Advanced Technology Deficit Widens in 3rd Quarter

Posted by: Michael Mandel on November 13

Here’s more bad news for jobs.

According to this morning’s trade report, the advanced technology trade deficit widened to $18.2 billion in the third quarter, up from $12.9 billion in the second quarter of 2009 (advanced technology products include 10 categories, such as information and communications, biotechnology, and aerospace).

The third quarter ATP deficit, at $18.2 billion, was just below the $18.9 billion of a year ago. I believe that was the record, though, I’m not 100% sure.

Nevertheless, the widening of the ATP trade deficit is not good news for U.S. production jobs, since it means that even as demand for innovative products recovers, the production benefits are primarily being felt overseas. Employment in the computer and electronic products industry, for example, fell at a 10% annual rate in the third quarter.

What about royalties and license fees to produce the new technology—doesn’t the U.S. benefit from that? The total trade surplus in royalties and license fees was $14.4 billion in the third quarter, smaller in magnitude than the advanced trade deficit. Given that royalties and license fees include movies and tv shows as well, it’s likely that the amount of revenue from licensing the overseas production of advanced technology products was actually substantially less.

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Reader Comments

cm

November 13, 2009 12:11 PM

To my knowledge, the "IP" licensing game is only played in jurisdictions where rights holders can (or think they can) effectively enforce their rights, i.e. more or less the Western World (including the Westernized parts of Asia e.g. Japan and Taiwan).

Even inside the US, businesses heavy in IP and trade secrets try to keep close reigns on letting domestic vendors near it, what with all the visa workers.

High to good quality Asian bootlegs of media titles are notoriously available even before the official release. But advanced computer chips and other tech items cannot be readily copied from a master, they need a whole ecosystem of design and manufacturing expertise.

Rob

November 13, 2009 04:02 PM

Hey - who cares! That's why productivity is up big time! That's why stock markets are up. The last (maybe second-last) stronghold of our economy (knowledge) is being farmed out to the lowest bidder. Well the illusion industry (TV, Movies, Finance) is still going strong right!

Zack

November 13, 2009 08:13 PM

Wait, I've been reading BW articles for years about how off-shoring technology created a 10:1 ratio of Tech jobs favoring the US. So that was all wrong?

Ed

November 14, 2009 03:29 PM

We are not really innovating at all when we create jobs somewhere else. Real and useful innovation means creating jobs in the U.S.

Could an economist please explain why their theories about globalization creating more and better jobs in the US have been a complete failure?

SAP Assessment

January 3, 2010 02:36 AM

Such innovation policies are quite crucial for having a better Europe ahead. These are no trifling matter, these are really serious issues.

Fritz Nozime

January 12, 2010 05:01 PM

We are in serious trouble:

Economist are not business planner,
only observer.

Corporate profit/greed is paramont to all else, natioanal economy of scale and interest.

Lost of skills/productivity/knowledge due to outsourcing.

Fritz Nozime

January 12, 2010 05:01 PM

We are in serious trouble:

Economist are not business planner,
only observer.

Corporate profit/greed is paramont to all else, natioanal economy of scale and interest.

Lost of skills/productivity/knowledge due to outsourcing.

Fritz Nozime

January 12, 2010 05:01 PM

We are in serious trouble:

Economist are not business planner,
only observer.

Corporate profit/greed is paramont to all else, natioanal economy of scale and interest.

Lost of skills/productivity/knowledge due to outsourcing.

Fritz Nozime

January 12, 2010 05:01 PM

We are in serious trouble:

Economist are not business planner,
only observer.

Corporate profit/greed is paramont to all else, natioanal economy of scale and interest.

Lost of skills/productivity/knowledge due to outsourcing.

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Michael Mandel, BW's award-winning chief economist, provides his unique perspective on the hot economic issues of the day. From globalization to the future of work to the ups and downs of the financial markets, Mandel-named 2006 economic journalist of the year by the World Leadership Forum-offers cutting edge analysis and commentary.

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