Policymakers in many countries increasingly emphasize the central role of knowledge, particularly research and development and other activities that advance science and technology (S&T), in a country's economic growth and competitiveness. This chapter examines the downstream effects of these activities on the performance of the United States and other major economies in the global marketplace.
This chapter covers two main areas. The first is knowledge- and technology-intensive (KTI) industries in both the service and manufacturing sectors. KTI industries are 10 categories of industries classified by the Organisation for Economic Co-operation and Development (OECD 2001, 2007) that have a particularly strong link to S&T:
This report gives special attention to KTI industries in information and communications technology (ICT). ICT combines the HT manufacturing industries of computers and office machinery, communications equipment, and semiconductors with the KI services of communications and computer programming (a subset of business services). ICT industries are important because they provide the infrastructure for many social and economic activities, facilitating innovation and economic growth.
Industries that are less KTI, however, remain very important in the world economy and therefore receive some attention in the chapter (see sidebar, “Industries That Are Not Knowledge or Technology Intensive”).
The globalization of the world economy involves the rise of new centers of KTI industries. Although the United States continues to be a leader in these industries, China, India, Brazil, and other developing economies have vigorously pursued national innovation policies in an effort to become major producers and exporters of KTI goods and services. Advances in S&T have enabled companies to spread KTI activity to more locations around the globe and to develop strong interconnections among geographically distant entities.
The second major focus of the chapter is innovation. Because innovation is closely associated with technologically led economic growth, the analysis of innovation in the chapter emphasizes the role of KTI industries. The measurement of innovation is an emerging field, and current data and indicators are limited. However, activities related to the commercialization of inventions and new technologies are regarded as important components of innovation indicators. Such activities include patenting, the creation and financing of new HT firms, and investment in intangible goods and services.
In recent years, innovations aimed at developing improved technologies for generating clean and affordable energy have become increasingly important in both developed and developing countries or economies. Clean energy has a strong link to S&T. Like ICT, energy is a key element of infrastructure, the availability of which can strongly affect prospects for growth and development. For these reasons, the chapter pays special attention to energy technologies.
Several themes cross-cut the various indicators examined in the chapter:
The chapter focuses on the United States, the EU, Japan, and the large and rapidly developing economy of China. Other major developing countries, including Brazil, India, and Indonesia, also receive significant attention. The time-span is from the late 1990s to the present.
This chapter is organized into five sections. The first section discusses the prominent role of KTI industries in regional and national economies around the world.
The second section describes the global spread of KTI industries and analyzes regional and national shares of worldwide production. It discusses shares for the KTI industry group as a whole, for KI services and HT manufacturing overall, and for particular services and manufacturing industries within these groups. Because advanced technology is increasingly essential for non-HT industries, some data on these industries are also presented.
The third section examines indicators of increased interconnection of KTI industries in the global economy. Data on patterns and trends in global trade in KTI industries make up the bulk of this section. The section also presents data on U.S. trade in advanced technology products (ATP), examining trends in U.S. trade with major economies and in key technologies. Data on domestic and foreign production and on employment in U.S. multinational companies (MNCs) in KTI industries are presented as indicators of the increasing involvement of these economically important firms in cross-border activities. To further illustrate the effects of globalization on the United States, the section presents data on U.S. and foreign direct investment abroad, showing trends by region and for individual KTI industries.
The fourth section presents innovation-related indicators. It examines countries' shares in all patents granted by the United States in various technology areas. It next examines countries' shares of high-value patents. It presents innovation-related data on U.S. industries from the National Science Foundation's (NSF's) Business R&D and Innovation Survey (BRDIS). A discussion of U.S. HT small businesses includes data on the number of HT small business startups and existing firms, employment, and venture capital and Small Business Innovation Research (SBIR) investment by industry.
The last section presents data on clean energy and energy conservation and related technologies, which have become a policy focus in developed and developing nations. These energy technologies, like KTI industries, are closely linked to scientific R&D. Production, investment, and innovation in these energies and technologies are rapidly growing in the United States and other major economies.
This chapter uses a variety of data sources. Although several are thematically related, they have different classification systems. The sidebar “Comparison of Data Classification Systems Used” describes these systems and aims to clarify the differences among them. The discussion of regional and country patterns and trends includes examination of developed and developing countries using the World Bank's per capita income classification. Countries classified by the World Bank as high income are developed countries, while those classified in the other income levels—upper middle income, lower middle income, and low income—are classified as developing. In this chapter, “country” and “economy” are used interchangeably in these discussions.