U.S. knowledge- and technology-intensive industries added value even during pandemic downturn

A recent National Science Board’s Science and Engineering Indicators report on the knowledge- and technology-intensive (KTI) industries analyzed production, trade and enabling technologies of KTI industries and found that KTI industries contributed 11 percent to both U.S. GDP ($2.3 trillion) and global GDP ($9.2 trillion) in 2019. Even though overall U.S. GDP declined during the COVID-19 pandemic, the value added generated by domestic KTI industries increased by 2.2 percent in 2019–20 as industries responded to a surge in demand led by increases in output of industries supporting remote work transitions and supplying medical products, while manufacturing of chemicals, transportation equipment and machinery declined. 

KTI industries are composed of both the manufacturing and services industries. While the national share of gross domestic product (GDP) produced by KTI industries has remained stable at 11 percent since 2002, a shift has occurred in the composition of U.S. KTI output away from manufacturing industries and into services industries. KTI manufacturing industries include air and spacecraft and related machinery; pharmaceuticals; computer, electronic, and optical products; chemicals and chemical products; transportation equipment (excluding aircraft); electrical and other machinery and equipment; and medical and dental instruments. KTI services industries include information technology (IT) and other information services; software publishing; and scientific research and development.

The report notes that domestic KTI output is highly concentrated geographically.  California produced the largest share (25 percent) in 2020 and it along with 14 other states accounted for 76 percent of the total value added generated domestically by KTI industries.

Looking at the global picture, China surpassed the U.S. to become the world’s largest producer of KTI manufacturing output in 2011, and it has been driving the rapid increase of global output for many KTI manufacturing industries over the past decade, according to the indicators report. China’s global share of KTI manufacturing value added increased from 20 percent in 2011 to 31 percent in 2019. Similar to the shift in the increasing share of KTI services industries domestically, globally the KTI manufacturing value added fluctuated between 19 and 21 percent since 2011. During that same period, the U.S. increased its global share of KTI services value added from 30 percent in 2011 to 37 percent in 2019.

The full report, Production and Trade of Knowledge- and Technology-Intensive Industries, Science and Engineering Indicators 2022, is available at https://ncses.nsf.gov/pubs/nsb20226/.