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Definition of High Technology

WHAT IS HIGH TECHNOLOGY? According to the National Science Foundation, there is no single preferred method for identifying high technology industries. High technology industries have a great dependence on science and technology innovation that leads to new or improved products and services. They generally have a substantial economic impact, fueled both by large research and development spending, and a higher than industry average sales growth. New product development and capital investment often go hand in hand, making high technology companies an attractive addition to local tax bases. In addition, innovation demands a trained and talented workforce. The demand can serve the entire business community by drawing talent to the high tech companies, as well as by calling upon the resources of other companies and entrepreneurs in the region and beyond. Companies grow up around the high tech enterprises and supply raw materials, components, specialized technical expertise in design, marketing, and knowledge management, skilled subcontractors, specialty packaging, distribution, and transportation. Local universities and organizations can benefit from R&D alliances with high tech companies. Experts consider active universities a key component in successful high tech regions, in part because universities can serve as incubators for high tech start-up companies, as well as providing ongoing technical support to business. Alliances between the high technology sector and local institutions ultimately lead to an improved quality of life through a spillover into the arts, local education, and social programs. How the definition of high technology will be used usually determines which of two major approaches to take. The basic methods use either the percentage of scientific and technical employment in a particular industry compared to all industries or R&D dollars spent as a percent of total sales, a measure of research intensity. Using workforce measures ⎯ Occupational employment and the percentage of particular occupations within industries changes over time, reflecting changes in employment growth as well as business structure. The Department of Labor revises these data periodically. If an industry’s proportion of R&D employment is equal to at least the average proportion of R&D employment in all industries, it can be considered high tech. In managerial and administrative occupations, the category of engineering, natural science, and computer and information managers is considered the most significant indicator of R&D activity, thus of high tech. The professional occupations most indicative of high R&D activity, thus of high tech, are engineers, physical and life scientists; computer scientists; and health professional specialties. Engineering and science technicians are also employed in significant proportions in high-technology companies.

excluding diagnostics (SIC 2836). Identifying individual high technology companies merely using industry classifications such as Standard Industrial Classification Codes (SIC) or the more recently adopted North American Industry Classification Codes (NAICS) has limitations. and laboratory analytical instruments (SIC 3826). pharmaceutical preparations (SIC 2834).) They are all research intensive. soaps. biological products. The economic potential of super-tech companies can be considerable: in 1996. paints and allied products. with superficial product changes. Within some companies. the R&D talent. lead the high-tech pack: pharmaceutical preparations (SIC 2834). they do not necessarily all have a major economic impact. and research and testing services ⎯ have been outperforming employment growth in the economy overall. the top ten most research intensive industries are: medicinal chemicals and botanical products (SIC 2833). biological products. computer and data-processing. electromedical apparatus (SIC 3845). rather than in true innovation. the average percent R&D employment in an industry. considered super-technology industries. and have faster than average sales growth. as well as in the service sector. may be employed merely making small variations on existing products. There have also been significant gains in the service sector share of R&D spending: almost 25 % in 1995 versus 8 % in 1985. engineering and architectural. or the research intensity does not reflect the major variations in performance of individual companies or establishments. telephone and telegraph apparatus (SIC 3661). cleaners. Currently. are relatively mature even though they may continue to generate new products. in vitro and in vivo (SIC 2835). telephone and telegraph apparatus (SIC 3661). diagnostics. toilet goods. They use mass-produced components in highly-regulated factory settings. as well as some computer and office equipment manufacturing. or scientific input required. rather than a determination of whether individual establishments are involved in innovative work. computer communication equipment (SIC 3576). it may lead to companies being inappropriately categorized. or overlooked altogether. A handful of categories. prepackaged software (SIC 7372). although abundant enough to qualify the industry sector for high-tech status. Although these ten industries are research intensive.Using research intensity ⎯ Data on research intensity (R&D dollars as a percent of total sales) is derived from studies of publicly traded companies. It is worth noting that R&D intensive services ⎯ management and public relations. excluding diagnostics (SIC 2836). and prepackaged software (SIC 7372. big spenders for R&D. Some companies involved in the manufacture of cigarettes. semiconductors and related devices (SIC 3674). When determinations of high technology status rely on industry-specific measures. Compare this to a 150 % increase for all industries. . Recent growth in R&D intensive high-tech industries has been largely due to growth in high-tech services. the super-technology industries saw sales almost 400 % greater than 1990 sales. For example. minimal engineering. commercial research (SIC 8731).

et al. July-August 1999 Roger Stough. Technology in Virginia’s Regions. 1988-1996.References Douglas Braddock.S. July 1991 John E.” Monthly Labor Review.” Monthly Labor Review. “Identifying ‘Super-Technology Industries. Science and Engineering Indicators ⎯ 1998 Occupational Employment by 3-Digit SIC Code (1997). annual release . Bureau of Labor Statistics R&D Ratios & Budgets. November 1999 Paul Hadlock.” Monthly Labor Review. June 1997 John W. competitiveness in high technology industry (1983).. Institute of Public Policy. “High technology employment: another view. and Donald Lyons.S. June 1997 An assessment of U. George Mason University. Jr. U. “R&D: Foundation for Innovation. March-April 1998 William Luker. Jankowski. Schonfeld & Associates.’ ” Technology-Research Management. Medcof.” Research-Technology Management. “Occupational employment projections to 2008. Center for Regional Analysis. Department of Commerce National Science Foundation. “Employment shifts in high-technology industries. Daniel Hecker and Joseph Gannon .