What factors allow manufacturing to succeed in a developed country? I am undertaking some research regarding differences between manufacturing sectors across countries.

I have noted that China has taken a lot of the less skilled manufacturing work away from developed countries. It clearly has a comparative advantage with regard to unskilled labour. Generally, it will be difficult for developed countries to compete with the wages of the lesser developed countries.

This has resulted in the decline of manufacturing in some countries such as Australia (12.6% of GDP in 2000 to 6.7% of GDP in 2015) or the US (14.2% to 12.3%). Whereas other developed countries are still able to successfully manufacture. Germany for example has had ~22% of GDP from manufacturing for the last 15 years.

What factors allow manufacturing to succeed in a developed country?

I am expecting it to be related to:


Regulation
human capital
size of domestic market
trade deals


I am interested in references in particular.
A massive simplification would to look at developed (high wage) countries as experiencing two forces.

There is the offshoring pathway. Low skill manufacturing can be offshored to lower waged countries. Output in the home country decreases.

Then there is the technological pathway. Automation and innovations can work to take the bottom out of employment, saving on wage costs. Manufacturing will become increasingly dependent on a more skilled employee. Output in the home country increases.

The expected trend is one away from the low skill manufacturing (think clothing) towards more complex, bespoke products (think 3D printed prosthetics).

The overall environment is notably more complicated with government subsidies, global supply chains and trade deals among others things all being important.

Deloitte Access Economics have released a manufacturing competitiveness report which covers elements of this.