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Linking Trade and Technology Policies: An International Comparison of the Policies of Industrialized Nations
workers, and companies; eviscerate America's strategic industries; and breed costly protectionist responses. Given the prevalence of such barriers and impediments, free trade in high-technology products is a largely meaningless option. For such products, the real policy choice is not between free trade and protection but between appropriate combinations of liberalization and government intervention that improve national economic welfare in the short run and sustain a more open international trading system in the long run. This real policy agenda requires using the nation's trade laws as they were designed to be used, to offset the negative effects of market distortions abroad.
Even at their best, however, the nation's trade laws cannot substitute for domestic policy initiatives. Ultimately, the fate of America's high-technology industries depends on the choices that Americans make about their macroeconomic policy, about their research and development policy, about their education policy, and about their commitment of today's resources to tomorrow's economic well-being.
NOTES
1.
Trade in manufactured products accounts for some 85 percent of total world trade in goods, and most of world trade in manufactured products consists of two-way exchanges of fairly similar goods at the sectoral level.
2.
For a recent popular discussion of how differences in the organization of national economics affect their competitive position in international trade see Porter (1990).
3.
The same conclusion is reached in Ostry (1990a, b).
4.
Any identification of "technology-intensive" or "high-technology" industries is necessarily somewhat arbitrary. In this paper, high-technology products are identified by their R&D intensity, as measured by their R&D spending relative to output and sales indicators, and by the share of scientific and engineering employment in their total employment. This general approach is the one used by both the OECD and the U.S. Department of Commerce to identify and measure trade in ''high-technology" products.
The OECD "high-technology" category includes the following sectors with their respective international standard industrial classification codes: drugs and medicine (ISIC 3522); office machinery and computers (ISIC 3825); electrical machinery (ISIC 383 less 3832); electronic components (ISIC 3832); aerospace (ISIC 3845); and scientific instruments (ISIC 385). The DOC "high-technology" category includes the following sectors with their respective SIC codes: guided missiles and spacecraft (SIC 376); communication equipment and electronic components (SIC 365-367); aircraft and parts (SIC 372) office; computing and accounting machines (SIC 367); ordnance and accessories (SIC 348); drugs and medicines (SIC 283); industrial inorganic chemicals (SIC 281); professional and scientific instruments (SIC 38 excluding 3825); engines, turbines, and parts (SIC 351); and plastic materials, synthetic resins, rubber and fibers (SIC 292). OECD data for the United States represented 96 percent and 100 percent of DOC data for the United States in 1980 and 1986, respectively. National Science Board, Science and Engineering Indicators, 1989 (Washington, D.C.: Government Printing Office, 1989).
5.
Science-based industries include industries such as fine chemicals, electronic components, telecommunications equipment, computers, and aerospace, which have high levels of
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