Americans invented the core high-technologies that enable the modern digital age, but they didn’t get a large share of the jobs created by these new industries. High-tech is dominated by Asia, where governments target its growth as vital to their economic development. The relationship between industry and the state is tight. In countries like China, Taiwan and South Korea, government-corporate partnerships provide patient capital, skilled workers and protection for intellectual property.
Their progress has been remarkable. Between 1999 and 2014, the World Bank reports, global exports of high-technology products (computers, aerospace, electrical machinery, pharmaceuticals and other “R&D intensive” products) rose by about 220%. China’s share of that soared to 26% from 3%. America’s fell to only 7% from 18%.
American innovations from the 1960s, the peak of the government’s commitment to defense and aerospace R&D, created the basis for a trillion-dollar electronics industry. Researchers with corporate and federal support invented the key components: microchips, lasers, LEDs, flat-panel displays, memory chips, imaging devices and solar-energy panels, among others. Today, these manufacturing industries employ millions of Asians but relatively few Americans.
Asia got the jobs because Asian governments set out to build innovative industries. They helped license the technology from the U.S., educated engineers and skilled workers, subsidized joint ventures with American firms that provided crucial experience, and underwrote new industries with grants and low-interest loans.
Solar energy is the latest example. As R&D made solar cells commercially viable, American venture capitalists poured money into startups. But Asian companies, with government support, moved into solar beginning around 2000. They bought German technology and by 2007 had cut market prices so low that American manufacturers couldn’t compete. When those kind of jobs move overseas, it’s largely a one-way trip. Since Asia produces most of the components, bringing solar-panel factories back to the U.S. would be difficult.