E C O N O M I C R E P O R T O F T H E P R E S I D E N T

Although goods production—capturing production in manufacturing,mining, and agriculture—has come to account for a smaller share of theeconomy, it, too, has become more deeply integrated into the globaleconomy. The share of domestic goods production destined for exportmarkets has grown from around 9 percent in 1929 to 21 percent in 1998.However, the shares for some specific industries and products are muchlarger. Many high-technology U.S. manufacturing industries, such aselectronics, export 25 percent or more of their total shipments.Imports, too, foster integration into the global economy. In fact, the UnitedStates often imports and exports within the same categories of products.Capital goods, for example, are the leading category of both U.S. importsand U.S. exports (Chart 6-3). This two-way trade can also be seen withinspecific industries, such as the computer industry. Some of this two-way,intraindustry trade reflects the globalization of production arrangements.Anecdotal evidence and recent studies document how production processeshave been increasingly divided up and reallocated, either domestically orglobally. That is, discrete elements of these processes, such as research anddevelopment, design, assembly, and packaging, are performed by firms in theUnited States and elsewhere, based on countries’ relative strengths incompleting different tasks. Part of the growth in trade may also reflect risingvertical specialization, in which goods are imported, further processed, andreexported.204 | Economic Report of the President