Introduction

This report covers three main areas. The first is an analysis of global production trends of KTI industries; the second is an analysis of global trade in KTI products; and the third is a discussion of AI technologies and their impact in the global economy. Many KTI industries are either developing or utilizing AI technologies, including software publishing, IT services, and computer, electronic and optical products industries. Furthermore, AI is likely to give rise to new technologically advanced industries, products, and services.

KTI industries consist of industries that have a relatively high ratio of business R&D expenditures to their value-added output. These industries make large investments in R&D and produce technologically advanced goods and services. The importance of science and technology in commercial activity extends beyond R&D intensive industries. This report also highlights the role and significance of knowledge and technology in the agriculture industry, which is not included in the KTI classification utilized in this report. Agriculture is an intensive user of advanced and science-based technologies including pharmaceuticals, biotechnology, and remote sensors.

This report uses a variety of data sources. A description of the data sources is provided in the Technical Appendix. This report’s discussion of regional and country patterns and trends in the production and trade of output of KTI industries focuses on the United States; three economies and regions—China, the EU, and Japan; and a group of Asian economies, including India, South Korea, Taiwan, and the Philippines. This group of Asian economies collectively account for a significant share of global KTI production.

Knowledge and technology intensity of an industry can be measured in different ways, including R&D performance, employment of high skilled workers, and patenting and innovation activities. R&D intensity, the focus of this report, is an important measure of R&D performance, but an incomplete measure of knowledge and technology intensity. Other facets of knowledge and technology are analyzed in the following Science and Engineering Indicators 2020 reports: “Science and Engineering Labor Force analyzes industry employment of science and engineering workforce, “Research and Development: U.S. Trends and International Comparisons” analyzes industry R&D performance, and “Invention, Knowledge Transfer, and Innovation analyzes patenting and innovation activities by industry. Through its industry output lens, this report complements the other reports to provide a comprehensive picture of the state of knowledge and technology creation, transfer, and adoption, and the role they play in a country’s economic competitiveness (in terms of production and trade) in the global arena. The R&D-intensity-based industry classification permits international comparison of KTI industries. We are not aware of internationally comparable data for defining KTI industries using other measures, such as employment-based classifications that are utilized by the U.S. Bureau of Labor Statistics (Wolf and Terrell 2016).