China moves into hierarcy of technology exporters, competitiveness study shows

December 15, 2003

China has moved higher into the hierarchy of technology exporters, according to a new study from the Georgia Institute of Technology.

"China's upsurge was a surprise in 1999 and it's still coming on strong," says Alan Porter, co-director of Georgia Tech's Technology Policy and Assessment Center (TPAC), which conducts the study, "Indicators of Technology-Based Competitiveness."

Sponsored by the National Science Foundation, the study is updated every three years to see how different countries size up on high-tech exports, with an emphasis on industrializing economies.

During the last decade, China has more than doubled its score on "technological standing" (TS) - a key benchmark that gauges current global competitiveness. This year, China received a 49.3 rating, compared to 20.7 in 1993, 22.5 in 1996, and 44.2 in 1999.

In 1993, China's closest neighbors on the TS scale were Spain and South Africa whereas this year's study shows China slightly above the Netherlands and just below Singapore. "That's quite a change in company," Porter says, adding that if China continues at this pace, it might surpass both Germany and the United Kingdom in the near future.

What's more, China also has increased dramatically on an average of four "input indicators" the study uses to predict future exports:

Since 1999, China has made particular strides in the last two categories, increasing 8.6 points on PC and 8.7 points on TI - the largest increases of the 33 counties in the study. "These changes suggest continued strength for China," says Porter, noting that PC and TI are most closely linked to future technological standing.

China's progress stems partially from the number of companies that are establishing manufacturing facilities in China, reports Liu Zuoyi, an officer with the National Natural Science Foundation of China (NSFC).

The reform of economic institutions has also benefited China's technology exports. "Especially with becoming a member of WTO, the investing environment has improved greatly," Liu says. Human capital is a third factor, he adds: "Most Chinese engineers are able to grasp the skills of design and manufacturing after a short time's training."

In addition to China's progress, Singapore, South Korea and Taiwan - a group of more established regional players known as the "Asian Tigers" -- continue to advance in technology exports. "People have recognized that these countries are a force to contend with, but may not realize exactly how strong they have become," Porter says.

Since 1993, Singapore has advanced 16.6 points on the TS scale, moving from 35.8 to 52.4. That puts Singapore in fifth place on this measurement, behind the United States, Japan, Germany and the United Kingdom.

Porter and David Roessner, another Georgia Tech faculty member, led production of the 2003 study, aided by Nils Newman, Xiao-Yin Jin, Elmer Yglesias and Alisa Kongthon. (A recent change in labeling reflects the year of the study's release rather than its latest data source, so the 2003 study actually follows the 1999 study by three years.)

When researchers launched the study in 1987, their idea was to examine which countries might be vying with the United States in high-tech product exports. "At the time, Japan was a serious competitor, and we wondered if anyone else would be," Porter explains.

Although Japan is the No. 2 exporter of technology products and well ahead of other countries, it has lost ground in recent years.

On TS scores, Japan and the United States were neck and neck in 1993, with Japan scoring 90.8 and the United States rating 90. Since then, Japan has dropped 9.2 points, scoring 81.6 while the United States has risen to 93.9. Similarly, Japan's score on input indicators has dropped by nearly 9 points and it now trails the United States by 11 points.

"From our measures, we can't say this is an absolute decline -- it's relative," Porter says. Still, the numbers suggest that while remaining a powerful exporter, Japan is no longer viewed as "the god of tech competitiveness," he adds.

Other results from the study include:

"Ireland's technology prowess stems more from multinational companies locating there than grassroots efforts - which is similar to how Southeast Asia got its start," Porter says.

The Georgia Tech study, found on the TPAC Web site (http://tpac.gatech.edu), continues to add countries and improve its data each year. Currently researchers are including elements to measure the export of high-tech knowledge services, reflecting the movement to a knowledge-based global economy.
-end-
Technical Contact: Alan Porter (404-894-2330); E-mail: (alan.porter@isye.gatech.edu).

Georgia Institute of Technology Research News

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