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Is there a name for distinguishing manufactured goods requiring little/no R&D and ones requiring high/sustained R&D costs? Do these two types of manufactured goods have a name in economics? For example if one divides manufactured goods into the categories of "Type-A" and "Type-B" then:


Type-A manufactured goods are those requiring permanently sustained R&D costs to compete e.g:

  • Computer Processors
  • Proprietary Software
  • Pharmaceuticals
  • Semiconductors
  • Automobiles
  • Jet Engines

Type-B manufactured goods are those requiring no long-term R&D costs to compete e.g:

  • Plastic Bottles
  • Fly Swatters
  • Chairs
  • Shoes
  • Shirts
  • Forks

Besides a name for these two types of manufactured goods, I would be interested in information explaining how they differ (other then by definition) and how countries come to have differing Type-A and Type-B export ratios based on regulations and access to raw materials. For example:

Because the R&D costs of Type-A goods accumulate with each improved version and because companies keep the R&D details secret, that money over time adds up and becomes a barrier to entry for anyone wanting to sell goods in that market that can't copy or reverse engineer all of your previous R&D investments. Moreover because of this large barrier to entry, the markets for Type-A goods are most often oligopolies, (and occasionally if the R&D costs lead to the discovery of new technology then you may obtain a monopoly) thus they can charge much more for their goods, to the point that labor costs are no longer a competitive issue. For example Raytheon can pay engineers 40-USD an hour in Virgina to assemble a JT9D jet-engine, despite the same labour costing 4-USD an hour in East Asia, because Boeing 747s which use those jet-engines have such high profit margins, that the extra labour cost isn't a big deal. Likewise the goods in Type-B are never improved/upgraded substantially and because it is widely known how to make them, there is almost no barrier to entry and anyone can create competitive products, this means there are a massive number of competitors and thus likely very small profit margins - to the point that labor costs are a competitive issue. For example Nike can not pay shoe assemblers 15-USD an hour in the US because otherwise they would have to increase the price of their shoes, making it no longer competitive in most markets - causing them to lose money, however Nike can pay shoe assemblers 3-USD an hour in Thailand because legal wages there are low enough to still give them a profit margin. So some key differences are:

Type-A goods are more advanced, require inventing new models, more profitable and does not compete on labour costs

Type-B goods are less advanced, require copying existing models, less profitable and do compete on labour costs

Now as a corollary - countries whose exports are mostly Type-A goods can maintain higher GDPs with smaller populations, whereas countries whose exports are mostly Type-B goods often require much larger populations to maintain a similar GDP, moreover countries whose exports are mostly Type-A can often enact higher minimum wage laws without lowering their GDP too much, whereas countries whose exports are Type-B can't enact higher minimum wage laws without lowering GDP, likewise countries whose exports are mostly Type-A have a greater incentive to create and enforce intellectual property and patent laws whereas countries whose exports are mostly Type-B have a greater incentive to not create and to not enforce intellectual property and patent laws, lastly since by definition manufactured goods are either Type-A or Type-B, we see that countries which produce neither of these goods must then rely on agriculture and raw-materials for their exports, and these countries are less-developed, except in tiny populations with high value resource rights.

For example over 80% of both Russia and Qatar's exports are oil/natural-gas while Russia has a poorer population over 50 times as large as Qatar's few million very rich people, likewise South Korea despite having half as many people as Russia has a GDP 10% larger because they export Type-A goods that are much more profitable then oil, or as another example China has four times the population of the US, but their nominal GDP is 10% smaller because American Type-A goods are much more profitable then Chinese Type-B goods, moreover this nominal GDP gap is closing as China further industrializes and as their government has been working to develop many profitable domestic Type-A industries by both buying old bankrupt Type-A industries and or then subsidizing them until they can compete in global markets - for example both Huawei and SMIC, were either subsidized and unprofitable or subsidized with very small profit margins up until 5-10 years ago.


Thus by splitting up manufactured goods into two classes based on their R&D costs (what I called "Type-A" and "Type-B" goods) one can then more precisely characterize a bunch of other economic phenomena, which seems pretty useful? - So is there already a name for these two types of manufactured goods? Or perhaps already terminology for charactering manufactured goods based on the general amount/duration of R&D costs?

If my examples have errors or if I misused economic terms here, I apologies - I don't have much knowledge of economics beyond an introductory course I took at college several years ago.

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There is a term "non-rivalrous" which I think captures what you are asking about. Rivalrous goods are your Type B: if I have a fly swatter and give it to you then I no longer have it: if we are to both have fly swatters then two fly swatters must be made by someone.

Knowledge, information, data, software etc are non-rivalrous: if I have a copy of a program or an electronic book then I can make a new copy for you at approximately zero marginal cost. The same goes for the plan for a computer processor or a jet engine. Creating this information is very expensive, but once it is created everyone can have it.

Obviously the actual processor or jet engine costs something to manufacture, so the resulting physical artefacts are rivalrous. The solution is to account for the knowledge and the physical artefacts separately rather than trying to keep account of the mix of rivalrous and non-rivalrous costs in each.

Copyright and patents are a way of turning non-rivalrous goods into rivalrous ones: if I have a copy of a book and give it to you then I can no longer have my copy unless I break copyright law.

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    $\begingroup$ I think perhaps a better definition then what I wrote might be that Type-A goods derive most of their value from intellectual property secrets while Type-B goods derive most of their value from their raw materials. Because wouldn't semiconductors and jet engines still be rivalrous goods under your definition? $\endgroup$
    – user38229
    Oct 7 '21 at 10:52
  • $\begingroup$ @Ethan Yes, that is what I said. Economists don't have an exact equivalent of your "type A". Instead they consider the two types of value separately. And of course trade secrets are another way of making information into a kind-of rivalrous good. $\endgroup$ Oct 7 '21 at 13:11

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