U.S. high-tech headed for trouble?

The knowledge economy: Is the United States losing its competitive edge? Benchmarks of our innovation future, The Task Force on the Future of American Innovation, Feb 16, 2005
(via John Daly's blog)

The Task Force on the Future of American Innovation has published a bleak picture of America's future in science and engineering. While the United States still seems to be ahead by most measures, the rest of the world is catching up fast.

Here are some of the signs of trouble they're seeing:


The ratio of first university degrees in natural sciences and engineering (NS&E) to the college-age population in the U.S. is only 5.7 degrees per 100. Japan awards 8 per 100, and Taiwan and South Korea each award about 11 per 100.

In 2000, Asian universities accounted for almost 1.2 million of the world’s S&E degrees and European universities (including Russia and Eastern Europe) accounted for about 850,000 S&E degrees, while North American universities accounted for only about 500,000 degrees.

In 2000, about 89,000 of the approximately 114,000 doctoral degrees earned worldwide in S&E were earned outside the United States.

Of course, this doesn't take into account the quality or prestige of American degrees, although this too seems to be declining a bit.

From 1994 to 2001, graduate S&E enrollment in the U.S. declined by 10 percent for U.S. citizens but increased by 25 percent for foreign born students. In 2001 approximately 57 percent of all S&E postdoctoral positions at U.S. universities were held by foreign born scholars.


From 1994 to 1998, the number of Chinese, South Korean, and Taiwanese students who chose to pursue their Ph.D.s at U.S. universities dropped 19 percent (from 4,982 to 4,029). At the same time, the number who chose to pursue their Ph.D.s at universities in their own countries nearly doubled (from 4,983 to 9,942). This indicates that these countries are quickly growing their own higher educational capabilities.

Since 1980, the number of S&E positions in the U.S. has grown at almost five times the rate of the U.S. civilian workforce as a whole. However, the number of S&E degrees earned by U.S. citizens is growing at a much smaller rate.

There are rapidly increasing retirements from the S&E field, leading to a potential shortage in the S&E labor market. For example, more than half of those with S&E degrees in the workforce are age 40 or older.

There is increasing global competition in the S&E labor market. Between 1993 and 1997 the Organisation for Economic Development countries increased their number of S&E research jobs by 28 percent, almost twice the 15 percent increase in S&E research jobs in the United States.

Knowledge Creation and New Ideas Benchmarks

The U.S. share of S&E papers published worldwide declined from 38 percent in 1988 to 31 percent in 2001. Europe and Asia are responsible for the bulk of growth in scientific papers in recent years.

From 1988 to 2001 the U.S. increased its number of published S&E articles by only 13 percent. In contrast, Western Europe increased its S&E article output by 59 percent, Japan increased by 67 percent and countries of East Asia, including China, Singapore, Taiwan, and South Korea, increased by 492 percent.

U.S. Patent applications from the Asian countries of China, India, Singapore, South Korea, and Taiwan grew by 759 percent from 1989 to 2001. Patent applications from the U.S. during the same period grew more slowly at 116 percent (though, as with the above, it should be mentioned that the Asian countries started out at a much lower base level).

The U.S. share of worldwide citations is shrinking. Whereas in 1992 the U.S. share of citations was 52 percent, by 2001 it had declined to 44 percent of the worldwide total.


Collectively, the world’s fastest growing economies are on track to catch up to U.S. R&D investment. From 1995 through 2001, the emerging economies of China, South Korea, and Taiwan increased their gross R&D investments by about 140 percent. During the same period the U.S. increased its investments by 34 percent.

Within the U.S., federal funding of basic research in engineering and physical sciences has experienced little to no growth over the last thirty years. In fact, as a percentage of GDP, funding for physical science research has been in a thirty year decline.

Between 1995 and 2002, China doubled the percentage of its GDP invested in R&D, from 0.6 to 1.2 per-cent. Also, China intends to increase the proportion of science spending devoted to basic research by more than 200 percent, to about 20 percent of its science budget, in the next 10 years. From 1995 to 2002, Japanese businesses increased their R&D spending from 2.12 percent to 2.32 percent of GDP, and European businesses increased their R&D spending from 1.15 percent to 1.17 percent of GDP. U.S. businesses, however, actually decreased their level of spending, from more than 2 percent to 1.87 percent of GDP.

High-tech economy

The U.S. share of worldwide high-tech exports has been in a 20-year decline. From 1980 until 2001 the U.S. share fell from 31 percent to 18 percent. At the same time, the global share for China, South Korea, and other emerging Asian countries increased from just 7 percent to 25 percent.

During the 1990s, the U.S. maintained a trade surplus for high-tech products even as the trade balance for other goods plummeted. But since 2001, even the trade balance for high-tech has fallen into deficit.

China now rivals the U.S. as a destination for foreign capital and in 2003 largest foreign direct investment (FDI) in the world with $53.5 billion flowing into the country. Investment in U.S. businesses, meanwhile, dropped from $314 billion in 2000 to $30 billion in 2003 and $91 billion through the first three quarters of 2004.

From 1989 to 2001, U.S. high-tech output doubled, growing from $423 billion to $940 billion, but China’s high-tech output shot up more than 8-fold, from $30 billion to $257 billion.


Asian countries are investing significantly in nanotechnology, and may have already surpassed the U.S. China has also been investing heavily in nanotechnology and already leads the U.S. in some key areas. In recent surveys, China ranked third, after the U.S. and Japan, in worldwide nanotechnology patents and publications.

From 1998 through 2003, the balance of trade in aircraft — for years one of the strongest U.S. export sectors — fell from $39 billion to $24 billion, a loss of $15 billion, reflecting increased sales of foreign-made commercial aircraft to U.S. carriers.

China is making rapid progress in biotechnology. The production value of the biotechnology industry throughout the country was 200 million yuan ($24 million U.S.) in 1986. In 2000, the figure reached 20 billion yuan ($2.4 billion U.S.). The output value of China’s pharmaceutical industry was 200 billion yuan last year, with an annual growth rate of 20 percent in each of the previous five years.

Unfortunately, the authors didn't have access to numbers from India for most topics.

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