1435 



and the United Kingdom but increased in the Union of Soviet Socialist Republics 

 (U.S.S.R.), Japan, and West Germany. By 1971, U.S. expenditures for R&D 

 were 2.6 percent of GNP, as compared with an estimated 3.0 percent for the 

 U.S.S.R. approximately 2.0 percent for the United Kingdom and West Germany, 

 and 1.8 percent for both Japan and France. 



The United States had a favorable but declining "patent balance" (patents 

 of United States versus foreign origin awarded in each, country) between 1966 

 and 1970; the dechne was due to a reduced number of patents of U.S. origin in 

 France, West Germany, and the United Kingdom, combined with increased U.S. 

 patents of Japanese origin. 



Starting from a higher base, increases in labor productivity in U.S. manufac- 

 turing industries between 1960-71 were the lowest of all countries — 39 percent — 

 compared with 210 percent for Japan, 86 percent for West Germany, 81 percent 

 for France, and 50 percent for the United Kingdom. Productivity gains in the 

 United States offset increased labor costs until the mid-196Cs but rose less rapidly, 

 than such costs during the 1966-71 period. 



The United States had an increasingly favorable position in the sale of "tech- 

 nical know-how" — patents, techniques, "formulas, franchises, and manufacturing 

 rights — during 1960-71; Japan was the major purchaser of U.S. "know-how," 

 surpassing all of Western Europe after 1967. 



The favorable U.S. balance of trade in technology-intensive products grew 

 throughout 1960-71, but was increasingly negative in nontechnologj^-intensive 

 areas. 



Within the technology-intensive areas, products v/ith the fastest rising trade 

 surplus are aircraft, computers, and plastics. Product areas in which the growth 

 of imports exceeds exports include office machinery, chemical elements and 

 compounds, medicinal products, and telecomm.unication apparatus. 



The favorable trade balance of the United States in high technology' products 

 rested primarily on purchases bj' developing nations (55 percent in 1971) and 

 countries of Western Europe. A deficit balance with Japan, developed in the 

 mid-i960s and continuing to grow through 1971, exists in electrical machinery, 

 scientific and professional instruments, and nonelectrical machinerj'.'"^ 



One broad technological trend adversely affecting the U.S. position 

 in international trade was identified in 1971 by Peter G. Peterson, 

 while Assistant to the President for International Economic Affairs. 

 He pointed out that the United States is "tending to become an 

 increasingly service-oriented economy." While fears of a decline in 

 U.S. manufacturing were "highl}'^ exaggerated," nevertheless, "the 

 kinds of services which make up the bulk of the service sector are 

 certainly less 'tradeable' than new manufactured goods and raw 

 materials . . . ." And between 1950 and 1971 the national output 

 in services had risen from 30 to 42 percent. Meanwhile "our exports 

 have become inadequate to pay for our imports." It should be noted 

 that this observation was made before the oil embargo of 1974 and 

 the subsequent sharp increase in the price of imported petroleum. 

 Even then, 



Our imports have been rising not only in response to our consumer appetites, 

 but because our industry buys an increasing share of its raw materials abroad. 

 Our imports of crude oil, iron ore and copper are growing and we import most or 

 all of our natural rubber, tin, nickel and chrome. Long-range projections indicate 

 that bj^ the year 2000 we will import 30% to 509c of our mineral requirements, 

 including oil. In doing so, we will be competing in world markets with other 

 industralized nations, such as Japan, which are even more dependent on imported 

 raw materials than we are.''^ 



The scope of the technology-economics interface has been suggested 

 by Dr. Leo S. Packer, director of the office of technology policy and 



'«- National Science Foundation, National Science Board, Science Indicators 1972 (Washington, D.C.: 

 U.S. Government Printing Office, 1973), pp. 2-3. 



'« Peter G. Peterson, A Foreign Economic Perspective, vol. 1 of The United Slates in the Changing World 

 Economy (Washington, D.C.: U.S. Government Printing Office, 1971), p. 11. 



