However, outsourcing abroad almost certainly explains little of the recent increase in labor productivity; indeed, if outsourcing results in the loss of high-skill, high-wage jobs in the United States, as many fear, its effect would be to lower rather than to raise domestic labor productivity. 12  Production is measured here by the manufacturing component of the industrial production index.
Choosing an exchange rate regime In the years following World War II, many countries operated under an exchange rate regime that one might call “fixed until further notice.” This system, known as the Bretton Woods system, saw most countries peg the external value of their currencies to some other currency, most often the U.S. dollar.