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HIGH-TECH INDUSTRIES DRIVING GLOBAL ECONOMIC ACTIVITY

September 11, 1998

Four industries (aerospace, computers and office machinery, electronics and communications equipment, and pharmaceuticals) are growing at a rate more than twice as fast as other manufactured goods,  thereby driving national economic growth around the world, according  to a National Science Foundation (NSF) Issue Brief, High-Tech Industries Drive Global Economic Activity (NSF 98-319).

The study found that since 1980, these industries’ inflation-adjusted growth has averaged nearly 6 percent annually compared with a rate of 2.4 percent for other manufactured goods. Global economic activity in high-tech industries was especially strong from 1992-95, when output grew at over 8 percent per year, once again more than twice the rate of growth for all other manufacturing industries.

The report also examines how high-tech industries benefit national economies finding that:

* High-tech firms are associated with innovation. Firms that innovate tend to gain market share, create new product markets, and use resources more productively.

* High-tech firms are associated with high value-added production and success in foreign markets, which helps to support higher compensation to the workers they employ.

* Industrial R&D performed by high-tech industries has other spillover effects. These effects benefit other commercial sectors by generating new products and processes that can often lead to productivity gains, business expansions, and the creation of high-wage jobs.

* Data provided by the report for the 1990s shows an increased emphasis on manufacturing in the four high-tech industries among the major industrialized countries. In 1995, high-tech manufactures are estimated to represent 15 percent of manufacturing output in both the United States and Japan, 14 percent in the United Kingdom, and 10percent each in France and Germany.

Two Asian countries, China and South Korea, typify how important these R&D intensive industries have become to the newly industrialized economies. In 1980, high-tech manufactures accounted for just 4 percent of China's total manufacturing output; this proportion jumped to nearly 10 percent in 1989 and then reached 12.5 percent in 1995, more than for France or Germany. In 1995, high-tech manufacturing in South Korea accounted for about the same percentage of total output as in Japan and the United States (15 percent).

For more information or additional details, visit the NSF Issue Brief  website at http://www.nsf.gov/sbe/srs/issuebrf/sib98319.htm.

Virginia