Date of publication: 2017-07-09 02:40
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Manufacturing is vital to a nation, it fosters a strong domestic economy, generates employment sustaining family wages and salaries, resulting in decent standard of living for the working class. Manufacturing firms large and small are bastions of state and local economies, supplying jobs and tax revenues to finance essential public services. Manufacturing creates economic activity spillovers in other sectors that supply intermediate goods and services. It also stimulates creation of numerous high-end job services such engineers and programmers in software technology within local economies. Additionally it drives economic productivity, innovation and engine of overall economic growth.
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The increasing deficit in trade posse’s long term effects on the growth of the economy. The economy consumes more than it produces. This deficit cannot be scaled down if economic activities continue to be exported overseas. Goods and services produced and provided by firms are being imported back to the worsening the deficit situation. Outsourcing also diminishes the purchasing power of workers and shrinks their presence in the consumer market.
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Another long term affect that poses much greater in addition to knowledge spillovers is the lack of local talent available to be utilized in the economy. College enrollment for courses leading to high skilled jobs as suffered a setback due to uncertainties associated with outsourcing of these jobs. In addition, the economy is at risk of losing its attractiveness to skilled immigrants.
The current tax regulations permits multinational corporations to postpone tax payment on foreign earnings until those earnings are repatriated. These provisions encourage continued investment in foreign economies with low tax rates at the expense of creating jobs in the economy, and further tilting trade deficit in favor of emerging economies. Comprehensive tax reforms reflecting the changing situations need be recommended and enacted. These regulations must be punitive to businesses or hinder foreign investments and expansion by firms.