Euler Hermes
Economic Outlook n° 1187 | Special Report | The Reindustrialization of the United States
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from those countries. The positive view here is that the U.S. has focused on the highest growth industry since 1995, and its lead may make it well-suited for further competitive gains.
▶ However, the concentration in one industry is rather risky to U.S. manufacturing as a whole. An off- set to that risk is that the second largest U.S. concen- tration is in medical technology; none of the other major economies have that in their top three, repre- senting a competitive U.S. advantage in this industry. Similarly, the third largest U.S. industry concentration – pharmaceuticals - appears in only one other coun- try’s list: China. Other countries show concentration risk. Over 40% of Japan’s increase in new patents is related to computers or electronics. This situation is especially dangerous given that Japan’s once domi- nant electronics manufacturers are now struggling to survive in the global marketplace. South Korea is less concentrated with only about 16% in high tech- nology. China however is the most diverse, sugges- ting that the Chinese leadership is fostering deve- lopment across many industries as the country seeks to support its rapid growth rate.
▶ Another measure of a country’s innovation com- pares the number of patent applications to its GDP, as shown below in Table K in the first column. This
measure conceptually shows a country’s commit- ment to its R&D efforts, and by this measure U.S. dedication to R&D is very weak at only a fraction of that of South Korea’s and Japan’s and only a bit more than half of China’s. Clearly the U.S. needs to increase its dedication and funding to R&D to compete in the future global economy. The last column in the table shows how effective a country’s R&D program is by comparing how many patent applications are made relative to the amount of R&D spending. Once again, South Korea, Japan, and China far outpaced the U.S. in 2010.
▶ Finally, Figure 28 below shows two measures of R&D activity, averaged from 2000-2012. The U.S. per- forms reasonably well by these measures. For exam- ple, Japan and the U.S. have the largest number of research workers per 1,000 total workers. But while U.S. R&D spending as a percentage of GDP exceeds the average for the OECD countries, it still lags behind Japan, Korea, and Switzerland.▣
28. Research and development, averages 2000-2010 12
10 8
R&D as a % of GDP Researchers/1000 workers
6
4
2
0
Source: OECD
J. Contribution of fields of technology to the change in volume of filings between 1995 and 2008
Total Computer technology
Electrical machinery, apparatus Pharmaceuticals
Digital communication Medical technology Semiconductors Measurement
Audio-visual technology Transport
Telecommunications Others (25 fields) Total
10.5 7.0 6.6 6.4 5.6 5.4 4.6 4.3 3.8 3.8
41.8 100
US Computer technology Medical technology Pharmaceuticals
Japan Electrical machinery, energy Semiconductors
Computer technology
China Digital communication
Electrical machinery, energy Pharmaceuticals
30 Source: World Intellectual Property Organization (WIPO)
19.0 9.7 8.8
15.9 14.8 11.6
7.5 6.9 6.5
Korea Semiconductors
Computer technology Electrical machinery, energy
Germany Transport
Semiconductors Electrical machinery, energy
8.9 7.5 7.3
12.7 9.0 8.5
Note: Total refers to the world total. The IPC- technology concordance table (available at:
www.wipo.int/ipstats/en) was used to convert IPC symbols into corresponding fields of technology. Data include both first and subsequent filings.
K. 2010 Measures of innovation Application to
Country to GDP ratio Korea Japan China US
Germany
99.8 73.7 32.2 18.4 17.2
Application Business sector R&D ratio 4.1 3.0 2.8 0.8 0.9
Source: World Intellectual Property Organization (WIPO)
Japan US Australia Canada France Korea UK OECD Germany Russian
Switzerland Spain
Italy China Mexico
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