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Chapter 6. Industry, Technology, and the Global Marketplace


The U.S. economy continues to be the leading global economy in technology-based industries, as measured by its overall performance, market position in these industries, and position in patenting and other measures of innovation-related activities.

The strong competitive position of the U.S. economy overall is tied to continued U.S. global leadership in many KTI industries. The United States continues to hold the dominant market position in commercial KI services, which account for nearly one-fifth of global economic activity, and in HT manufacturing industries. The U.S. trading position in commercial KI services and licensing of patents and trade secrets remains strong, as evidenced by the continued U.S. surpluses in these areas. The United States is the leading source of RD&D and venture capital financing of clean energy technologies.

The overall U.S. ranking notwithstanding, its market position in almost all of these industries has not been improving; in many cases, it has slipped. China, the second-largest producer in HT manufacturing industries, has narrowed its gap with the United States. U.S. production and employment have fallen sharply in the HT manufacturing industries of communications, computers, and semiconductors, coinciding with U.S. companies moving assembly and other activities to China and other countries. The U.S. trade position in these products has shifted to deficit because, although exports have increased, imports have increased even more. In addition, productivity growth of the U.S. economy has slowed in the 2000s relative to the 1990s.

For much of the 2000s, the EU's position was similar to that of the United States—relatively strong overall economic performance, with a slowdown in productivity and flatlining or slight declines in its market position in KTI industries. During this period, Japan's economy showed less dynamism compared with the economies of the United States and the EU, and its market position declined steeply in many KTI industries. Japan's loss of market position in HT manufacturing industries was due, in part, to Japanese companies shifting production to China and other Asian economies.

Among large developing countries, China's progress clearly stands out. China has become a leading provider of commercial KI services and the second-largest global producer in HT manufacturing industries. China has become the largest global exporter in HT manufacture products and has developed surpluses in trade of HT manufacturing products and commercial KI services. China has become the world's largest source of commercial financing for clean energy and a leading producer in the solar industry. China has led the acceleration of productivity growth in developing countries over the last decade. However, China's indigenous capability in KTI industries and other indicators is uneven. Much of China's HT manufacturing output is controlled by MNCs that import higher-value components from other countries. Chinese companies have made limited progress in more technologically advanced and higher-end manufacturing activities. In addition, China's share of USPTO and economically valuable patents remains very small.

Other developing economies—including Brazil, India, and Indonesia—are showing rapid progress in their overall economic growth and technological capabilities. Their market positions in many KTI industries have strengthened, coinciding with their rapid economic growth and development. Productivity growth has accelerated in most developing countries.

Led by China, KTI industries in developing countries have grown much faster than developed economies in the aftermath of the recession. The United States has generally fared better than other developed countries in most KTI industries in the aftermath of the 2008–09 global recession. Although productivity growth has been weak, the United States continues to grow faster than most other developed countries. The EU's market position in KTI industries has eroded because of the EU's economic and financial problems. Japan continues to lose market share in many KTI industries.