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Overview

Global Output of Knowledge- and Technology-Intensive Firms

Governments in developed countries believe that KTI economies create well-paying jobs, contribute high-value output, and ensure economic competitiveness. Governments in many developing countries believe the same and promote the growth of knowledge-intensive services and high-technology manufacturing industries.[18]

In 2010, these KTI industries contributed a combined $18.2 trillion to global economic output—about 30% of world GDP, and a growing share of many countries' economic output. Services are by far the largest aggregate, totaling $16.8 trillion: $10.9 trillion in tradable services, and $5.9 trillion in more location-bound health and education services. High-technology manufacturing added $1.4 trillion (figure O-26).

The effects of the 2007–09 recession on KTI industry output are visibly more severe than were those of the 2001 recession. A slowdown in growth in 2008 was followed by contraction or, in the case of knowledge-intensive services, lack of growth in 2009 and a sharp upswing in 2010. High-technology manufacturing went from 4.9% growth to a 5.7% contraction to 13.5% growth.

The largest aggregate in the KTI category is commercial knowledge-intensive services, which includes business and financial services and communications. The value of its global output increased from $4.9 trillion in 1998 to $9.4 trillion in 2007. As with all KTI industries, it showed recession effects that were more severe for the EU than for the United States (figure O-27). The United States, with $3.6 trillion in 2010, generated the largest value of these industries, as its output expanded after flat growth in 2008 and 2009.

The EU was particularly hard hit by the recession, resulting in declining output followed by shallow growth. The rest of the world suffered a 1-year slowdown or shallow declines, followed by sometimes vigorous growth. Increased production by China expanded its value-added output of commercial knowledge-intensive services and increased its global share from 3% in 2005 to 7% in 2010.

High-technology manufacturing value-added output suffered a global contraction in 2001 but offered a more varied picture in the 2007–09 recession: Brief but sharp contraction in Asia (excepting China) followed by an equally sizeable rebound in 2010; a sharper drop in the EU, followed by shallow growth; slowing growth followed by strong expansion in the United States; and unimpeded, rapid growth in China. By 2010, China's global share was 19%, up from 3% in 1998 (figure O-28).

The five high-technology manufacturing industries are, in decreasing order of the $1.4 trillion 2010 global value-added total: communications equipment and semiconductors ($512 billion), pharmaceuticals ($346 billion), scientific instruments ($275 billion), aerospace ($137 billion), and computers and office machinery ($127 billion). The United States ranked first overall in aerospace and tied with the EU in pharmaceuticals, but in communications equipment manufacturing it ranked behind Japan and the Asia-8, and in scientific instruments it ranked behind the EU.

China accounts for almost half of the global value of computer and office machinery production. This category saw a particularly rapid shift in relative world positions (figure O-29).

Notes

[18] These industry groups are defined by OECD and form the basis for databases of economic activity that cover 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.
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