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Distinction between manufacturing and services has blurred: McKinsey

Says manufacturing is evolving to include more service inputs and to require more service-type employees

Shaikh Zoaib  |  New Delhi 

While continues to be an engine of growth worldwide, a research by Global Institute, said that the distinction between and has blurred.

“Over time, service-like activities — such as R&D, marketing and sales, and customer support — have become a larger share of what do,” McKinsey's latest study - Manufacturing the future: The next era of global growth and innovation - said.

Manufacturing is evolving to include more service inputs and to require more service-type employees, according to the Global Institute.

Also, the study emphasises that though manufacturing matters, its nature is changing.

“Globally, manufacturing output (as measured by gross value added) continues to grow by about 2.7% annually in advanced economies and 7.4% in large developing economies (between 2000 and 2007),” the research said, adding that economies like China, India, and Indonesia have risen into the top ranks of global manufacturing reaching among the world’s 15 largest manufacturing economies.

"Even India, which has leapfrogged into the global trade with its information technology and business process outsourcing industries, continues to build up its manufacturing sector to raise living standards - aiming to raise the share of manufacturing in its economy from 16% today to 25% by 2022," said the latest report, referring to the National Manufacturing Policy adopted in November 2011.

The study also notes that manufacturing has generated 70% of exports in major manufacturing economies and up to 90% of business R&D spending.

Manufacturing contributes 16% of global GDP and 14% of global employment.

First Published: Tue, November 20 2012. 11:44 IST