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Press Release 95-50
New Report Says Several Asian Nations Closing the High-Tech Gap

Findings Reveal Three Distinct "Tiers"

July 24, 1995

This material is available primarily for archival purposes. Telephone numbers or other contact information may be out of date; please see current contact information at media contacts.

Several Asian economies appear headed toward greater prominence as developers of technology, an achievement that will make them more viable challengers to world high-tech markets currently dominated by industrialized countries such as the U.S., Japan, and Germany, according to a new report released today by the National Science Foundation (NSF).

According to NSF Director Neal Lane, the report "clearly says to me that the U.S. must continue to strengthen its own investments in the R&D enterprise if we are going to meet the economic challenges brought on by the high-tech development of these and other nations."

In addition, Lane agrees with the report that there is a silver lining: "The rise of these Asian nations' economies does mean larger and more robust markets for U.S. products, and more opportunities for U.S. scientists and engineers to collaborate."

The report -- "Asia's New High-Tech Competitors" -- used various criteria to compare the technological capacity of Japan (included as a benchmark by which to judge other Asian economies), with those of Hong Kong, Singapore, South Korea, Taiwan, China, India, Indonesia, and Malaysia. Among the criteria used were analysis of patents and patenting trends, U.S./Asia trade in U.S. high-tech products and technological knowhow, acquisition of U.S. high-tech companies, and acceptance of foreign investment.

Not surprisingly, given its long-standing ability to compete with other industrialized powers such as the U.S. and Germany, Japan still stands alone as the most advanced industrialized country in the region. Closing quickly on Japan, however, are the economies of Hong Kong, Singapore, South Korea, and Taiwan. Often referred to as the "four tigers" or as newly industrialized economies (NIEs), these countries have made "dramatic leaps forward" in the global technological economy over the past decade.

Said Cora Marrett, the NSF assistant director for social, behavioral, and economic sciences [the NSF organization which produced the report]: "We've thought for quite some time that several of these nations were on the verge of bursting into worldwide industrial prominence; this report confirms those beliefs."

Furthermore, the report predicts that Taiwan and South Korea are the most likely to make the greatest impact in technologyrelated fields and high-tech product markets. These predictions are based upon: strong patent activity in the U.S. in electronics and communications; data showing both economies increasing their licensing of U.S. technological know-how; and data showing both economies' rapidly rising imports of U.S. products that incorporate advanced technologies.

In addition, both economies' have significant technological infrastructures in place that should serve to support further growth in high-tech industries. Cited as evidence of technological infrastructure are: systems of intellectual property rights, R&D activities closely related to industrial applications, large numbers of qualified scientists and engineers, and others.

Singapore and Hong Kong, on the other hand, while they show strong signs of technological strength, currently appear to be more technologically limited than either Taiwan or South Korea. The report also concludes that the relatively small populations of these countries might "limit their ability to make a major impact across a broad spectrum of technology areas." Malaysia: Next "Asian Tiger?" Among the four third-tier countries -- China, India, Indonesia, and Malaysia -- only the latter appears to be moving substantially closer in technological mastery and hightech production to the more developed NIEs.

The report found that Malaysia is purchasing increasing amounts of U.S. high-tech products and has attracted large amounts of foreign investment necessary to build high-tech manufacturing facilities. While many of these facilities are simple assembly operations, the country's commitment to technology based development and its commitment to education and technical training suggest that as it gains technological capabilities, more complex processing will likely follow.

While China, India, and Indonesia faired well in some economic indicators, their economies did not show the same level of national strategy, technological infrastructure, or inplace capacity that would project technological competitiveness in the near future.

Implications for U.S: Challenges and Opportunities

According to the report, the expected development of one or more of the Asian countries into significant industrial economies creates both challenges and opportunities for the U.S.

If these nations continue to progress technologically, U.S. high-tech industries can expect competition for global market shares to intensify. In addition, as Asian economies grow, so will the competition for the best science and technology talent. Through the years Asia has sent many of its best students to U.S. universities, and many of these students have stayed and worked in U.S. industries. As opportunities to work at the technological cutting-edge are created in Asia, it seems likely that many of these students will increasingly opt to return to Asia. In addition, the increased competition is likely to attract some of the best American minds now available in industrial, university, and government sectors.

On the other hand, as other nations become more technologically advanced they will provide new opportunities for U.S. high-tech industries and the U.S. scientific and technological enterprise as a whole in the form of larger markets and new collaborators in scientific and technological research.

The nine economies profiled in this report comprise many of the world's fastest growing, and contain about half the world's population. With the end of the Cold War and the implementation of the General Agreement on Tariffs and Trade (GATT), the climate for global trade will have never been better, the report concludes.

-NSF-

Media Contacts
Michael Fluharty, NSF, (703) 292-8070, mflauhart@nsf.gov

The National Science Foundation (NSF) is an independent federal agency that supports fundamental research and education across all fields of science and engineering. In fiscal year (FY) 2014, its budget is $7.2 billion. NSF funds reach all 50 states through grants to nearly 2,000 colleges, universities and other institutions. Each year, NSF receives about 50,000 competitive requests for funding, and makes about 11,500 new funding awards. NSF also awards about $593 million in professional and service contracts yearly.

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