Introduction
U.S. knowledge- and technology-intensive (KTI) or research and development (R&D)-intensive industries compete in a changing environment for international production, R&D, and technology development, impacted by recent macroeconomic, geopolitical, and pandemic-related headwinds (Baldwin and Freeman 2022; Cerdeiro et al. 2021; Goldberg and Reed 2023; OECD 2023a). The latter have affected capital costs, input prices, and the organization of supplier networks, including those for critical minerals and materials, energy, technology, and labor (CRS 2022a; GAO 2022; IMF 2023a; Page 2023). In turn, the economic vitality of KTI industries is an important source for R&D investment, competitiveness, and contributions to public policy goals across countries—from national security, sustainable energy, and communications and other physical infrastructure to environmental protection and health (OECD 2023b).
This report examines production patterns of R&D-intensive industries measured as value-added output: the value of goods and services produced by an industry (gross output) minus the cost of intermediate inputs (energy, materials, and purchased services)—henceforth, value added. The resulting measure captures primarily the contribution of labor and capital and avoids double counting when aggregating value of production within and across countries. The report also uses several measures of international trade, as described shortly.
KTI industries are defined as those with high and medium-high R&D intensities based on an international comparable taxonomy developed by the Organisation for Economic Co-operation and Development (OECD 2016) using the International Standard Industrial Classification of All Economic Activities (ISIC). (See Technical Appendix and Table SAKTI-1.) These industries comprise 10 in manufacturing—pharmaceuticals; chemicals and chemical products (excluding pharmaceuticals); computer, electronic, and optical products (including semiconductors); electrical equipment; motor vehicles, trailers, and semi-trailers; air and spacecraft and related machinery; weapons and ammunition; railroad, military vehicles, and other transport equipment; other machinery and equipment; and medical and dental instruments—and 3 in services—information technology (IT) and other information services; software publishing; and scientific R&D services. (See the Glossary section for definitions.)
This report focuses on two main areas of KTI activity: production patterns and international trade, including new analyses of global semiconductor production and of composition of U.S. KTI-related services. The first section covers trends in U.S. and global KTI production. Statistics on U.S. value added by detailed industry are from the Bureau of Economic Analysis (BEA), whereas international data were obtained from S&P Global’s IHS Markit Comparative Industry Service, classified according to ISIC Revision 4.
The second section analyzes cross-border transactions from three perspectives: goods trade, services trade, and trade in value added (TiVA) focused on domestic versus foreign content of U.S. exports. Sources for trade statistics include BEA, S&P Global, and a joint BEA–National Science Foundation (NSF) project on TiVA.
Other Science and Engineering Indicators 2024 reports cover topics related to KTI industries, especially the forthcoming Indicators 2024 report “Research and Development: U.S. Trends and International Comparisons” (covering U.S. and global R&D); the Indicators 2024 report “Invention, Knowledge Transfer, and Innovation” (innovation, patenting, and venture capital investment); and the forthcoming Indicators 2024 report “The STEM Labor Force” (scientists, engineers, and skilled technical workers).