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Leveraging Trade in High Technology for Emergence
The emerging strength of Brazil, Russia, India, China, and South Africa in high-technology trade is examined. Trends in high-technology trade in BRICS are reviewed, highlighting the hugely disproportionate contribution from China in trade in high-technology products, primarily driven by information technology products. Subsequently, trade in ITP is analysed as a special case and the relevance of the Information Technology Agreement 1 in influencing production and trade of ITP has been discussed focusing on experiences of China and India (against the performance of traditional players in this category). The ITA 2 and its rationale are introduced. The
The authors gratefully acknowledge the comments received from the anonymous referee. They also benefited from the comments received from S K Mohanty. The preliminary version of this paper appeared as RIS Discussion Paper No 207.
The rise and relevance of BRICS (Brazil, Russia, India, China, and South Africa) cannot be overstated. BRICS constitutes prominent emerging economies with substantial influence on world affairs—both political and economic. While China has demonstrated its capacity to be the world leader in production and trade, India and Brazil have been steady on technological development. BRICS has become the fastest and largest emerging market economies and contributed -21.91% of world’s gross domestic product (GDP) at 2010 constant prices in 2018, with China, Brazil, and India accounting for 13.03%, 2.80%, and 3.44%, respectively, followed by Russia (2.08%) and South Africa (0.52%). The United Nations Conference on Trade and Development (UNCTAD) has associated “emergence” with countries’ performance in knowledge-intensive exports, both globally and to other developing countries.1 Evidence suggests that production and exports of high-technology products (HTP) mainly in areas like electronic goods and computers have substantially shifted to the developing world (Lall 2000; Mani 2000; Srholec 2007). The emergence of BRICS, strongly evident across economic indicators, may lead to important lessons on export performance/international trade in high-technology goods.
The financial crisis of 2007–08 had a negative effect on global trade. However, according to UNIDO (2013), the impact on trade in manufacturing goods was proportionately less severe than on trade in fuels and mining products. Within manufacturing, HTP make up for the largest share of trade in terms of value and are most dynamic in nature. Conceptually, high-technology goods are those that are outcomes of high levels of innovation and research and development (R&D). High-technology goods constitute products that are either final products in themselves or serve as intermediate inputs. With increasingly distributed production structure spanning several locations and countries, those countries that are part of such production networks stand to gain according to their relative value addition. While, intellectual assets generate maximum rent, manufacturing and assembly of products are equally important sources of income growth. Often, production of high-technology goods in developing countries is of downstream nature. This helps advanced economies to obtain substantial revenue generated out of sales of high-technology goods.
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