High-Technology Manufacturing Industries
National economies benefit from high-technology industries that generate new products and processes, stimulate other business activity, increase productivity, and create high-wage jobs. The OECD defines five industrial sectors as high-technology: aerospace, pharmaceuticals, computers and office machinery, communication equipment, and scientific (medical, precision, and optical) instruments. The following analysis is in terms of domestic value added, i.e., the total production value minus the value of foreign inputs.
- Asia performed more than one-third of the world's value-added production by high-technology manufacturing industries from 1990 to 1997, greater than the U.S. and EU shares. Thereafter, Asia's share fell below that of the United States as global demand soared for communication equipment and other information technology products produced in the United States, while growth of high-technology production became erratic and slowed in many East Asian economies (figure 36).
- Throughout the entire 1990–2003 period, Asia's high-technology value added has consistently exceeded that of the EU. Unlike the rising trend observed for Asia in 2002 and 2003, the EU's value added has essentially remained flat since about 2000 (table 16).
- Japan once accounted for the lion's share of high-technology value added in Asia, but its long-term output grew more slowly than that of other Asian economies and dropped sharply after 2000. Its share of Asia's total declined from 77% in 1990 to half in 2000 and 38% in 2003 (figure 37).
- China's high-technology value-added manufacturing expanded rapidly, especially since 1998, and in 2003 approached 80% of the magnitude of Japan's. South Korea also recorded rapid growth since 1998.
- High-technology industry value added activity has also grown rapidly in Taiwan, Singapore, and Malaysia since the late 1990s. Of the 10 Asian economies examined here, only Indonesia and Thailand showed little or no growth between 1993 and 2003 (figure 38).
Figure 36 Source Data: Excel file
Table 16 Source Data: Excel file
Figure 37 Source Data: Excel file
Figure 38 Source Data: Excel file
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High-Technology Manufacturing Exports
High-technology manufacturing exports provide an indication of a country's ability to produce high-technology goods that can compete in the international marketplace. S&T help to support competitiveness in international trade and to generate revenues needed for further investments in innovation. Data reported here reflect the value of exports by high-technology manufacturing industries.
- High-technology exports worldwide grew from $474 billion in 1990 to $1.9 trillion in 2003. Over the period, major shifts occurred in the relative positions of exporting regions/countries (table 17).
- Exports by Asia's high-technology manufacturing
industries have grown especially rapidly since 1990, contributing to the region's strong economic performance. In 2003, Asia accounted for 43% of world high-technology exports, up from 33% in 1990 (figure 39).
- The 1990–2003 increase in Asia's share of world high-technology manufacturing exports was accompanied by declines in the EU share (from 37% to 32%) and the U.S. share (from 23% to 16%). Since 1992, Asia's share has been larger than that of the EU; since 2000 it has been more than twice the U.S. share (table 17).
- All of the Asian economies expanded their high-technology exports rapidly from 1990 to 2003, but two distinct patterns emerged. Japan, the largest Asian exporter, doubled the volume of such exports over the period, while combined exports of the other Asian economies grew more than eightfold, sending the Japanese world share plummeting from 17% in 1990 to 9% by 2003. During that period, the Japanese share of Asian high-technology manufacturing exports fell from half to 20% (table 17).
- In 2001, after years of double-digit growth in its high-technology manufacturing exports, China displaced Japan as Asia's leading exporter of such goods. The growth in Asia's share of world activity during the 1990s was also driven by increased exports from Singapore, South Korea, and Taiwan (figure 40).
- Among Asian economies, China's success as a high-technology exporter is the most prominent. In 2003, China accounted for 12% of world high-technology exports, up from 5% in 1990. Singapore, with the smallest population and landmass in Asia, was third at 6% in 2003. South Korea and Taiwan each had about 5%.
Table 17 Source Data: Excel file
Figure 39 Source Data: Excel file
Figure 40 Source Data: Excel file
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High-Technology Service Industries
Service-sector industries account for about two-thirds of world economic activity, and high-technology or knowledge-based service industries are a large and growing part of the sector. OECD identifies five broad service industries that report high R&D intensities: communication, finance and insurance, business, education, and health services.
- Asia lags behind both the EU and the United States in revenues generated by high-technology services. However, revenue growth in the high-technology service sector during 1990–2003 has been slightly faster in Asia than in either the EU or the United States (figure 41).
- Japan has by far the largest high-technology service sector of the 10 Asian economies for which data are available. However, compared with Japan, the sector is growing faster in most other parts of Asia (table 18).
- High-technology service industries in most Asian economies are in relatively early stages of development. In terms of revenue growth in the sector, China, South Korea, India, Malaysia, and Taiwan stand out. India's high-technology service industry has grown the fastest; yet, despite more than tripling its revenues from 1990 to 2003, India accounted for only about 1% of total world revenues in the high-technology service sector in 2003 (figure 42).
Figure 41 Source Data: Excel file
Table 18 Source Data: Excel file
Figure 42 Source Data: Excel file
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U.S.–Asia and U.S.–EU Trade Flows in Technological Know-How
Firms trade intellectual property when they license or franchise proprietary technologies, trademarks, patents, and inventions to entities in other countries. The data analyzed here represent U.S. receipts (royalties) and payments (fees paid) from technological know-how—the exchange and use of industrial processes with unaffiliated foreign companies in Asia and the EU. The data indicate trends in the production and diffusion of technical knowledge.
- The United States is a net exporter of technological know-how, and trade with Asia accounts for most of the surplus. U.S.–EU trade in industrial processes generally shows only a small U.S. surplus (figure 43).
- In 2003, the latest available year with comparable data, U.S. receipts from technology licensing transactions with Asia were five times the amount of similar U.S. payments to Asia (table 19).
- Japan remains the largest customer in the world for technological know-how from the United States, although its purchases declined significantly in the late 1990s before rebounding in 2000 and 2001. In 1993, Japan's share of U.S. receipts was at its peak at approximately 51%; by 2003, Japan's share was 28% (figure 44; table 19).
- South Korea has been the second largest customer in the world for U.S. technological know-how, accounting for between 9% and 19% of U.S. receipts from 1990 to 2003 and reaching its peak in 2000. Taiwan is the only other Asian economy to record any significant intellectual property trade activity with the United States.
- Japan is the only Asian country to receive any sizable payments from U.S. firms for access to technological know-how.
- U.S. receipts of licensing fees or royalties from China have been small, on the order of $100 million in 2003. U.S. payments to China have been minuscule, indicating little flow of technological know-how from China to the United States as yet.
Figure 43 Source Data: Excel file
Table 19 Source Data: Excel file
Figure 44 Source Data: Excel file
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 Based on above-average ratios of research, development, and evaluation expenditures to total output.
 Based on above-average ratios of R&D spending to total sales and on shares of scientific and technical employment.
Data represent U.S. firms' royalties and payments generated from the exchange and use of industrial processes with unaffiliated foreign companies. Such transactions between unaffiliated companies better reflect the market value of technical know-how than flows among affiliated firms.