Sunday, December 19, 2010

Shifting Patterns in Trade for Knowledge Intensive Products and Services

The above link is to an article on the international development of science and technology and its impact on world trade. There is a worldwide pattern in which every nation is racing to position itself in knowledge intensive industries. One of the patterns is that developing countries are catching up to the US and Europe in producing knowledge workers and they have been expanding their trade surpluses in high technology products.

The US and Europe have been offshoring the production of ICT products (information and computer technology). The US trade deficit in ICT goods reached $126 billion in 2007, while China had a surplus of $129 billion and the Asia 9 had a surplus of $221 billion.

The US had a trade surplus in the export of commercial knowledge products and services of $50 billion in 2007. This includes business and financial services provided by US multinationals. The US also had a trade surplus of $60 billion in payment for intellectual property rights protected by patents, copyrights etc.

The global economy has been evolving into three sectors. The US and Europe represent the two sectors that once dominated the global economy. The Asian sector, with China as the dominant force, has been the fastest growing sector. Japan, while still a very large economy, has lost ground to faster growing economies in Asia.

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