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Given that the US excels in innovation and venture capital financing, how do young firms scale-up their operations and why do so many manufacturing firms have trouble growing? The authors look at high-tech spinoff companies from MIT in order to see the limitations even these privileged companies face. They identify a “learning by building” process through which firms use prototype manufacturing to develop commercial products. But, even these MIT spinoffs face an “inflection band” in which venture capital is insufficient to scale-up and other funding sources can be scarce, leading firms to move offshore. The authors suggest a public interest in finding ways to help firms scale production in the United States.

Using the lens of onshoring versus offshoring, this chapter draws on interviews with executive at large firms with substantial manufacturing presence in the US, finding that interviewees cited a number of reasons for locating production offshore. In addition, the author develops an analytic model of the total cost of a product and how various product characteristics might affect that cost. The model identifies innovativeness as a factor that supports onshoring as well as pointing out that product variety itself is a form of innovation. Three major factors foster onshoring: innovation in products and processes, a low ratio of value to weight, and a high variety of products.

Paul Osterman, Professor of Human Resources and Management at the MIT Sloan School of Management, starts the dialogue by explaining why offshoring is not a new phenomenon and then argues that a “stairway” should be built inside companies so that the employees can improve their conditions during their working lives. He expresses his disagreement with Rifkin’s theory and outlines why he believes there will be no “End of Work”. Later he reflects on how to balance supply and demand in the labor market with university training, and why ethics is important in the corporative world and how they try to instill this in students at the MIT Sloan School of Management. He goes on to defend the need to fight for open knowledge and for ‘opening up’ the economic system related to this, and argues why the challenge of creating ‘decent’ jobs according to standards for decent work, with social protection and decent pay continues to be decisive. Finally, he gives his opinions about new systems for organizing work in the new economy, such as Amazon’s Mechanical Turk (MTurk), which is based on human intelligence tasks (HITs).

In Chapter 10, Fiorini, Jansen, and Weisi Xie summarize the trends documented in the first nine chapters of this book, documenting increasing globalization, structural change in all economies, and employment losses in manufacturing. They first ask whether structural change has accelerated in recent years. Focusing in particular on the relative role of the manufacturing sector in the USA and considering employment, they conclude that changes in recent years are not dramatic, although a more contrasting picture arises in terms of value added, as a result of changes in relative prices and productivity differentials. Their second question is whether the movement of factories to the developing world has been systematic and global. Again, changes observed in the sectoral composition of economic activity are far more complex than what would be expected from a pure offshoring story.

In Chapter 8, Ebenstein, Harrison, and McMillan create a new measure of globalization’s impact on the labour force by defining occupational exposure to globalization. Workers can more easily switch industries than occupations, and so wage declines are felt by workers who are forced to leave manufacturing or their occupation entirely. The statistical analysis confirms that an occupation-based analysis is more effective at uncovering the impact on worker wages of global competition. Offshoring to low-wage countries is associated with wage declines for US workers, particularly those performing routine tasks. Occupational exposure to globalization puts significant downward pressure on wages because such a measure captures the movement of workers out of manufacturing and into lower wage services. The evidence presented here shows that there is a premium associated with manufacturing jobs; the same individual who switches employment and moves from manufacturing to services typically loses 5–20% of their initial wage.