SCIENCE & ENGINEERING INDICATORS

Exported goods and services to other countries are an indicator of a country’s economic success in the global market because exports capture the country’s products that compete in the world market. The production of many goods, including electronics and automobiles, has become fragmented and disbursed across many countries. A significant volume of world trade is in unfinished intermediate goods that are exported to other countries for further production. These other countries supply additional inputs or perform final assembly before exporting the finished good. Conventional measures of trade are an imperfect measure of production in global value chains, including high and medium-high R&D intensive goods. Conventional trade measures credit the entire value of the finished product to the country that exported the finished product, which exaggerates the contribution of the final exporting country, and do not credit the value to countries that provided intermediate goods to produce the finished good.

This section briefly examines trade in high and medium-high R&D intensive goods for the United States and other major economies as measured in conventional trade data. It then examines trade in value-added data for certain high R&D intensive goods for which data are available—computer, electronic, and optical products industry (see sidebar Trade in Value Added of the Computer, Electronic, and Optical Products Industry).

Value-added trade data are a more accurate measure of goods produced in global value chains. The data show that the United States has a smaller trade deficit and higher exports than on a conventional basis in electronic goods, which are part of high R&D intensive products.

Global exports of high R&D intensive products—aircraft; computer, electronic, and optical products; and pharmaceuticals—were $2.8 trillion in 2018; the United States makes up a relatively small global share among the major economies (Figure 6-12 and Table S6-19). Over the last decade, the growth trend of U.S. exports has been uneven with a sharp decline in 2009 before levelling off at a lower level. The U.S. global share declined from 12% to 8% during this period (Figure 6-12 and Table S6-19). The U.S. trade deficit has substantially widened by slightly more than $200 billion over the last decade (Figure 6-13 and Table S6-19). The United States has the largest trade deficit in high R&D intensive products among major economies ($304 billion), 38% larger than the value of its exports (Figure 6-13 and Table S6-19).

Although the world’s largest exporter of high R&D intensive goods (31%), the EU’s exports reflect the substantial volume of intra-regional trade among EU member countries (Figure 6-12 and Table S6-19). In contrast, exports data for China and the United States do not include trade within their borders, which is likely to be substantial. Although EU exports grew over the last decade, the EU’s global share has fallen from 36% to 31% during this period (Table S6-19).

China is the second-largest global exporter (23%) (Figure 6-12 and Table S6-19). China is the hub of “Factory Asia,” which produces much of the world’s electronic products that are part of high R&D intensive products. China imports and exports inputs and components from Asian economies, notably Japan, South Korea, Singapore, and Taiwan (Frederick and Lee 2017:24). China’s exports grew significantly over the last decade with China’s global share rising from 17% to 23%. China’s trade surplus fell from $79 billion in 2008 to $21 billion in 2018, representing 3% of its exports (Figure 6-13 and Table S6-19).

Global exports of medium-high R&D intensive products—chemicals excluding pharmaceuticals; electrical equipment; other machinery and equipment; medical instruments; motor vehicles; railroad and other transport; and weapons—were $5.8 trillion in 2018 (Figure 6-14 and Table S6-20). The U.S. trade position is very similar to its position in high R&D intensive products—the third largest exporter and far below the largest exporter, the EU (Figure 6-14 and Table S6-20). The United States has a substantial trade deficit ($297 billion) that comprises 50% of its exports. The U.S. trade deficit has widened over the last decade (Figure 6-15 and Table S6-20).

Similar to high R&D intensive products, the EU is the world’s largest exporter of medium-high R&D intensive products (Figure 6-14 and Table S6-20) and its exports are bolstered by the substantial value of intra-EU trade. The EU has had a substantial trade surplus ($400–$500 billion) over much of the last decade accounting for 18%–23% of its total exports (Figure 6-15 and Table S6-20). China is the second-largest global exporter, slightly ahead of the United States (Figure 6-14 and Table S6-20). China’s exports have grown rapidly over the last decade coinciding with China assembling and manufacturing many goods in medium-high R&D intensive industries including electrical equipment, other machinery and equipment, and motor vehicles. China has had a modest surplus since 2012 (Figure 6-15 and Table S6-20). Japan is the fourth largest exporter and has a substantial trade surplus (Figure 6-14, Figure 6-15, and Table S6-20). Japan’s exports have remained roughly flat since 2011.