KTI industries have accounted for about a 10th of U.S. gross domestic product (GDP) since 2002 (11% in 2022, or $2.9 trillion of $25.7 trillion in current U.S. dollars, based on S&P Global detailed value-added industry data and BEA GDP statistics) (BEA 2023c; Table KTI-1; Table SKTI-1; Table SAKTI-2). This relatively modest share reflects that the U.S. economy is relatively less manufacturing intensive and that most KTI industries are in the manufacturing sector given its higher R&D intensity (Wolfe 2022).^{​See Thomas (2022) for comprehensive economic statistics on U.S. manufacturing.} Indeed, in 2022, manufacturing industries overall accounted for 11.2% of U.S. GDP, compared with 55.6% for total private services.^{​See the Glossary section for the definition of total private services used in this report.}

For most of the data since 2002, KTI manufacturing accounted for a larger share of U.S. GDP (6%–7%), compared with KTI services (3%–5%). Despite these relatively constant shares relative to GDP, two changes are notable for value added within U.S. KTI industries. KTI services industries’ share in total U.S. KTI value added increased from about a third to 45% from 2002 to 2022, with the KTI manufacturing share declining from over two-thirds in 2002 to 55% in 2022 (Table SKTI-1). In particular, IT and other information services has been the largest U.S. KTI industry by nominal value added since 2008 (Figure KTI-1). Because of small but steady increases (with a declining share through 2021 and flat in 2022), the share of software publishing now almost matches the computer, electronic, and optical products manufacturing share of KTI value added. The output trend in these three IT-related industries is consistent with increased U.S. private fixed investment in physical IT (computers, peripheral, and communication equipment) and in intangibles or intellectual property products (IPPs), such as software, since the early 2000s.^{​U.S. software investment was on par with the aggregate of computer and peripheral equipment and communications equipment at about $166 billion for both in 2004. Since then, software investment outgrew its tangible IT investment counterpart so that in 2021, the former is about twice the latter in current U.S. dollar terms ($512.4 billion vs. $262.8 billion); see BEA (2022).}

More recently, KTI services production was impacted differently from KTI manufacturing in the last economic downturn, likely reflecting the level and timing of the effects of the pandemic on goods versus services in the overall U.S. economy (Chetty, Friedman, and Stepner 2023). Figure KTI-2 shows annual percentage changes since 2018 in separate panels for KTI manufacturing and KTI services. Except for weapons and ammunition; pharmaceuticals; and computer, electronic, and optical products—each of which had an annual increase in 2020—value added by U.S. KTI manufacturing industries declined by larger percentages compared with the overall percentage decline in GDP in the 2020 recession. These industries rebounded in 2021, with further increases in 2022. In contrast, all three KTI services industries—software publishing, IT and other information services, and scientific R&D services—posted annual increases since 2018 in current U.S. dollars. Within U.S. KTI manufacturing, value added of air and spacecraft manufacturing and of machinery and equipment manufacturing had annual increases in 2022 over 20% in current U.S. dollars, followed by medical and dental instruments and supplies; chemicals and chemical products (excluding pharmaceuticals); and railroad, military vehicles, and transport equipment nec, each with increases over 15%. U.S. KTI industries are highly geographically concentrated. (See the sidebar Geography of Domestic KTI Production.)

This section examines global statistics on KTI industries, starting with value added. Subsequent sections explore the participation of these industries in goods and services trade.

KTI industries produced $11.1 trillion globally in value added in 2022, a 5.6% increase in current U.S. dollars compared with a 15.8% post-pandemic rebound in 2021 following little change in 2019 and 2020, based on current U.S. dollar S&P Global data (Table SKTI-2). By comparison, global GDP increased 3.8% in 2022 following a pandemic-related drop in 2020 and a 13.5% increase in 2021 in current U.S. dollars based on International Monetary Fund statistics (IMF 2023b). Since 2018, KTI value added accounted for between 10% and 11% of global GDP, with 3% from KTI services industries and between 7% and 8% from KTI manufacturing industries (Table KTI-2). Overall, services represent a larger share of global GDP compared with manufacturing; within KTI industries globally, however, services value added has a smaller share compared with manufacturing.

The United States, China, the European Union (EU-27), Japan, and South Korea accounted for about 80% of global KTI value added in 2022 based on S&P Global data in current U.S. dollars (Table SKTI-2). In that year, China and the United States were the top two producers of KTI output ($3.0 trillion and $2.9 trillion, respectively), each representing over a quarter of global KTI value added, followed by the EU-27, with a 17.0% share ($1.9 trillion). (The EU-27 share includes Germany, with 5.2%, or 31% of the EU-27 share.) Another 9% of KTI value added originated from Japan (5.4%) and South Korea (3.6%).

The aforementioned global shares vary across broad KTI sectors (Figure KTI-3 and Figure KTI-4). For manufacturing KTI output, China and the United States accounted for 34% and 20% of the global total, respectively. For services KTI output, these nations’ respective shares were almost reversed (12% for China and 40% for the United States), which is consistent with the larger share of total manufacturing in China’s GDP and of services in U.S. GDP. Another illustrative measure is KTI value-added intensity, which is the ratio of KTI value added relative to GDP. South Korea had the highest KTI value-added intensity since 2002 (Figure KTI-5). In 2022, this ratio was 24% for South Korea, followed by 17% for China. The U.S. KTI value-added intensity has been between 10% and 11% since 2002, similar to the range of global KTI value-added intensity—both at 11% in 2022. The intensity levels for Japan and Germany have been in the middle teens since 2002 (Figure KTI-5).