Manufacturing's performance in the 1990s was much higher than in the 1980s. Another way to look at economic growth is through the contribution of technological advances, hours worked and physical capital, such as factories and machines. Together, these factors make up the economy's capacity to produce. Using this method, manufacturing's contribution to growth in the 1990s was 33 percent. Manufacturing's main impact on growth is through technological advance, contributing 57 percent.
Manufacturing also makes smaller, but significant, contributions to labor and capital investment.
This number is based on the supply side of the economy, or production function. It differs from the number for GDP in the sense that GDP is measured as a sum of expenditures, while the production function measures the long-term capacity to produce. Investment in research and development is the single most important source of technological advance. The new technologies developed by manufacturing often spill over into other sectors of the economy. For example, the technology in ATM machines originated with equipment used on the factory floor.