Abstract
This chapter examines manufacturing in the early foundations of economics before moving into a relatively short, but admittedly complex, application of both economics and trade theory to the manufacturing sector. The review focuses first on growth theory, including New Growth Theory and its efforts to better model growth. Because these models remain imperfect, manufacturing's role is still not adequately understood. The discussion then turns to trade theory. New Trade Theory has led to a focus on the innovative and competitive capabilities of firms; the weaknesses of smaller firms in developing innovation capability have affected the manufacturing sector overall. However, these developments in growth, productivity, and trade theory and their application to manufacturing have been largely missed by mainstream economics. The analysis then turns to a discussion of some of the shortcomings of mainstream economics as it has applied to manufacturing.
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