There has been a lot of talk about the US losing its leadership position to China and/or India over the next few decades. I think it's going to take a lot longer than that. Here are some interesting facts I read in a David Brooks column in the New York Times.
- The US economy accounted for 30.52% of the world's GDP in 1971. Today it accounts for 30.74%.
- The US accounts for 40% of the world's R&D spending.
- The US produces more engineers per capita than China or India.
- US unemployment rates for scientists and engineers are no lower than the rates for other professions, which implies the US has no real shortage of these talents despite countless press references to the contrary.
- At least 22 out of the top 30 universities in the world are American, and more foreign students come to American universities now than before 9/11/01.
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7 comments:
You know, Jeremy, you shouldn't take David Brooks very seriously. He's not a very good researcher, really:
US is about 20% of the world's GDP, roughly equal to the share of the European Union. China is about 15%.
Here's the source: https://www.cia.gov/cia/publications/factbook/rankorder/2001rank.html
Here you can find the numbers for R&D expenditures per country. http://www.nsf.gov/statistics/infbrief/nsf06306/
So I suspect that his R&D number for the US is also wrong. It spends 40% more than the European Union (whose share is dragged down by the new members--all the strongest members are on par with the US), but it doesn't look that the absolute number is right. In addition, the US R&D number is a "global" figure, a good portion of which comes from the US affiliates of foreign companies (such expenditures doubled from 1994-1998).
It is also a little silly to talk about university rankings, although U.S. News makes a good business out of that.
So although his opinion might hit home and be dear to one's heart, he's a columnist who won't spend 5 minutes to check his numbers.
Rick, thanks for the comment and for providing the sources which appear to dispute David Brooks' version of the facts. Generally, I hold the NY Times in high regard. Of course every journalist is bound to screw up now and then, and even the Times has been subjected to journalistic scandal, but David Brooks has built his reputation over 20 years working for publications including the Wall Street Journal and The Weekly Standard. (His full bio is here
http://topics.nytimes.com/ref/opinion/BROOKS-BIO.html).
That said, I emailed him this morning to ask for the sources supporting the facts in his column. I will post his reply if/when it arrives.
Thanks,
Jeremy
I cannot comment on Brooks' sources. However, I believe I can shed light on a common point of confusion reflected in Rick's comment. Rick cites the CIA Fact Book in stating that the US produces 20% of global GDP whereas China produces 15%. However, these statistics reflect GDP Purchasing Power Parity (PPP), that is, the size of each economy adjusted for standards of living. Clearly, 1 US$ goes a lot furhter in Shanghai (not to mention the western provinces) than it does even in Des Moines, hence nominal Chinese GDP is dramatically inflated by this measure.
According to the IMF, the US represented 28% of nominal GDP in 2005, whereas China produced 5%. The US economy therefore remains 5.6x larger than China's by this more straightforward statistic.
I made precisely the same misreading of the CIA page this very weekend. The CIA page is not well annotated in my opinion, and is unfortunately the #1 Google result for "GDP rank." Fortunately, Wikipedia, which reproduces the IMF rankings (link below) is the #2 result. Given the growing popularity of Wikipedia, hopefully this clearer source will overtake the CIA shortly.
http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)
Justin,
With all due respect, I am afraid I wasn't confused. Albeit far from perfect, PPP-adjusted GDP is the appropriate way to measure the relative size of economies. In order to calculate the world GDP, one should bring the numbers from different countries to the appropriate common denominator. It is especially problematic in case of countries like China, where the official exchange rate of yuan is kept at an artificially low level on purpose.
You can read about the need for the PPP adjustment in Wikipedia
here.
The relative size of an economy is only one part of the story. I think productivity among the largest economies is a more important metric because it is an indicator of prosperity. Perhaps lookng at per capita GDP or measures of competitiveness and total factor productivity would make more sense. I think we'd find that the U.S. is close to or at the top.
I think all of this is true but we have to remember that the GDP doesn't take in consideration the value of our debt and future promises made to other countries. Most banks would value the money of a certain country based on their trade & futures debt. It is like a very fat man. He may eat 5X more than the next man, but in order for him to survive he must east 4X the next man. He might only buy 2X and the get a loan for the other 2X. That 2X accrues interest (and some ire for not getting their money quickly) and this is why there have been rumblings of China and India surpassing us. If their currency becomes more important in the world market, then this economy would depress faster than a crying widow.
Remember the dot.com fiesta: no party has ever ended gently in world market. ever.
let me rephgrase my analogy:
The fat man may make 5X more things than the next man, but he has to eat 4X more than the next man to properly survive.
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