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Overview

Fast-Rising Global Output of Knowledge- and Technology-Intensive Firms


Governments in many parts of the world are acting on the conviction that knowledge- and technology-intensive economies create well-paying jobs, contribute high-value output, and ensure economic competitiveness. In response to changing opportunities, knowledge-intensive (KI) services industries and high-technology (HT) manufacturing industries have grown more rapidly than other segments of economic activity[17] (figure O-24 ).

In 2007, these knowledge- and technology-intensive (KTI) industries combined contributed just under $16 trillion to global economic output—about 30% of world GDP (figure O-25 ).

Initially these industries were the province of developed nations, but they have grown rapidly in developing markets. The global value-added volume for the largest aggregate—commercial knowledge-intensive services—increased from $4.5 trillion in 1995 to $9.5 trillion in 2007 (figure O-26 ).

The United States, with $3.3 trillion in 2007, produced the largest value-added output of these industries, which include business services, financial services, and communications. The United States was followed by the EU with $2.9 trillion. World shares in these industries fluctuated for the United States and the EU, but by 2007 had settled near their 1995 levels. Increased production by China and the Asia-9 expanded their value-added output of commercial KI services, but at about half a trillion dollars each, their world market shares remained just below 5%. Flat output growth in Japan caused its market share to decline by more than half, to 8%.

The same pattern is evident in the individual KI service sectors: fluctuations in the U.S. and EU shares, steep declines for Japan's shares, and modest to rapid growth from low bases for China and the Asia-9, leading to modest increases in their world shares.

Relative to these KI trends, high-technology manufacturing shows a much stronger world position for the developing Asian economies and much steeper decline for Japan. The Asia-9 output was about 10% of the value-added world total over the 1995–2007 period, while China's share increased from 3% to 14%. Japan's share dropped from 27% to 11%. The U.S. and EU shares both showed modest upward movement.

The five HT industries are, in decreasing order of the $1.2 trillion 2007 global value-added total: communications and semiconductors ($445 billion), pharmaceuticals ($319 billion), scientific instruments ($189 billion), aerospace ($153 billion), and computers and office machinery ($114 billion). The aggregate distribution by country/economy is shown in figure O-27 .

The United States ranked first with 31% of the total, followed by the EU's 25% share. The United States was the world leader in communications and semiconductors (29%), pharmaceuticals (32%), and aerospace (52%), and ranked behind the EU in scientific instruments (19% vs. 44%).

However, in computers, the United States (25%), the EU (15%), and Japan (5%) all ranked well behind China (39%). This category saw a particularly rapid shift in relative world value-added positions (figure O-28 ).

These data obscure a larger dynamic, discussed briefly below: the development of a high-technology assembly zone in the Asia region, arrayed largely around China. It is likely that part of China's rapid growth of value-added in computer manufacturing reflects the large-scale movement of Taiwanese manufacturing facilities to, and subsequent export of computer products from, China. Nevertheless, these data highlight the growing concentration of the world's computer and office machinery manufacturing in Asia.

Notes

[17] These industry groups are defined by the OECD and form the basis for databases of economic activity that over a large number of the world's economies. Knowledge-intensive services industries include the commercially tradable business, financial, and communications services, and education and health services, which are considered more nearly location-bound and closer to government functions. High-technology manufacturing industries include aircraft and spacecraft; pharmaceuticals; office, accounting, and computing machinery; radio, television, and communication equipment; and medical, precision, and optical instruments.
 

Science and Engineering Indicators 2010   Arlington, VA (NSB 10-01) | January 2010

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