TPAC - Technology Policy and Assessment Center at the Georgia Institute of Technology

Indicators of Technology-Based Competitiveness of 33 Nations

2003 Summary Report

Alan L. Porter, J. David Roessner, Nils Newman, Xiao-Yin Jin, and Elmer Yglesias

Report to the Science Indicators Unit, Science Resources Studies Division, National Science Foundation
under Contract D020024

April 23, 2003

To view in pdf format click here

What's New
High Tech Indicators 2003 compares the technological competitiveness of 33 nations, including a large number of industrializing economies. This continues a series prepared every three years. For those of you unfamiliar with "HTI," the "Background" section describes its heritage. For those familiar with the indicators, we note several changes:

Background
"High Technology Indicators" (HTI) development work at Georgia Tech has proceeded in phases. The first phase generated indicators of national capabilities to produce high technology products suitable for export. We developed a conceptual model of the processes by which industrializing nations gain access to external technology and technical information, absorb that technology/information effectively, and institutionalize a science-based development and manufacturing capability. The model included four "input" or leading indicators of a nation's future capacity (roughly 15-year time horizon) to compete in international markets in high technology products. It derived three "output" indicators of a nation's current international competitiveness. The research team compiled data for 20 countries representing a range of regions and extent of industrialization to prepare the initial HTI round for 1987.

The second phase used data on an expanded set of 28 countries to examine in detail the indicators' reliability and validity. Conceptual development is described in this article:

The third phase of HTI work culminated in HTI 1993, albeit work extended into 1995. We refined formulas for the seven indicators developed in the previous phases, applied them empirically, tested the value of the indicators for policy and scholarly purposes, and assessed the processes of data collection and verification. The results of this phase are incorporated in Figures 7-11 of this report and were discussed in two articles:

HTI were prepared again for 1996 and 1999, following closely the format developed for 1993. Country coverage is discussed in the next section. Results are included in Figures 7-11 of this report.

Two articles explore the 1999 findings:

Selected results from 1999 HTI are reported in:

In sum, HTI have been prepared at 3-year intervals since 1987. Beginning with 1993, the indicators stabilized to permit time series "indicator" comparisons. This report summarizes findings from the 1993, 1996, 1999, and 2003 HTI using this stable formulation.

Reminder -- we changed the dating system as of 2003 to reflect the date when the indicator is constructed. So the actual span between HTI for 1999-2003 is 3 years, just as in the previous versions being compared. HTI for a given year previously appeared in the following year because various statistical measures used in HTI do not become available until then. HTI-2003 are posted as of April, 2003.

For this round, the U.S. National Science Foundation (NSF) requested that Georgia Tech strive to enhance the indicators in several ways:

The "HTI 2001 Final Report" posted on the TPAC website describes research on ways to improve HTI that supports the current revisions. An article explores one aspect of the research:

As of April, 2003, we have completed the "traditional" HTI and are beginning analyses toward a revised HTI formulation. We will report on that as it develops.

Country Coverage

Country coverage evolved gradually since 1993. The 1996 HTI added Poland, Venezuela, and South Africa, but dropped Hong Kong, so the total number of countries came to 30. [Regularization of statistics for China and Hong Kong remains problematic even for 1999 and 2003, particularly in sorting out exports.] For 1999, HTI added Ireland, Israel, and the Czech Republic, yielding a total of 33 countries. As in previous reports, the countries are clustered in charts as follows:

Indicator Definitions

The conceptual definitions of the seven indicators follow. They are the same as those used in the 1993-96-99 studies. With the exception of Technological Emphasis, each indicator is comprised of both statistical data (S) and data from a survey of experts (E). Full operational definitions of the indicators and sources of data for the indicators appear in the Appendix.

Raw data are transformed to “S-scores.” Each indicator component is scaled from 0 to 100 and then averaged to generate comparable indicators with a 0 to 100 range. For survey items, 100 represents the highest response category for a question; for statistical data, 100 typically represents the value attained by the country with the largest value among the 33-country set. Thus, this is a relative scaling so that an apparent "decline" over time or low score is only relative to the other countries in the set of 33.

National Orientation (NO): Evidence that a nation is undertaking directed action to achieve technological competitiveness. Such action can be manifested at the business, government, or cultural levels, or any combination of the three.

S: investment risk index (constructed from the Political Risk Services data series)

E: questions addressing national strategy, implementation, entrepreneurship, and attitudes toward technology.

Socioeconomic Infrastructure (SE): The social and economic institutions that support and maintain the physical, human, organizational, and economic resources essential to the functioning of a modern, technology-based industrial nation.

S: Harbison-Myers Human Skills Index (from World Bank data on % in higher education and % in secondary school)

E: questions addressing national policies toward multinational investment, mobility of capital.

Technological Infrastructure (TI). Institutions and resources that contribute directly to a nation's capacity to develop, produce, and market new technology. Central to the concept are the ideas of economic investment and social support for technology absorption and utilization. These could take the forms of monetary payments, laws and regulations, and social institutions. Also included is the physical and human capital in place to develop, produce, and market new technology.

S: number of scientists in R&D; electronic data processing purchases

E: questions addressing technical training and education, contributions to knowledge, R&D with industrial relevance, technological mastery.

Productive Capacity (PC): The physical and human resources devoted to manufacturing products, and the efficiency with which those resources are used.

S: electronics production

E: questions addressing supply of skilled labor, indigenous component supply, indigenous management capability.

Technological Standing (TS): An indicator of a country's recent overall success in exporting high technology products.

S: value of high tech exports; value of electronics exports

E: question addressing current high technology production capability.

Technological Emphasis (TE): An indicator of a country's relative emphasis on high technology products in its overall export product mix.

S: ratio of high tech exports to total exports; ratio of electronics exports to total exports.

Rate of Technological Change (RTC): An indicator of how rapidly a country is improving its high technology export performance.

S: change in high tech exports; change in electronics exports

E: questions addressing current high tech production and estimated high tech production in 15 years.

The emphasis on electronics reflects our assumption that this has been a vital contributor to much high technology development in recent years. We recognize changing realities that likely warrant broadening the definition of "high tech" in future HTI formulations. We find greatest "output indicator" interest in TS.

Expert Panel

Expert opinion data were obtained from a survey of the International Technology Indicators Panel during summer and fall, 2002. Surveys were largely completed through a website interface [here], augmented by e-mail, fax, and mail contacts. The resulting group of 371 experts (up considerably from 207 in 1996 and 303 in 1999) collectively provided 412 responses (up from 265 in 1996 and 336 in 1999). The average number of responses per country was 12.5, with a minimum of 10 per country.

Beginning in the late 1980’s, we have worked together with our National Science Foundation colleagues to invite selected professionals to serve on the International Technology Indicators Panel. Our criteria include direct knowledge of the country and of the bases for technological competitiveness. Prototypical experts include embassy science attaches, faculty members, and industrial professionals. Attendees at international conferences and participants in journal advising and publishing relating to technology analysis, forecasting, management, and so forth are good candidates for the Panel. We seek balance among multiple perspectives, and between indigenous and external "watchers." Over time, turnover in membership has been heavy -- only 31% of the current respondents also participated in 1999. We invite various persons who appear to meet these criteria to participate, but ultimately self-selection comes into play. The respondents indicate their familiarity on a self-report scale item.

Due to the general nature of our selection criteria, we are cautious in interpreting the sector-specific item responses on current and 15-year future prospects. On the items reflected in HTI, respondents leave very few missing -- 412 responses to 15 questions = 6180 possible answers, of which only 12 were left unanswered. In contrast, of 412 X 20 = 8240 possible responses (current and future prospects for each of 10 sectors), 539 were blank.

Results: Input Indicators
We present results for the 33 countries using the previously mentioned groupings. Table 1 consolidates indicator information for the four input indicators (NO, SE, TI, ad PC) and one output indicator (TS), for each of 1993, 1996, 1999, and 2003. Figures 1-14 provide a series of charts breaking out the indicator data. [NOTE: As discussed in "Country Coverage," we have added 6 countries over this period; 1993 and 1996 values have been constructed for those countries, as feasible, but are missing in several instances.]

National Orientation (NO) indicates a country's commitment to technology-based development along a number of dimensions: government policy, political stability, entrepreneurial spirit, and acceptance of the idea that development should be technology-based. Figures 1 (2003 data) and 10 (1993-96-99-2003 data) present NO.

The behavior of NO is quite regular. Recall its formulation -- it is comprised of weighted responses to 4 expert opinion items (5-point scale responses, so these do not result in extreme differences) plus a scaled investment risk assessment value.

Using the "Big Three" [U.S., Japan, Germany] as a benchmark, note how many countries exhibit comparable NO levels. Commitment to high tech competitiveness is widespread – both for 2003 and over the full period, 1993-2003.

Notable declines over the 1993-2003 time period (e.g., drops of 10 or more points) show for Thailand and Indonesia. Recall that HTI are relative indicators. Hence, a "decline" on NO or another indicator does not imply an actual drop, just that competing countries in the HTI have advanced further. Several countries show strong increases, particularly New Zealand, Russia, and The Philippines.

Socioeconomic Infrastructure (SE) indicates the strength of each nation's educational system, mobility of capital, and encouragement of foreign investment. Figures 2 and 11 display SE.

Strong socioeconomic infrastructure is not restricted to the OECD nations. The three Tigers (Singapore, South Korea, and Taiwan) are striking in their parity or better with the heavily industrialized nations. Ireland and Israel, as with NO, stack up well on SE.

Russia and the UK show sizable increases from 1993 to 2003. The Eastern and Western European nations display generally increasing SE. The Latin American countries show relatively poorly. South Africa and Indonesia show notable declines.

Technological infrastructure (TI) captures the strength and contributions of a nation's scientific and engineering manpower, its electronic data processing purchases, the relationship of its R&D to industrial application, and its ability to make effective use of technical knowledge. The composition of this indicator includes four expert opinion items plus a measure of purchases of electronic data processing (EDP) equipment, and number of scientists and engineers in R&D. Even on our S-score basis, the U.S. swamps all others on TI. There continues to be much greater variation in TI among the 33 nations than was the case for either NO or SE (Figures 3 and 12).

The Asian Cubs (particularly Malaysia, Thailand, Indonesia, and the Philippines, excepting China and India) lag, as do the Latin American countries, less so Brazil.

Few of the 33 countries show much change in TI from 1993 to 2003. Shifts of 10 or more points appear only for China and South Africa.

Productive Capacity (PC) concerns capabilities to manufacture technology-intensive products. It combines the value of electronics production with three survey items related to manufacturing and managerial capabilities to measure the amount and efficiency of resources available.

Productive Capacity clearly separates the U.S. and Japan from the rest of the countries in our sample (Figures 4 and 13), with the U.S. taking top position from Japan. One component measure, -- electronics production, exerts considerable influence as it ranges widely. The U.S. scales at 100 on electronics production followed by Japan at 73, with a marked drop to China (37), South Korea (22), and Germany and the UK (15).

Spain shows the largest drop on PC over this decade. Japan, Brazil, and South Africa also show relative declines. Taiwan and China show the biggest gains.

Overall Inputs: The HTI Input Indicators seek to anticipate future (roughly 15-year time horizon) high tech competitiveness prospects.

Figures 5 and 14 average the four Input Indicators - NO, SE, TI, and PC - to provide a single composite "INPUT" predictor of future high tech prospects.

Figure 14, in particular, conveys important messages concerning global competitiveness. To the extent the HTI model is on target, INPUTS provide leading indicators as to likely changes in national competitiveness over the coming years. Compare the prospects as of 1993 and 2003:

RESULTS: OUTPUTS
High Tech Standing (TS) measures current high tech production and export standing (Figures 6 and 15). TS incorporates three components: an expert opinion item (rating technology-intensive production), overall high tech exports, and the value of electronics exports. As noted for the input indicators, the skewed distributions on statistical components exert strong influence on the resulting indicator, even though each component is scaled separately for the 33-country set (S-scores). This effect appears for TS, with the U.S. the benchmark (score of 100) for both overall high tech exports and electronics exports.

Since 1993, Japan and the U.S. remain well ahead of all others in high tech competitiveness; however, the U.S. has forged a 12-point S-score lead over Japan. The U.S. advance traces back to marked gains on overall high tech exports and on electronics exports; strangely, the U.S. still trails Japan on the expert opinion measure.

Germany is closer to the other leading nations (UK, Singapore) than to the U.S. and Japan on TS. The "Big Three" are more truly "The Big Two" now. This distancing is not due to any decline in Germany, but rather to the remarkable gains by the U.S.

The elevation of Singapore’s position since 1993 is remarkable, particularly in that two of the three components that make up TS are absolute (not per capita or otherwise normalized) measures of electronics and high tech exports. Its high tech exports are primarily electronics, so our inclusion of electronics export as a separate component of TS certainly benefits Singapore. No matter -- Singapore’s $74B in high tech exports ranks sixth in the world on an absolute basis (TS draws upon 1999 export data, the most recent available).

Other nations spread out greatly on the TS measure, generally changing modestly since 1993. The striking exceptions are China, which has increased tremendously, and Mexico.

An argument could be made that the TS component, high tech exports, is the ‘real’ output target. The disparities in high tech exporting are huge:

"Top 10" High Tech Exporters for 1999 (in US$ Billions)

So, the range in high tech exporting in this elite group of 33 nations is from less than $0.4 billion to $263 billion! [For details on what “high tech exports” includes, see the Appendix.]

Technological Emphasis (TE) and Rate of Technological Change (RTC) are not emphasized. These indicators have been less telling. We do include Figures 7 and 8 showing current values of these output indicators, and Figures 16 and 17 showing their evolution over time. Note the erratic volatility of RTC over each 3-year period. Nevertheless, the upsurge on RTC in 2003 by many Asian countries is interesting.

TE is much more stable than RTC and may be of interest to some. We are currently revising the make-up of the High Tech Indicators for future years. One issue is to broaden the constitution of "high tech" toward "knowledge economy" factors. The current TE places heavy emphasis on electronics that we think needs to be refined. That said, both TE figures tell a consistent story that Singapore, Malaysia, The Philippines, and Ireland have very high high tech concentration in their export mix.

Present vs. 15-Years from Now: As in previous years, we asked our expert panel to estimate high tech production capability at present and in 15 years for each of eight sectors and overall. Figure 9 compares present and 15-year overall estimates provided by the 2003 panel. Keep in mind that these are simply subjective judgments (responses on 1-5 scales, averaged and multiplied by 10 to yield a maximum score of 50). As such there is a marked ceiling effect. For instance, Japan, currently gauged at about 47 can at most be projected to increase 3 points.

The message conveyed here is stunning. In HTI-1999, excepting Germany and the UK, every country was expected to increase its high tech export capability over the next 15 years. The projected gains were large for all groups except the Big Three and the highly industrialized Western European countries.

HTI-2003 conveys the same message. Every country in HTI, other than some Western European nations, is projected to increase in high tech competitiveness over the coming 15 years. This optimism does not show dampening in conjunction with the recent bursting of the "technology bubble" (e.g., demise of the dot-coms, staggering drop in the NASDAQ index).

COUNTRY SET COMPARISONS

The previous sections discussed results for each indicator. Here we seek to gain perspective by considering sets of countries, across indicators for 1993, 1996, 1999, and 2003.

HTI were developed to track the emergence of industrializing nations; comparisons among the existing leading nations are only secondary. We do not include all the leading OECD nations. Having said that, we note general stability and strengthening in HTI for “The Big Three” and Western Europe -- the first two groupings in each chart. TI and PC differentiate within this group far more than do NO and SE, with the U.S. and Japan notably outdistancing the others. The American and Japanese dominance is even more striking on TS technological standing (Figure 15) and its key component, high tech exports. The U.S. has fared extremely well over the past decade according to both our input and output indicators.

The third grouping in the charts consists of four "English heritage" nations: Canada, Australia, South Africa, and New Zealand. All except South Africa show solidly. In other words, these are potential high tech competitors of the future. At present, TS (Figure 15) shows Canada making great strides.

The fourth grouping is made up of four Eastern European countries: Russia, Poland, Hungary, and the Czech Republic. They too display national orientation to compete in high tech (NO), with improving SE, and PC (TI declines a bit in 2003). Their future high tech prospects appear good, even though present TS is weak.

The fifth group consists of the Three Tigers -- Singapore, South Korea, and Taiwan. Look at their profile across Figures 10, 11, 12, 13, 14, and 15. Their NO is pronounced; SE and PC are top tier; TI trails the leading technological countries but is edging up. They have "arrived." Singapore trails only four countries on TS; South Korea and Taiwan evidence strength beyond countries like Italy and Sweden (Figure 13). (Our electronics emphasis favors them.)

The sixth group includes six Asian economies of considerable diversity -- Malaysia, China, Thailand, Indonesia, The Philippines, and India. Again, a scan across the HTI generally shows strong NO, lagging SE, and lagging TI and PC (but note strong advances by China and India). China’s rise on TS is remarkable, prodded particularly by its electronics exports (also third in our set of countries).

Latin America, our seventh group, generally lags on the input and output indicators. Mexico appears to be going counter to this pattern.

Israel shows considerable strength on the leading (input) indicators.

CONCLUDING OBSERVATIONS

The HTI show reassuring consistency across time, excepting the volatile RTC measure not presented this year.

The U.S. is doing very well. In terms of the four input measures and Technological Standing, the U.S. has outdistanced its nearest competitors from 1993 to 2003, with a slight dip in 2003.

When the HTI development was initiated in the mid-1980’s, a small clique of technologically advanced nations dominated. The sense in profiling a country set including newly industrializing countries was of a "ski slope." High tech exporting "belonged to" the leading OECD countries. The present results might be likened to a gentler "beginners’ ski slope;" competition is real (e.g., Malaysia exports far more high tech than Italy). [Again, we acknowledge that interpretation is not straightforward; much of Malaysia’s exports come via multinational companies headquartered elsewhere; however the data show that the country has moved well beyond the manufacturing platform model of some years ago.]

Since 1987, HTI has pointed toward dramatically broadening, global high tech competition, and it continues to do so. The leading (input) indicators remain strong for the OECD, Asian Tigers, and China. They present more of a mixed picture for other industrializing nations.

Next Steps. Over the coming months we will be working to generate “new” HTI that more fully address “knowledge economy” facets and enhance the statistical bases. Look for these by early 2004.