Washington has an aviation cluster with facilities such as the final assembly plant for the Boeing 787 Dreamliner, seen here at Boeing Field after its maiden flight in December 2009. (Robert Sorbo/Courtesy Reuters) Seattle, Washington has an aviation cluster with facilities such as the final assembly plant for the Boeing 787 Dreamliner, seen here at Boeing Field after its maiden flight in December 2009. (Robert Sorbo/Courtesy Reuters)

The Brookings Institution released a comprehensive report on the geography of U.S. manufacturing and found that different areas specialize in different sectors. Almost 95 percent of very high-tech and 80 percent of all types of manufacturing jobs are in metropolitan areas. Manufacturers benefit from being part of a cluster, a geographic concentration of interconnected firms, their suppliers and service providers, and related institutions such as universities. The report also found that relative to service industries, manufacturing has higher average wages, more innovation, and greater export potential.

Success stories of rebounding local economies often provide practical, realistic lessons. CFR’s Edward Alden discussed how North Carolina is responding to the collapse of its manufacturing base.

House Passes Ex-Im Bank Reauthorization

The House of Representatives voted overwhelmingly to reauthorize the U.S. Export-Import Bank (NYT), a government institution that helps foreign buyers of U.S. exports obtain financing. However, the lopsided vote masked the contentious debate within the GOP, a ideological bout between some pro-business lobbies and conservative political groups. Senate Majority Leader Harry Reid is expected to push the bill through the Senate unchanged in order to avoid expiration of the bank’s authority May 31.

International trade and investment. Read more from leading analysts on the debate over next steps in U.S. trade policy.

Innovation

Twitter Deemphasizes Patents

The Wall Street Journal discusses Twitter’s new stance on patents. Last month Twitter introduced policies restricting its ability to file infringement cases, limiting the value of patents at a time when tech giants spend billions to acquire them, and court cases such as Oracle v. Google garner headlines. Some in Silicon Valley believe patent fights slow innovation, and that startups shouldn’t spend scarce resources on patent filings. Others contend that patents are often the only way investors can extract value from a failed startup.

Should the United States adopt a “patent box” tax incentive as several European countries have done in recent years in order to spur innovation? Jonathan Masters’ latest Policy Initiative Spotlight examines the issue alongside a more conventional policy, the research and development tax credit.

Innovation. Read more on how the U.S. capacity to innovate could play a chief role in economic growth.

Infrastructure

Buying Electricity from Your Roof

Solar panel installers are combining new business models with large tax incentives and cheap solar panels to spread their business to the mass market (NYT). Roof Diagnostics installs solar panels onto a homeowner’s roof for free. The panels remain the property of the installer, and the homeowner signs a 20-year power agreement at fixed rates, often well below prevailing electricity prices. This allows the installer to receive both tax incentives and a steady stream of payments to finance upfront costs; rates of return are generally between 7 and 13 percent.

Scott Thomasson, the president of NewBuild Strategies and an expert on infrastructure funding, recently authored “Encouraging U.S. Infrastructure Investment,” a Policy Innovation Memorandum released by the CFR’s Renewing America initiative. Thomasson proposes new initiatives to address crumbling U.S. infrastructure.

Infrastructure. Read more on how upgrading the nation’s aging network of roads, bridges, airports, railways, and water systems is essential to maintaining U.S. competitiveness.

Education and Human Capital

Could Digital Grading Aid Employers?

Education continues to attract innovators who aim to improve the learning experience; the Harvard Business Review discusses using technology to aid employers in selecting employees. Employers can review transcripts, but have limited and costly means to measure important attributes such as communication ability, creativity, and thoroughness. CoursePeer changes that by allowing professors to grade online interactions with students using different metrics. This feedback is then tabulated and provided to potential employers.

Education and human capital. Read more from experts discussing ways to improve U.S. education and immigration policies.

Corporate Regulation and Taxation

Goldman Sachs Pares Hedge Fund for Volcker Rule

As Paul Volcker defends his eponymous rule (NYT), Bloomberg reports that Goldman Sachs redeemed about $250 million from hedge funds in the first quarter. The U.S. bank plans to gradually sell off its positions to prepare for the Volcker Rule’s requirement limiting the stakes banks can have in hedge funds. In a filing, Goldman said: “We currently expect to redeem up to approximately 10 percent of certain hedge funds’ total redeemable units per quarter over 10 consecutive quarters, beginning March 2012 and ending June 2014.”

Corporate regulation and taxation. Read more from top economists and business experts on solutions for addressing corporate tax reform.

The Morning Brief is compiled by Renewing America contributor Steven J. Markovich.

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