'Made in America': What Does America Manufacture?

March 4, 2011 — -- In the first part of ABC News' series, "Made in America," correspondents David Muir and Sharyn Alfonsi removed all foreign made products from the Usry family's Dallas home.

The result: A virtually empty house -- no beds, no tables, no chairs, no couches. The only items that were left were a vase, a candle and some pottery.

Bruce Katz, the director of metropolitan policy at the Brookings Institution said that is not surprising.

"Dealing with these consumption products in American homes might give a distorted perspective of what America makes and our relationship with the rest of the world," Katz said.

America, he added, still makes many things that are sold abroad and domestically -- just not things that are found in the house.

"There is the economy we see in our daily lives and there is the hidden economy, which is out of sight and out of mind; that's the real economy," he said. "It makes the economy we see happen because it's productive, innovative and profit making, and that's what makes America successful."

According to Moody's Analytics, when it comes to manufacturing the U.S. is a global leader in the production of medical equipment, airplanes, movies, pharmaceuticals and agriculture products.

Aside from movies, although Americans may come into contact with these products they are not goods that consumers purchase.

But, Katz said, such advanced, higher-value sectors are driving America's economy and the continued growth and advancement of those fields will sustain it.

In an editorial for Forbes in 2009, Robert Reich, the former secretary of labor and a professor at the University of California, Berkeley, declared that "manufacturing jobs are never coming back."

"As productivity rises, employment falls because fewer people are needed," he wrote. "This goes well beyond the factory floor. America ... used to have lots of elevator operators, telephone operators, bank tellers and service-station attendants. Remember?

"Manufacturing is following the same trend as agriculture," he added. "A century ago, almost 30 percent of adult Americans worked on a farm. Nowadays, fewer than 5 percent do. That doesn't mean the U.S. failed at agriculture. Quite the opposite. American agriculture is a huge success story. America can generate far larger crops than a century ago with far fewer people."

Reich said that in today's economy, the new jobs are going to be in research and development, design and engineering, and high-level sales, marketing and advertising.

"These advanced industries require a higher level of skill, from industrial design to industrial production," Katz told ABC News. "It requires a different kind of American worker."

It is the type of worker that conceptualizes, researches and designs Apple's iPod, but does not build it. Although the iPod is assembled in China, the vast majority of its value is from the innovation and intellectual property that is developed at its California headquarters.

Licensing intellectual property from things like drug formulas, music, movies and television shows is a big U.S. export. According to Brookings, in 2008 royalties for intellectual property exports were $91.6 billion.

The commercial service sector also is one of America's big exports. Brookings reported that, in 2008, America exported $500 billion in commercial services, including professional and technical services, plus management and consulting.

America's future economic prosperity has to be built on exports, Katz said.

"Only 1 percent of our corporations export abroad, and less than half of those corporations export to more than one country," he said. "We need to understand that if we look externally for markets, there is enormous potential for the export of goods and services from the United States, and for the growth of jobs, good jobs, quality jobs in the near term."