Despite signs of a slowing economy, the United States continues to rank among the leaders in all major technology areas. Advances in U.S. aerospace, computer, and telecommunication industries continue to influence new technology development and dominate technical exchanges between the United States and its trading partners. New data on patenting trends in the United States bears this out and may suggest a level of optimism by U.S. and foreign inventors in the U.S. economy.

The United States also continues to be a leading provider of knowledge-intensive services, but it may face greater competition in the near future as European countries devote more resources to service-sector R&D. For now, however, exports of U.S. technological know-how sold as intellectual property continue to exceed U.S. imports of technological know-how.

Though strong, U.S. high-technology industries have struggled in the shrinking economy and in the aftermath of the September 11 terrorist attacks. Declining investment in IT has clearly affected the bottom line in U.S. firms producing computer hardware and software. Firms involved in all aspects of communication, along with those in the U.S. aerospace industry, may be facing the greatest challenges. Airlines have sharply cut back orders due to declines in travel and tourism, and they face tougher competition in their struggle to retain market share while addressing the challenges raised by the events of September 11 and the still evolving societal and economic reactions to them. The event itself affected the nation in myriad ways, but it set an already struggling U.S. aerospace industry on its heels, and the industry continues to lose world market share.

Asia's status as both a consumer and developer of high-technology products has been enhanced by development in many Asian economies, particularly Taiwan, South Korea, and China. Several smaller European countries also exhibit growing capacities to develop new technologies and to compete in global markets.

The United States continues to be a leading developer and supplier of high-technology both at home and abroad. This success has likely been influenced by a combination of factors: the nation's long commitment to investments in S&T; the scale effects derived from serving a large, demanding domestic market; and the U.S. market's willingness to adopt new technologies. These same market dynamics already show signs of benefiting Asia and a more unified Europe and will likely enhance the value of their investments in S&T.