- Key Economic Indicators of U.S. Competetiveness
- U.S. Technology in the Global Marketplace
- Global Trends in Patenting
Key Economic Indicators of U.S. Competetiveness
Measuring National Competitiveness of China and India
The rapid economic advancement of China and India has sparked considerable interest and uncertainty about the measurement of their economies and productivity advancements. In the case of China, some scholars contend that official estimates of China’s GDP, GDP per capita, and productivity growth have been overstated because of the difficulty and inaccuracy of estimating economic output within China’s industry and service sectors.
Official estimates by the Chinese government and most international organizations suggest that labor productivity growth rates, as measured by real GDP per person employed, increased by an average of 7.3% between 1995 and 2004. Although a more conservative estimate by the Groningen Growth and Development Centre (GGDC) and The Conference Board (TCB) indicates an average productivity growth rate of 5.6% during the same period, this estimate also finds faster growth from 2000 to 2004 (8.6%) than official sources (7.6%)
GGDC and TCB estimate that India’s productivity growth averaged 4.4% during this period, as measured by GDP per employee
Despite uncertainties over the size of China’s economy and its level of productivity, GGDC and TCB estimate that China’s GDP and productivity are between 4 to 5 times higher on a purchasing power parity (PPP) basis than would be determined using China’s official exchange rate. A PPP adjustment implies that China and India’s GDP levels are about 71% and 28%, respectively, of the U.S. GDP level
U.S. Technology in the Global Marketplace
U.S. Global Market Position in Education and Health Services
Many nations’ governments serve as the primary provider of education and health services. The size and distribution of each country’s population profoundly affect delivery of these services. For these reasons, global comparisons based on market-generated revenues are less meaningful for education and health services than for other service industries.
Education services include governmental and private educational institutions of all types that offer primary, secondary, and university education, as well as technical, vocational, and commercial schools. In 2005, fees (tuition) and income from education- and service-related operations amounted to $1.3 trillion in world value-added revenue
The United States, with arguably the least government involvement, has the largest health-service industry in the world, followed by the EU and Asia
Comparison of Data Classification System Used
This chapter incorporates several thematically related but very different classification systems. These measure activity in high-technology manufacturing and knowledge-intensive service industries, measure U.S. trade in advanced technology products, and track both the patenting of new inventions and trends in venture capital investments. Each classification system is described in the introduction to the section that presents those data. This sidebar shows the classification systems used in the chapter in tabular format for easy comparison.
|System||Type of Data||Basis||Coverage||Data Source||Data Preparation|
|High-technology manufacturing industries||Industry shipments (sales), value-added exports, and imports in constant (2000) dollars||Industry by International Standard Industrial Classification||Aerospace, pharmaceuticals, office and computing equipment, communications equipment, scientific instruments||United Nations Commodity Trade Statistics and Global Insight, Inc.||Global Insight, Inc., proprietary special tabulations|
|Knowledge-intensive service industries||Industry production (revenues from services) in constant (2000) dollars||Industry by International Standard Industrial Classification||Business, financial, communication, health, education services||United Nations Commodity Trade Statistics and Global Insight, Inc.||Global Insight, Inc., proprietary special tabulations|
|Trade in advanced technology products||U.S. product exports and imports, in current dollars||Product by technology area, harmonized code||Biotechnology, life sciences, optoelectronics, information and communications, electronics, flexible manufacturing, advanced materials, aerospace, weapons, nuclear technology, software||U.S. Census Bureau, Foreign Trade Division||U.S. Census Bureau, Foreign Trade Division, special tabulations|
|Patents||Number of patents for inventions, triadic patents (invention with patent granted or applied for in U.S., European, and Japan patent offices)||Technology class, country of origin||More than 400 U.S. patent classes, inventions classified according to technology disclosed in application||U.S. Patent and Trademark Office, European Patent Office, and Organisation for Economic Co-operation and Development (OECD)||U.S. Patent and Trademark Office and OECD|
|Angel capital||Funds invested by U.S. angel investors||Technology||Biotechnology, electronics, financial services, healthcare, industrial/energy, information technology, media, telecommunications||Center for Venture Research, University of New Hampshire||Center for Venture Research, University of New Hampshire|
|Venture Capital||Funds invested by U.S. venture capital funds||Technology area defined by data provider||Biotechnology, communications, computer hardware, consumer related, industrial/energy, medical/health, semiconductors, computer software, Internet specific||National Venture Capital Association||Thomson Financial Services, special tabulations|
Consumption of High-Technology Manufactured Goods
Production of high-technology goods feeds both domestic demand and foreign markets. A broad measure of domestic use is provided by adding domestic sales to imports and subtracting exports. Use so defined encompasses two different concepts: consumption of final goods and capital investment for further production (intermediate goods). Available data series do not permit examining these two concepts separately.
During the past decade, use of high-technology goods has more than doubled after accounting for inflation, from $1.6 trillion to $3.5 trillion
The Chinese trend underscores the difficulty of teasing out final consumption from use as intermediate goods. The strong rise in the Chinese trend is considered by many observers to reflect the rising inflow of intermediate goods, often previously produced in China, from other Asian manufacturing centers into China for further assembly and ultimate export.
Patterns of the world’s use of high-technology manufactures have changed considerably over the past decade. Bearing in mind the difficulty of breaking these trends into final consumption versus investment, the U.S. share rose from 22% in 1995 to about 30% in 2000 and has largely stayed at that level
U.S. IT Investment
Information technology (IT) was a major contributor to innovation and productivity gains during the 1990s. In addition to technical changes within the IT field, companies used IT to transform how their products performed and how their services were delivered. IT applications also improved the flow of information within and among organizations, which has led to productivity gains and production efficiencies.
From 1992 through 2006, U.S. industry purchases of IT equipment and software exceeded industry spending on all other types of capital equipment
U.S. Global Market Position in Other Industries
Agriculture, construction, mining, and utilities are not classified as either manufacturing or service industries and are not categorized by their level of technology or knowledge intensity. Like those in the manufacturing and service sectors, however, these industries incorporate and use S&T in their products and processes. For example, agriculture relies on breakthroughs in biotechnology, construction uses knowledge from materials science, mining is dependent on earth sciences, and utilities rely on advances in energy science.
In construction and utilities, the United States produces more than a fourth of the world’s value added
Classifying Products in Trade
The characteristics of goods in international trade can be determined from either an industry or a product perspective:
- Industry perspective. U.S. industry exports and imports are collected from government surveys of companies with physical operations in the United States, where respondents are asked to report the value of foreign shipments and purchases from abroad. These shipments, both exports and imports, are classified by the primary industry of the responding company. Under this scheme, whether Ford Motor Company exports automobiles or tires, both types of exports would be classified under Ford’s primary industry code "manufacturer of motor vehicles and parts." The value of industry exports includes the value of components, inputs, or services purchased from domestic industries or imported from other countries. The value of industry imports includes the value of components, inputs, or services that may have originated from a different industry or country than the country of origin.
- Product perspective. Data on product trade, such as that reported below in the section about U.S. trade in advanced technology products, are first recorded at U.S. ports of entry. Each type of product is assigned a product trade code by the customs agent according to the harmonized system.* Exporters generally identify the product being shipped and include its proper code. Because many imported products are assessed an import duty and these duties vary by product category, the receiving country customs agent inspects or reviews the shipment to make the final determination of the proper product code and country of origin. The value of products entering or exiting U.S. ports may include the value of components, inputs, or services classified in different product categories or originating from other countries than the country of origin.
* The Harmonized Commodity Description and Coding System, or Harmonized System (HS), is a system for classifying goods traded internationally, developed under the auspices of the Customs Cooperation Council. Beginning on 1 January 1989, HS numbers replaced previously adhered-to schedules in more than 50 countries, including the United States.
Global Trends in Patenting
U.S. Patents Granted by State and Type of Ownership
Examination of USPTO-issued patents provides information on patenting activity by U.S. states and type of ownership. More than half of USPTO patents issued to the United States come from seven states: California, Texas, New York, Michigan, Massachusetts, New Jersey, and Illinois
When patent output by U.S. states is adjusted for their population, however, the rankings change considerably. Two states with small populations, Idaho and Vermont, are ranked first and second, respectively, in their per capita output of U.S. patents in 2005
Patents granted to U.S. inventors can be further analyzed by patent ownership at the time of the grant. Ownership is assigned on the basis of the first-named organization listed on the patent. Corporations own the majority of patents granted to U.S. entities, and their share has been steadily increasing since the early 1990s
Almost all patents are issued to either corporations or individuals. In 2005, U.S. corporations owned 86% of patents issued to U.S. inventors, with individuals owning 14%; in 1992, the respective shares were 74% and 24%. Corporations also own the majority of U.S. patents issued to the rest of the world, and that share also has been increasing over the past decade. The share of individual ownership in patents issued to the rest of the world, which is about half of the level in the United States, has also fallen since the early 1990s.