EU industrial structure 2009

NB-BL-08-001-EN-C
Performance and competitiveness
The production of EU industrial structure is a response to the increasing interest in analysing
the competitiveness of the EU economy from a sectoral perspective. This publication provides
insight into the relative performance of individual industries, and contributes to explaining the
competitiveness of the EU economy at large. The publication covers market sectors, from mining to
market services, although, wherever necessary, it refers to the whole economy, including primary
sectors and non-market services.
The work is empirical and data oriented and consists of the creation and analysis of a system

EU industrial structure 2009 — Performance and competitiveness

of statistical indicators on various facets of sectoral performance and competitiveness. The
indicators cover fields of relevance to gain insight into the economics and policy issues of EU
sectors. The publication applies the same set of indicators to all sectors and uses input–output data
to go beyond the analysis of individual sectors separately buy capturing sectoral interrelations,
such as those between manufacturing and services sectors. From a geographical point of view
the publication covers the EU-27 as a whole and individual Member States and it also makes
comparisons with other countries, such as the US, Japan and BRIC countries (Brazil, Russia, India,
China), wherever possible.
The 2009 edition of EU industrial structure covers the following topics: the recent economic
downturn, EU sectoral structure, EU sectoral growth, international competitiveness of EU industry,
synthesis and further analyses of the sectoral competitiveness in the EU. This publication follows
the path laid by EU sectoral competitiveness indicators (2005) and EU industrial structure 2007 —
Challenges and opportunities. Compared to the previous publications, the 2009 publication offers
a more detailed sectoral breakdown and adds two chapters, one devoted to the analysis of the
impact of the financial crisis on the real economy and one synthesis chapter.

EU industrial
European Commission • Enterprise and Industry structure
2009
Performance
and competitiveness
European Commission
Enterprise and Industry ISSN 1831-3043
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EU industrial
structure
2009
Performance
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European Commission
Enterprise and Industry
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 Contents

Contents
E x e c u t i v e s u m m a r y . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Chapter I
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Chapter II
T h e e c o n o m i c d o w n t u r n . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

II.1 Growth and cycles in EU industries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

II.1.1 Manufacturing growth and cycles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
II.1.2 Services growth and cycles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
II.2 Sectoral developments: the current downturn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
II.2.1 Most recent developments in manufacturing industries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
II.2.2 Most recent developments in services industries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
II.3 Effects of sectoral interconnections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

Chapter III
I n d u s t r i a l s t r u c t u r e i n t h e E U . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

III.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
III.2 The share of industries and sectoral specialisation in the EU. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
III.2.1 The share of industries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
III.2.2 Sectoral specialisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
III.3 A tool to analyse sectors: from nomenclatures to taxonomies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
III.3.1 Labour skills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
III.3.2 Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
III.3.3 Growth intensity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
III.4 Value added by enterprise size categories. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
III.5 Sectoral interrelations: output multipliers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
III.5.1 Output multipliers in the EU. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
III.5.2 The role of manufacturing in the economy: beyond its share. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
III.6 Appendix tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82

Chapter IV
Se c t o r a l g r o w t h . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85

IV.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
IV.2 Output growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
IV.2.1 EU manufacturing in the global context. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
IV.2.2 Sectoral growth in the EU. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87

Page 3
EU industrial structure 2009 — Performance and competitiveness

IV.3 Sectoral competitiveness indicators. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90

IV.3.1 Labour productivity, unit labour costs and competitiveness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
IV.3.2 Labour productivity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
IV.3.3 Unit labour costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
IV.4 Factors of production: labour, capital, energy and technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
IV.4.1 Labour. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
IV.4.2 Human capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
IV.4.3 Gross fixed capital formation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
IV.4.4 Energy intensity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
IV.4.5 Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
IV.5 Demand-side drivers: a sectoral picture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
IV.5.1 Private consumption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
IV.5.2 Investment demand. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120

Chapter V
I n t e r n a t i o n a l c o m p e t i t i v e n e s s o f E U i n d u s t r y . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125

V.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125

V.2 EU industries in the global market. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
V.2.1 The structure and direction of world trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
V.2.2 Openness of EU industries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
V.3 External trade and competitiveness of EU industries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
V.3.1 Indicators of competitiveness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
V.3.2 Intra-industry trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148
V.3.3 Trade in intermediate goods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152
V.3.4 The role of labour qualification and technology in EU sectoral trade . . . . . . . . . . . . . . . . . . . . . . . . . 157
V.4 International movement of factors: foreign direct investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166

Chapter VI
Se c t o r a l c o m p e t i t i v e n e s s i n t h e E U : s y n t h e s i s a n d f u r t h e r a n a ly s i s . . . . . 171

VI.1 Specialisation of EU countries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171

VI.2 Sectoral picture of the EU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173
VI.2.1 Overview of EU sectors: summary table. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173
VI.2.2 Cluster analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175
VI.2.3 Links between variables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176
VI.3 Performance and competitiveness of manufacturing sectors in the EU. . . . . . . . . . . . . . . . . . . . . . . . . . . 178
VI.3.1 Overview of EU manufacturing sectors: summary table. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178
VI.3.2 Cluster analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 181
VI.3.3 Links between variables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182
VI.4 Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187

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 Contents

Annexes
A n n e x e s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189

A.1 Statistical nomenclatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189

A.2 List of abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195

Re f e r e n c e s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196

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EU industrial structure 2009 — Performance and competitiveness
Executive summary
• Recent developments1 in the industries of the European Union all
reflect a continuous deterioration in the situation. The negative
growth rates in manufacturing production output in the last
months of 2008 and early 2009 were below the lowest on record
since the beginning of the 1990s. The forward-looking indicators,
such as new orders or production expectations, do not point to
any improvements in the short term. Although the crisis started
in the financial sector, its impact on the ‘real economy’ has now
materialised; it has spread throughout the whole economy as all
sectors are interconnected. Untangling these interconnections
is crucial to diagnose how the crisis has spread throughout the
economy and to understand its impact on various activities.
• Looking at short-term indicators and comparing the current crisis
with previous downturns provides some pointers to its possible
evolution. But a longer-term perspective is crucial for a proper
understanding of the performance of EU sectors. The economic
downturn is, to a large extent, the result of business cycles. But in
some sectors the situation has been exacerbated by pre-existing
low sectoral performance. An industry is likely to be more at risk
if it was already showing signs of a lack of competitiveness before
the crisis. In this report, the relative performance of each industry
is tracked since 1995 by means of a set of sectoral competitiveness
indicators.
• The report on the EU industrial structure is a response to the
growing interest in analysing the competitiveness of the EU
economy from a sectoral perspective. It sheds light on the position
of EU sectors in the short and long term. The sectoral dimension of
both production and demand in the EU are reviewed. The short-
term analysis concentrates on the effects of the crisis, while the core
of the report concentrates on growth and on long-term aspects
of competitiveness. Sectoral competitiveness characteristics are
viewed from a domestic perspective through labour productivity
or unit labour costs, and from an external perspective through
trade-related measures such as revealed comparative advantages,
relative trade balance or world market shares. The report looks
at sectors individually and in relation to others, investigating the
interrelations between sectors using multiplier effects. The links
between domestic and external aspects of sectoral competitiveness
are reviewed. Since the sectoral structure varies considerably across
1 In what follows, the description is based on data available in mid-2009 at the
time of the drafting of the report.
Page 6
EU countries, the report also includes a section on EU countries’
specialisations.
• The report is based on the most recent possible indicators. It focuses
on market sectors, from mining to market services, although,
where necessary, it looks at the whole economy, including primary
sectors and non-market services. The list of sectors covered varies
across indicators depending upon data availability. The report
concentrates mostly on the EU-27 as a whole but often provides
comparisons between EU countries and the US. Emerging
countries,  such as China and India, are also considered in the
sections on external performance.
EU manufacturing growth is the lowest
since the early 1990s and bound to
deteriorate further
• The substantial decline in manufacturing activity since mid-2008
is the result of a deceleration trend that had already begun in
October 2006. The EU economy, like the US, has gone through two
business cycles since the early 1990s and is now in the downward
phase of a third one. The troughs of the manufacturing cycles
occurred first around 1991 in the US and in 1993 in the EU, and
then at the end of 2001. They were characterised by negative
growth rates in manufacturing output. In fact, detailed analysis of
manufacturing output using short-term indicators shows that the
extremely negative growth rates in the last few months of 2008
were of a higher magnitude than in 1993 and at the end of 2001 in
the EU and the US.
• Certain types of sector are more sensitive to business cycles
than others2. When looking at manufacturing goods for the time
period 1990 to 2008, consumer durables and capital goods show
substantial decreases in level of activity around 1993 and 2001.
The same applies to intermediate goods. This is not the case for
consumer non-durables, which are much less volatile and enter a
trough only in 1992. The sectors where the amplitude of the cycle
2 Chapter II of the report considers the sectors’ business cycles in the period from
the early 1990s until the third quarter of 2008. They are examined in two ways: first,
by grouping sectors in different categories and, second, by looking at individual
sectors.

is higher than for total manufacturing are the capital, intermediate
goods and consumer-durable sectors. Conversely, for non-durables,
the amplitude is lower. Concerning services, they have grown faster
and with less cyclical patterns than goods.
• Additional analysis confirms a deep recession across all
manufacturing industries, which already by the end of 2008 was
stronger than the downturn in 1992–93. While the strongest
deterioration is found in manufacturing, some service sectors are
also seriously affected, much more than in previous downturns.
A ‘diffusion indicator’3 shows the intensity of the crisis and its
diffusion across the economy. In February 2009 this indicator
approached the level of 1993, and went below the previous trough
of December 2001. Pointers to future developments can build on
leading indicators such as new orders or production expectations.
The dramatic fall in new orders was evident in the last months of
the period (until April 2009) and is now expected to exert a negative
impact on production in the following months. The EU Business
Surveys (regular harmonised surveys used to monitor the different
sectors of the EU economies) provide a ‘balance’ of opinions
regarding the level of order books, the stock of finished products
and production expectations that confirm the deterioration in the
last few months (until April 2009). Worryingly, the stock of finished
products has built up to levels similar to 1993. Order-book levels
and production expectations present a negative outlook that is
worse than 1993.
• Identifying which individual sectors are most important in the EU,
which ones generate most spillovers to other sectors, and how
these sectors have developed recently, is essential to understanding
the potential development of the crisis.
As sectoral developments are
interconnected, the most seriously
affected sectors have strong
repercussions on others
• As sectors are interconnected, the developments spill over to
the whole economy. The complexity of the spillover effects is
compounded by the fact that they pass not only from one sector
to another, but also from one country to another. It is possible to
gauge the impact of each sector based on output multipliers4.
Given the existence of the single market, most of the multiplier
effects are expected to have an impact on other EU countries. The
five sectors with the greatest impact on other domestic and foreign
sectors are: motor vehicles, trailers and semi-trailers, basic metals,
food products and beverages, office machinery and computers,
and chemicals and chemical products. However, when looking at
only the effect on the domestic economy, the five top sectors are:
food products and beverages, construction work, manufacture of
3 The synthetic indicator called the ‘diffusion index’ is defined as the difference
between the percentage of industries that are expanding and of those that are
declining, where ‘expanding’ and ‘declining’ mean positive and negative growth
rates respectively.
4 The output multiplier for a sector measures the total value of production
necessary in all sectors of the economy, directly and indirectly, to produce one
monetary unit of production for final demand. Chapter III provides an overview
of EU output multipliers while Chapter II links the multipliers to the effects of
the crisis.
Executive summary
wood and of products of wood and cork (except furniture), articles
of straw and plaiting materials, and recovered secondary raw
materials. These different top fives, with only one sector appearing
in both, illustrate the importance of imported intermediate inputs
for the production of goods and services in a country. This also
demonstrates that changes in final demand in one country have an
impact on other countries, particularly other EU Member States.
• When multiplier effects are analysed in view of the crisis, four
manufacturing sectors generate a strong negative impact on the
economy: basic metals, motor vehicles, food and drink, and machinery
and equipment. They have a high multiplier effect, represent a high
share in gross domestic product (GDP) and suffered a strong decrease
in production5. Basic metals have a high multiplier (3.0) and represented
0.7 % of GDP in 2007. Production of basic metals decreased by 23.7 %
between December 2007 and December 2008. The sectors most
affected, directly and indirectly, by the basic metals industry are other
business services, wholesale trade, electrical energy, gas, steam and
hot water, metal products and metal ores. Apart from basic metal, the
three other sectors having strong knock-on effets are motor vehicles
(1.3 % of GDP, –23.6 % of production decrease, multiplier of 3.1), food
and drink (2 % of GDP, –3.2 % of production decrease, multiplier of
2.8), machinery and equipment (1.9 % of GDP, –6.5 % of production
decrease, multiplier of 2.7). Following the same logic, other large
sectors have a more neutral effect. Examples are the wholesale and
retail trade, which are large sectors (5.4 % and 4.4 %), but which, at
the same time, have lower multiplier effects (1.9 and 1.8) and whose
growth rates are, relative to the other sectors, not as dramatic (1.5 %
and –0.5 %).
Market services play a growing role in the
EU economy
• Many growth opportunities have been seized but the current
downturn will put the latest improvements at risk. Between 1995 and
2007, market services gained more than 4 percentage points to reach
49.2 % of total EU GDP while manufacturing sectors lost about 3.5 %
in their total share of GDP in the EU (from 20.5 % to 17.1 %). This trend
does not mean that actual manufacturing output has diminished in
the EU; it has in fact increased at a rate of 2.1 % from 1995 to 2008.
Obviously, the overall EU outcome hides very different patterns.
Romania, Slovakia, the Czech Republic and Finland have a much lower
share of market services than the EU-27 average (around 41–43 % of
GDP compared to 49.2 % in the EU as a whole in 2007). Conversely,
these countries, along with Germany and Slovenia, have much higher
manufacturing shares (more than 23 % compared to 17.1 % in the EU
in 2007). Also, several countries are characterised by both high shares
and high growth in the construction sector. In the EU as a whole, the
construction sector grew by 0.5 % from 1995 to 2007 and represented
6.5 % of GDP in 2007, but its presence was much more pronounced in
Spain (4.6 % growth, 12.2 % of GDP), Lithuania (2.9 % growth, 10.2 % of
GDP), Ireland (4.5 % growth, 9.9 % of GDP), Latvia (3.8 % growth, 8.4 %
of GDP) and Romania (2.8 % growth, 8.4 % of GDP).
• Private consumption in the services sector and investment in
5 T he annual decrease in production was calculated with the most recent data
available, which were for December 2008 for manufacturing activities and retail,
and October 2008 for other service activities.
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EU industrial structure 2009 — Performance and competitiveness
construction work have been the largest contributors to demand
growth in the EU6. Private consumption represented 57.4 % of EU
GDP in 2007. It has been characterised by an increasing share of
services, which now accounts for more than 70 % of consumption in
the most developed EU countries, coupled with a structural decrease
in the consumption of goods as a share of total consumption. From
1997 to 2007, the sectors where consumption was most sensitive to
business cycles were mostly ‘luxury’ goods and services (package
holidays, audio-visual and photographic equipment, tobacco
products, etc.). Construction work, including house building,
represented more than half of total non-financial investment in the
EU in 2007. Moreover, some countries have an even more unbalanced
profile, with construction outweighing all other types of investment.
Considering the nature of the sub-prime crisis, the recent importance
of construction investment generates more vulnerability.
• The recent sectoral developments are also the result of longer-term
trends. When European sectors are compared, some of them lag
significantly behind in terms of competitiveness, as measured by
labour productivity and unit labour costs developments.
More dynamic and high-performing
sectors are likely to adjust better to the
crisis
• While the share of manufacturing in EU GDP decreased from 20.5 % to
17.1 % from 1995 to 2007, its average labour productivity growth rate
of 3.2 % was the highest of all sectors. In addition, unit labour costs
developed more favourably in manufacturing than in services. From
1995 to 2007, the sectors where labour productivity grew the most in
the EU were manufacture of electrical and optical equipment (6.8 %)
and manufacture of chemicals and chemical products (5.2 %). The
primary and tertiary sectors saw labour productivity improvements,
but not as much as the manufacturing sector. In comparison, labour
productivity grew by 2.8 % in fishing and agriculture, while only two
service sectors had high growth rates: financial intermediation (2.7 %)
and transport, storage and communication (3.3 %).
• EU labour productivity growth is still lagging behind the US in most
sectors (looking at the 1995–2007 period). The manufacturing sectors
where the EU’s labour productivity growth is higher than the US
are wood and wood products, chemicals, other non-metallic mineral
products, basic metals and fabricated metal products. In other sectors
the data give a less positive view of EU competitiveness, with in general
lower growth rates, linked with weaker productivity performance.
Indeed, in all other sectors, including market services, the EU’s labour
productivity growth remains below the rates in the US, particularly so
in wholesale and retail trade, personal and household goods, and real
estate, renting and business activities.
• The characteristics of sectors in terms of the various production factors7
(labour input, capital input and technology) are of key importance
to understand performance developments. Manufacturing activities
appear to be less labour-intensive, but more R&D-intensive, generating
6 Chapter IV analyses demand by looking at sectoral private consumption and
gross fixed capital formation (GFCF).
7 Chapter IV reports the labour, capital and technology intensity at industry
level.
Page 8
relatively more patents than services. Interestingly, it is the services
sectors rather than manufacturing that have the highest educational
attainment and the highest investment intensity. The sectors with
higher levels of educational attainment include information technology,
finance and insurance, chemicals and real estate. Conversely, low
educational attainment prevails in wearing apparel, textiles and wood
products. Employment has decreased most sharply in those low-skilled
sectors where low-cost countries are more competitive than the EU.
Employment has, broadly speaking, shifted to the services sectors.
But, at a more detailed level, some manufacturing industries are still
creating jobs as well, such as the recycling industry, which experienced
4.6 % of employment growth from 1995 to 2008. Among the large
sectors, real estate and business services had the highest employment
growth rate (4.5 %) in 1995–2008. This also happened to be the sector
with the highest investment intensity (ratio of investment to value
added) in 2006. The agriculture sector and the transport, storage and
communications sectors are the second and third most investment-
intensive sectors. Manufacturing sectors account for about 80 % of total
EU expenditure in research and development (R&D), and the highest
R&D intensities (ratio of R&D to value added) can be observed in radio,
television and communication equipment, office accounting and
computing machinery, other transport equipment, and motor vehicles.
As one would expect, these sectors are also the ones that generate the
highest patent intensities (ratio of patents to employment in a sector).
• The EU accounts for 23.2 % of total world manufacturing. But this hides
a wide variation in sector shares: ranging from 4.7 % in radio, television
and communications equipment to 41.3 % in fabricated metal products.
Between 1995 and 2006, the EU lost significant ground in world
manufacturing sectors, such as tobacco products, textiles, wearing
apparel, leather, leather products and footwear, office, accounting
and computing machinery, and radio, television and communication
equipment. In contrast, EU shares in some sectors grew: wood products
(excluding furniture), paper and paper products, printing and publishing,
fabricated metal products, and motor vehicles, trailers and semi-trailers
experienced an increase in their share of world production.
• EU sectors, confronted with foreign competition, are under pressure
for further performance improvements. But foreign countries are also
a source of market opportunities.
EU openness is an opportunity for
diversifying sources of inputs, developing
new markets and transferring knowledge
• Trade performance is a clear signal of the competitiveness of EU
sectors. The EU is a large and open trading partner. In 2005, it
accounted for 44.4 % of world manufacturing exports, while 30.7 % of
the world manufacturing trade was between EU countries. The main
manufacturing trade partners of the EU are North America (29.6 % of
EU exports and 20.6 % of EU imports) and Asia (21.7 % of EU exports
and 45.8 % of EU imports). Regarding trade in services, the EU was
responsible for 48 % of world exports and 45 % of world imports in
2005, taking into account the intra-EU trade in services. Openness
indicators8 show that there is a high variation across EU sectors, but that
8 Chapter V presents various indicators of the openness of the EU, for example
exports as a share of production and imports as a share of apparent
consumption.

in general, EU openness towards the rest of the world has increased
in parallel with openness towards the EU. By being open, countries
also exchange knowledge and technology relating to the products
or services being traded. About 60 % of trade is between a group of
countries comprising the EU-27 and other high-income countries.
Though intra-industry trade is strongly present in developed countries,
all countries depend, in one way or another, on external intermediate
inputs (including intra-EU). In the EU, Belgium, Estonia, Ireland, Hungary
and Slovakia are the most dependent on intermediate inputs. Such
inputs come to a large extent from the single market. The openness of
the EU, whether to the rest of the EU or to external partners, ensures
access to a large variety of goods important for the competitiveness of
EU firms.
• Considering not only the volume but also the nature of trade in
goods, China has emerged as a contender to western economies.
EU external competitiveness is examined from two perspectives (by
looking at individual sectors and at sectors grouped according to
their characteristics) and compared to the US and the so-called BRIC
countries (Brazil, Russia, India and China). When the role of labour
qualification and technology in EU sectoral trade is examined, China’s
position is interestingly very distinct from that of other emerging
countries. China is now much closer to the western economies, such
as the EU or the US, as it displays revealed comparative advantages
in both high-skilled production and high-tech goods. In 2006, the EU’s
strongest revealed comparative advantages were in the following
products: machinery and equipment, chemicals, tobacco, and printing
and publishing. The main trade partners of the EU demonstrate other
revealed comparative advantages. In the US, the goods sectors that
stand out are other transport equipment and publishing and printing;
in Japan motor vehicles, trailers and semi-trailers and machinery and
equipment; in China the textile sectors and office machinery and
equipment sectors and in India furniture, textiles, and coke, refined
petroleum, and nuclear fuel.
• In the services sectors, the EU is very balanced and has revealed
modest comparative advantages in most sectors, the strongest
being in transportation and financial services. Similarly, the US has
revealed comparative advantages in financial services and recreational
and cultural services, Japan in construction, China in construction
and travel, and India in computer and information services. It is
worth stressing that services are much less tradable than goods,
corresponding in 2005 to about one quarter of the world volume of
trade in goods. Furthermore, certain forms of trade in services require
the movement of people. This implies that trade in services is in some
cases more regional than global.
• Foreign direct investment (FDI) is a common way to get around the
limitations of trade in services. As a result, the sectoral patterns for
FDI are dominated by services. FDI is extremely concentrated, with
around 44 % of outward EU FDI and 42 % of inward EU FDI being in
financial services in 2005. The importance of the single market for FDI
is evident from the fact that, on average, 62 % of the total FDI stock
of EU Member States is in other EU countries. The bulk of EU FDI in
the rest of the world (excluding the EU) is in refined petroleum and
other treatments. FDI and trade provide access to resources that are
not available at home but that also allow countries to build on their
strengths by accessing larger markets.
• The report shows that across EU manufacturing sectors, domestic
Executive summary
competitiveness (i.e. labour productivity, unit labour costs) is positively
linked to international competitiveness9 (as measured by revealed
comparative advantages, relative trade balance or world market
shares). There are a few sectors though for which the relation is not
verified. The leather and leather products sector exhibits the poorest
performance in domestic competitiveness, although its situation in
international competitiveness is more neutral. Two sectors exhibit the
poorest performance in international competitiveness, while they rank
in the first two places in domestic competitiveness: office machinery
and computers on the one hand and electronic components and radio
and TV equipment on the other hand.
• Broadening the scope of the economic activities of a country is a way
to avoid depending on sectors for which competition may become
too severe or demand too low. Diversification of activities may help
cushion the effects of the crisis.
Less diversified countries are more likely
to be more vulnerable to the crisis
• Production specialisation patterns10 vary across countries due to
many factors (including country size and country resources). Indeed,
countries cannot specialise in every sector, and all countries cannot
specialise in the same goods or services. At times of crisis, those
countries that are not overly specialised (i.e. are diversified) are likely
to be the most resilient. Diversification is naturally easier for large
countries, but smaller countries such as Belgium and Austria have
been able to diversify as well. The report indicates which countries are
the most diversified, namely Germany, France and the UK, and shows
the specialisation sectors of each country. It also examines whether
the most recent changes in GDP structure have led to more skill-
intensive, more technology-intensive or more fast-growing activities.
The countries with the highest proportion of highly-skilled labour are
Belgium, Ireland, France and Luxembourg. The overall observations
show that high-skilled activities are becoming more important in
almost all countries. Meanwhile, specialisation in high-tech or fast-
growing sectors is seen in only a handful of countries. Germany, France,
Hungary, Slovenia, Finland and Sweden clearly specialise in high-tech
sectors. Ireland and Luxembourg specialise in high-growth sectors.
• To conclude, as the crisis spreads throughout the EU economy, in-
depth sectoral knowledge becomes increasingly relevant. For this
reason, the report assesses industrial performance and sheds light
on the economics of sectors and on their contribution to the EU
economy as a whole. It clarifies a number of key mechanisms, such as
the magnitude of business cycles and the interconnections between
sectors. It also ranks the sectors in terms of domestic and international
competitiveness. In the future, given the uncertainty of the economic
situation, it will be crucial to update the analyses carried out in order to
provide more insight into sectoral developments.
9  hapter VI offers different types of analysis (such as cluster analysis) to provide an
C
overview of the similarities between sectors and the links between the different
competitiveness characteristics.
10 Chapter III and Chapter VI offer different measures of EU countries’ specialisations.
Chapter VI summarises the various approaches to specialisation considered in
Chapter III.
Page 9

Chapter I
Introduction
The production of EU industrial structure is a response to the increasing
interest in analysing the competitiveness of the EU economy from a
sectoral perspective. This approach provides insight into the relative
performance of each industry, and contributes to explaining the
competitiveness of the EU economy as a whole. This publication
follows the path laid by EU sectoral competitiveness indicators11 and EU
industrial structure 2007 — Challenges and opportunities12 and shares
with them the objective to elaborate and present information on
sectoral competitiveness and performance.
The purpose of this publication is to track sectoral developments and to
assess the competitiveness of EU industries building on a set of sectoral
competitiveness indicators. The list of sectors covered varies across
indicators depending upon availability of data in the original sources.
Compared with its predecessors, EU sectoral competitiveness indicators
and EU industrial structure 2007 — Challenges and opportunities, this
publication incorporates new topics and indicators, and enlarges EU
coverage to the EU-27. Two examples of new topics are Chapter II,
devoted to the analysis of the impact of the financial crisis on the real
economy, and Chapter VI, which brings together various indicators to
provide a summary view of sectoral developments.
The publication focuses on market sectors, from mining to market
services, although, wherever necessary, it refers to the whole economy,
including primary sectors and non-market services. Nevertheless,
the aim is to optimise the use of the information available and this
publication does not intend to bring all indicators to the same common
nomenclature, which would mean losing valuable information for
sectoral analysis. In fact, the sectoral detail in a number of statistical
data sources varies substantially between manufacturing and services,
or across different topics. One example of these limitations is external
trade in services and R&D data.
The publication is organised as follows: Chapter II is devoted to the
analysis of the impact of the financial crisis on EU sectors. It is divided
in two sections. The first section analyses the cyclical profile of EU
industries, while the second looks specifically at sectoral developments
in 2008, and in 2009 where data were available at the time of the
11 European Commission (2005), EU sectoral competitiveness indicators, Office for
Official Publications of the European Communities, Luxembourg.
12 European Commission (2007), EU industrial structure 2007 — Challenges and
opportunities, Office for Official Publications of the European Communities,
Luxembourg.
Chapter I — Introduction
drafting of the report. Chapter III presents information on the industrial
structure of the EU. The main topics of the chapter are sectoral
structure and production specialisation in EU countries as well as the
use of sectoral taxonomies to analyse it. The chapter also includes a
section on the distribution of sectoral value added by enterprise-size
categories, and finishes with a section on sectoral interrelations, which
presents output multipliers. Chapter IV deals with industrial growth
from various angles. Growth in the EU, vis-à-vis the world, is analysed in
terms of output. Furthermore, EU labour productivity and unit labour
costs are used to assess the developments of competitiveness across
sectors. The second main topic in Chapter IV is the analysis of growth
factors (gross fixed capital formation, human capital, and technology),
for which a set of indicators is presented and discussed. The chapter
finishes by analysing developments on the demand side, with special
attention to product composition and developments in private
consumption and capital formation. Chapter V presents indicators
pertaining to sectoral performance in international trade. Along with
indicators of share in world markets, relative trade balance, revealed
comparative advantage (RCA) and intra-industry trade (IIT), foreign
direct investment (FDI) at sectoral level, albeit highly aggregated, is
presented as an indicator of the international movement of factors.
This chapter also includes an analysis of trade in services. The RCA
index is presented for the EU and its Member States separately, China,
India, Japan and the US in terms of a standard sectoral classification,
as well as in terms of technology and labour skills sectoral groups.
Chapter VI offers a summary view based on the indicators presented
in the other chapters. Multivariate statistical techniques, such as
cluster analysis and principal components, are used to summarise the
information. Finally, Annexes A.1 and A.2 present the nomenclatures
used in the report (NACE Rev. 1 and others) and include the abridged
names of the categories used throughout this report. As was the
case for EU industrial structure 2007 — Challenges and opportunities
additional material (tables and graphs) to complement the contents
of this publication can be found on the companion website (http://
ec.europa.eu/enterprise/enterprise_policy/competitiveness/index_
en.htm). This material will include results for a more detailed sectoral
classification, such as the 3-digit level of the Statistical Classification of
Economic Activities (NACE Rev. 1).
Page 11

Chapter II
The economic downturn
This chapter focuses on short-term developments in EU industries. In
the current context of economic crisis the long-term trends presented
in Chapter IV do not portray the impact of the crisis on the various
sectors of the economy. This section focuses on the most recent
developments in 2008 and early 2009. This is done using monthly
indicators of production to measure growth in sectors as well as
information on new orders and business survey results to assess
developments expected in the near future. The output multipliers
presented in Chapter III are used to illustrate how the effects of the
crisis on one single sector spill over into the rest of the economy. The
analysis takes account of the cyclical profile of industries, to place the
developments of 2008 and early 2009 in the appropriate context. One
word on the sectoral nomenclature used in this chapter is in order here.
During the elaboration of this chapter the dissemination of data on
production indices at sector level changed from the nomenclature of
economic activities NACE Rev. 1 to NACE Rev. 2. Therefore, the monthly
time series on production are presented according to NACE Rev. 2.
However, all the other data used in this chapter are presented on the
basis of NACE Rev. 1 and the corresponding Classification of Products
by Activity (CPA). Furthermore, the data from business surveys are also
presented according to NACE Rev. 1. When needed, as in Box II.1 that
focuses on services activities, the data issues are explained in more
details. All in all this implies that in reading tables and figures particular
attention must be paid to the nomenclature used in each of them.
II.1 Growth and cycles in EU industries
The long-term trends discussed in Chapter IV reveal developments in
the competitiveness of the EU’s various sectors. However, they do not
capture an important feature of sectoral growth which is particularly
relevant for the analysis of the medium and short-term developments
of industries: cyclical patterns. Although cycles do not affect all
industries with the same intensity or at the same moment in time,
Chapter II — The economic downturn
they influence sectoral growth and must be taken into consideration
in the measurement of sectoral performance. The first section (II.1.1)
is devoted to analysing cycles in manufacturing activities and the
following one (II.1.2) is dedicated to services activities.
II.1.1 Manufacturing growth and cycles
To begin with it is useful to provide an overall picture of the general
business cycle of manufacturing activities. Figure II.1 shows, in a dual
scale graph, the cyclical component as calculated using the Hodrick-
Prescott (H-P) filter13 of the quarterly series of gross domestic product
(GDP) in the EU over the period 1995–2008 (left-hand axis) and the
growth rate (right-hand axis) at each quarter, relative to the same
quarter one year earlier. Including the growth rate allows for an easier
interpretation of the cyclical component. Another advantage of
presenting the cyclical component and the growth rate simultaneously
is in the interpretation of the data at the end of the period, which will
be particularly useful in the next section. Indeed, as growth rates
measure actual developments, they indicate accurately the situation at
the end of the period. The cyclical component at the end of the period,
as measured by the deviation of the original series from the H-P trend,
is affected by the calculation of the trend itself and overestimates
the actual series shift from the trend. Over the period considered,
GDP growth rates are always positive and the cyclical movements
correspond to growth cycles, consisting of successive accelerations
and decelerations of the growth rate without any decrease in the
absolute value of GDP. This distinction between growth cycles (growth
accelerations and decelerations, without decreases in GDP) and classical
cycles (characterised by a decrease in the absolute value of GDP) will
be useful in the interpretation of the cyclical profile of manufacturing
industries, whose cycle has larger amplitude than the economy as a
whole. In this case the two types of cycles can be clearly identified.
13 The smoothing parameter used is 14 400 for monthly data and 1 600 for quarterly
data.
Page 13
EU industrial structure 2009 — Performance and competitiveness

A second point, which is worth exploring before going into a more
detailed analysis of the manufacturing sector, is precisely the
extent to which the total economy (GDP) and the manufacturing
cycles are related. Figure II.2 shows the cyclical component of GDP
and manufacturing (including mining and energy) over the period
1995–2008. The figure shows the synchronicity of the two series
and the greater amplitude and volatility of the manufacturing cycle.
Broadly speaking, the series on manufacturing is a good indicator
of the general cycle as regards the timing. As regards the amplitude
and the nature of the respective cycles over this period, Figure II.3,
based on growth rates, provides additional information, showing
that the deceleration in GDP growth in 2001 was accompanied by
a decrease in the volume of industrial production. This situation is
replicated in the third and fourth quarters of 2008, although, as can
be observed below, the negative growth rates in manufacturing
production become larger as more data become available.
Having set the general framework, the analysis focuses on the cycle
in manufacturing as a whole and in the different manufacturing
industries. This analysis is based on the monthly index of industrial

FIGUR E II. 1 : C y c l i c a l c o m p o n e n t a n d g r o w t h r a t e ( t / t – 4 ) i n E U GDP — 1 9 9 5 – 2 0 0 8 ( q u a r t e r l y d a t a )

2 5

4
1

0
2

1
–1

0
–2
–1
GDP growth
GDP cycle
–3 –2
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: own calculations using Eurostat data.

FIGUR E II. 2 : C y c l i c a l c o m p o n e n t o f GDP a n d m a n u f a c t u r i n g i n t h e E U — 1 9 9 5 – 2 0 0 8 ( q u a r t e r l y d a t a )

–2

–4

–6
Manufacturing cycle
GDP cycle
–8
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: own calculations using Eurostat data.

Page 14

FIGUR E II. 3 : E U GDP a n d m a n u f a c t u r i n g p r o d u c t i o n g r o w t h r a t e s ( t / t – 4 ) — 1 9 9 5 – 2 0 0 8 ( q u a r t e r l y d a t a )
–2
–4
–6
–8
1996 1997 1998 1999 2000
Source: own calculations using Eurostat data.
production and the indicators used are the same used above for
GDP, namely, the cyclical component and the growth rate in each
month are relative to the same month of the previous year (T–12).
The series used cover the period January 1990 to February 2009.
An overall picture of the EU manufacturing business cycle relative
to the US provides a good framework for the analysis of the
cyclical profile of EU manufacturing. Figure  II.4 compares the
manufacturing cycle in the two areas and Figure II.5 the growth
rates. Figure II.6 and Figure II.7 provide additional information by
showing the cyclical component (left-hand axis) and the growth
rates (right-hand axis) for the EU and US separately. These graphs
provide insight into the nature of the cyclical movements, as they
show, for the EU, two troughs, in the first half of 1993 and at the
end of 2001, which are characterised by negative growth rates in
manufacturing output. For the US, the trough in 2001 is even more
pronounced than in the EU, but there is no coincidence with the EU
recession in manufacturing in 1993. Actually it is two years earlier,
in the first half of 1991, that the US exhibits negative growth rates.
Although a complete cyclical picture cannot yet be shown, the
most recent data available show a fall in the level of manufacturing
output, which is substantially stronger than in the two previous
periods mentioned. This applies to both the EU and the US.
Besides the three recessions indicated above, Figures II.4 to II.7 also
show growth cycles with successive accelerations and decelerations
in manufacturing growth. These cycles are more frequent, with
an average duration of three years from peak to peak, and are
characterised by positive growth rates, although in the lowest
phase industrial production stagnates, as is the case for the EU in
April 1996, April 1999 and June 2003. These growth cycles can also
be observed in the US, but in this country growth rates are higher
than in the EU, even during the low phase of these growth cycles.
Chapter II — The economic downturn
Manufacturing growth
GDP growth
2001 2002 2003 2004 2005 2006 2007 2008
For example, in January 1996 the growth rate in manufacturing
production was 2.7 % in the US and 4.6 % in January 1999. Actually,
manufacturing production in the US shows vigorous growth over
the period 1990–2009, as is clear from Figure II.5.
Having explained the general cycle in the EU and the US, the
different industries can now be analysed. This will be done in two
steps: first, by looking at industries grouped according to the type of
goods produced, namely, intermediate, capital, consumer durables
and consumer non-durables14; second, by analysing the cycle of
individual industries, defined at the 2-digit level of NACE Rev. 2.
Figures II.8A to II.8F show the cyclical component (left-hand axis)
and the growth rates (right-hand axis) of the original series. The
cyclical component of these groups of products is compared with
total manufacturing in Figure II.9.
Figures II.8A to II.8F show some interesting and contrasting
features of the main groups of goods. Over 1990–2008 consumer
durables and capital goods exhibit substantial decreases in the
level of activity around 1993, 2001 and, particularly, in 2009.
The same applies to intermediate goods. This is not the case
for consumer non-durables 15, which are much less volatile.
This picture puts the performance in 2008–09 in perspective.
Indeed, at the end of 1998 and beginning of 2009 growth rates
in all groups overshot the most negative growth rates in previous
periods. Figures II.9A to II.9E give further information on the
cyclical performance of these industries, by presenting their
cyclical profile along with that of manufacturing as a whole.
14 T he list of sectors included under each of these categories of goods is presented
in the companion website of this publication.
15 Section IV.5.1 of the report looks more closely at the different patterns in products’
private consumption.
Page 15
EU industrial structure 2009 — Performance and competitiveness

FIGUR E II. 4 : C y c l i c a l c o m p o n e n t o f m a n u f a c t u r i n g i n t h e E U a n d US f r o m 1 9 9 0 t o F e b r u a r y 2 0 0 9 ( m o n t h l y
data)

–2

–4

–6

–8

–10
EU cycle
US cycle
–12
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
–14
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: own calculations using Eurostat and Federal Reserve data.

FIGUR E II. 5 : G r o w t h r a t e i n m a n u f a c t u r i n g i n t h e E U a n d US f r o m 1 9 9 0 t o F e b r u a r y 2 0 0 9 ( % ) ( m o n t h l y d a t a )

15

10

–5

–10

–15 EU growth
US growth
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07

–20
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: own calculations using Eurostat data.

Page 16
 Chapter II — The economic downturn

FIGUR E II. 6 : C y c l i c a l c o m p o n e n t a n d g r o w t h r a t e ( t / t – 1 2 ) i n E U m a n u f a c t u r i n g f r o m 1 9 9 0 t o F e b r u a r y 2 0 0 9
(monthly data)

8 10

4 5

2
0
0

–2
–5
–4

–6
–10
–8

–10 –15
EU cycle
EU growth
–12
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
–14 –20
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: own calculations using Eurostat data.

FIGUR E II. 7 : C y c l i c a l c o m p o n e n t a n d g r o w t h r a t e ( t / t – 1 2 ) i n US m a n u f a c t u r i n g f r o m 1 9 9 0 t o F e b r u a r y 2 0 0 9
(monthly data)

4 15

2 10

0
5

–2
0
–4
–5
–6

–10
–8

US cycle –15
–10 US growth
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07

–12 –20
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Source: own calculations using Eurostat data.

Page 17
EU industrial structure 2009 — Performance and competitiveness

FIGUR E II. 8 a : C y c l i c a l c o m p o n e n t a n d g r o w t h r a t e ( t / t – 1 2 ) i n t h e E U f o r c a p i t a l g o o d s — 1 9 9 0 t o F e b r u a r y   2 0 0 9
(monthly data)

10 15

10
5

0
0

–5 –5

–10
–10

–15

–15 Capital cycle

Capital growth –20
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
–20 –25
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Source: own calculations using Eurostat data.

FIGUR E II. 8 B : C y c l i c a l c o m p o n e n t a n d g r o w t h r a t e ( t / t – 1 2 ) i n t h e E U f o r c o n s u m e r d u r a b l e g o o d s — 1 9 9 0 t o
February 2009 (monthly data)

6 10

4
5
2

0 0

–2
–5
–4

–6 –10

–8
Consumer dur. cycle –15
–10 Consumer dur. growth
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07

–12 –20
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Source: own calculations using Eurostat data.

Page 18
 Chapter II — The economic downturn

FIGUR E II. 8 C : C y c l i c a l c o m p o n e n t a n d g r o w t h r a t e ( t / t – 1 2 ) i n t h e E U f o r c o n s u m e r n o n - d u r a b l e g o o d s — 1 9 9 0
to February 2009 (monthly data)

1.5 4

1 3

0.5 2

0 1

–0.5 0

–1 –1

–1.5 –2

–2 –3
Consumer non-dur. cycle
–2.5 Consumer non-dur. growth –4
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
–3 –5
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Source: own calculations using Eurostat data.

FIGUR E II. 8 D : C y c l i c a l c o m p o n e n t a n d g r o w t h r a t e ( t / t – 1 2 ) i n t h e E U f o r c o n s u m e r g o o d s — 1 9 9 0 t o F e b r u a r y
2009 (monthly data)

3 6

2 4

1 2

0 0

–1 –2

–2 –4

–3 Consumer cycle –6
Consumer growth
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07

–4 –8
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: own calculations using Eurostat data.

Page 19
EU industrial structure 2009 — Performance and competitiveness

FIGUR E II. 8 E : C y c l i c a l c o m p o n e n t a n d g r o w t h r a t e ( t / t – 1 2 ) i n t h e E U f o r i n t e r m e d i a t e g o o d s — 1 9 9 0 t o
February 2009 (monthly data)

10 15

10
5
5

0
0

–5

–5
–10

–15
–10
Intermediate cycle
Intermediate growth –20
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
–15 –25
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Source: own calculations using Eurostat data.

FIGUR E II. 8 F : C y c l i c a l c o m p o n e n t a n d g r o w t h r a t e ( t / t – 1 2 ) i n t h e E U f o r m a n u f a c t u r i n g g o o d s — 1 9 9 0 t o
February 2009 (monthly data)

8 10

4 5

2
0
0

–2
–5
–4

–6
–10
–8

–10 –15
Manufacturing cycle
Manufacturing growth
–12
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07

–14 –20
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: own calculations using Eurostat data.

Page 20
 Chapter II — The economic downturn

FIGUR E II. 9 a : C o m p a r i s o n o f c y c l i c a l c o m p o n e n t i n t h e E U b e t w e e n t o t a l m a n u f a c t u r i n g a n d c a p i t a l g o o d s —
1990 to February 2009 (monthly data)

10

–5

–10

–15 Capital cycle

Manufacturing cycle
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
–20
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: own calculations using Eurostat data.

FIGUR E II. 9 b : C o m p a r i s o n o f c y c l i c a l c o m p o n e n t i n t h e E U b e t w e e n t o t a l m a n u f a c t u r i n g a n d c o n s u m e r d u r a b l e
goods — 1990 to February 2009 (monthly data)

–2

–4

–6

–8

–10
Consumer dur. cycle
Manufacturing cycle
–12
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07

–14
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: own calculations using Eurostat data.

Page 21
EU industrial structure 2009 — Performance and competitiveness

FIGUR E II. 9 C : C o m p a r i s o n o f c y c l i c a l c o m p o n e n t i n t h e E U b e t w e e n t o t a l m a n u f a c t u r i n g a n d c o n s u m e r n o n -
durable goods — 1990 to February 2009 (monthly data)

–2

–4

–6

–8

–10
Consumer non-dur. cycle
Manufacturing cycle
–12
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
–14
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Source: own calculations using Eurostat data.

FIGUR E II. 9 D : C o m p a r i s o n o f c y c l i c a l c o m p o n e n t i n t h e E U b e t w e e n t o t a l m a n u f a c t u r i n g a n d c o n s u m e r g o o d s —
1990 to February 2009 (monthly data)

–2

–4

–6

–8

–10
Consumer cycle
Manufacturing cycle
–12
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07

–14
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Source: own calculations using Eurostat data.

Page 22
 Chapter II — The economic downturn

FIGUR E II. 9 E : C o m p a r i s o n o f c y c l i c a l c o m p o n e n t i n t h e E U b e t w e e n t o t a l m a n u f a c t u r i n g a n d i n t e r m e d i a t e g o o d s
— 1990 to February 2009 (monthly data)

10

–5

–10
Intermediate cycle
Manufacturing cycle
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
–15
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Source: own calculations using Eurostat data.

Page 23
EU industrial structure 2009 — Performance and competitiveness

As regards the individual sectors defined at the 2-digit level of
NACE Rev. 2, the aim is to provide a comprehensive comparative
view of the cyclical developments in EU industries, with particular
emphasis on the troughs of the business cycle. To start with, the
cyclical profile of manufacturing is presented in Figure II.10. This
figure shows the growth rate (T/T–12), the average growth rate over
the whole period, and a band defined by the interval [average
growth +1 standard deviation, average growth –1 standard
deviation]. The series shows two troughs in the business cycle
before 2008, circa 1993 and circa 2001. For the last months of
2008 and beginning of 2009, the growth rates indicate a fall in the
absolute value of manufacturing production that is substantially
deeper than in the periods around 1993 and 2001.
An overall picture of cyclical developments across all industries
is provided in Figure II.11. This chart is constructed on the same
basis as Figure II.10, although it only shows selected pieces of
information. More precisely, the chart reports for each industry
the periods where the growth rate was particularly low, that is
lower than the average minus one standard deviation (the lower
band presented in Figure II.10), although, obviously, this threshold
changes for each sector. In all cases the growth rate sign is negative.
Periods where growth rates for each industry were particularly low
are highlighted in light green. Moreover, for each industry, the
five lowest growth rates over the whole period are highlighted
in dark green. Although the headings of the columns of the chart
refer to years, the observations are monthly. The chart shows a
concentration of low growth rates around 1992 and 1993. Nearly all
industries were hit by the recession in that period. This corresponds
to the trough in the business cycle which is apparent in Figure
II.10. A second period of negative growth took place around 2001,
although the intensity and duration was lower than in the previous
one. However, the latest data for 2008 and 2009 show that the crisis
is hitting nearly all sectors harder than in the past. Although the
duration is still unclear from this data, it is apparent that most of
the manufacturing sectors exhibit very low growth rates compared
to the previous troughs.

FIGUR E II. 1 0 : E U m a n u f a c t u r i n g g r o w t h r a t e f r o m J a n u a r y 1 9 9 1 t o N o v e m b e r 2 0 0 8 ( % ) ( m o n t h l y d a t a )

10

–5

–10

Growth (%)
Mean
–15 Mean + std dev
Mean – std dev
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07
M01
M07

–20
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Note: Monthly data. The three horizontal lines represent the average growth rate over the period, and two bands given by the interval (average + standard,
average – standard deviation).
Source: own calculations using Eurostat data.

Page 24
 f i g u r E ii 11: cyclical troughs in Eu mining, manufacturing and construction 1990–2008

Sector 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008+2009
B-Mining
Capital
Consumer
Consumer dur.
Intermediate
Consumer non-dur.
Energy
C-Manufacturing
C10-Food
C11-Beverages
C12-Tobacco
C13-Textiles
C14-Clothing
C15-Leather & footwear
C16-Wood
C17-Paper
C18-Printing & publishing
C19-Refined petrol.
C20-Chemicals
C21-Pharmaceuticals
C22-Rubber & plastics
C23-Non-metl. min. prod.
C24-Basic metals
C25-Metal products
C26-Electronic & optical prod.
C27-Electrical eq.
C28-Machinery n.e.c.
C29-Motor vehicles
C30-Other transport eq.
C31-Furniture
C32-Other manuf.
C33- Repairof machinery
D-Electricity, gas & water
F-Construction
F_cc1-Buildings
F_cc2-Civil engineering

Page 25
Chapter II — The economic downturn

Note: Monthly data. Light green areas show growth rates below the lower band ‘average – standard deviation’. Dark green zones indicate the five lowest rates for each sector over the whole period. Periods for which no data are available are highlighted in
orange. Sectors are presented according to NACE Rev. 2.
Source: own calculations using Eurostat data.
EU industrial structure 2009 — Performance and competitiveness
II.1.2 Services growth and cycles
From 1996 to 2008, services have grown faster and with less marked
cyclical patterns than goods (Figure II.12). Inspection of quarterly
data on value added (in constant prices) over the period shows that
the service sector in general shows higher growth rates and less
volatility than industry. While the comparison with 1992–93 would
be particularly interesting, due to lack of a long-time series, the
comparison is limited to the period 1996–2008. The only benchmark
available is therefore the downturn in 2001. Although the quarterly
data from Figures II.12 to II.14 refer to highly aggregated sectors, they
have the advantage of measuring value added in constant prices,
which can be compared directly with GDP developments and, also,
with value added in other sectors. While Figure II.12 compares different
groups of services sectors to the manufacturing industry as a whole,
Figures II.13 and II.14 compare services sectors to total GDP.
While the strongest deterioration in value added related to the crisis is
found in industry, some service sectors are also seriously affected,
FIGUR E II. 1 2 : E U g r o w t h r a t e i n v a l u e a d d e d i n c o n s t a n t p r i c e s r e l a t i v e t o t h e s a m e q u a r t e r o f t h e p r e v i o u s
y e a r, 1 9 9 6 – 2 0 0 8 ( % ) ( q u a r t e r l y d a t a )
–2
–4
–6
–8
1996 1997 1998 1999 2000 2001
Source: calculated using Eurostat data.
Page 26
much more than in previous downturns. Comparing the situation
at the end of 2008 with past troughs indicates that the group of
sectors including the wholesale and retail trade, repair of motor
vehicles, hotels and restaurants, transport and communication
never showed negative growth rates of value added over the period
1996–2008, except for the last quarter of 2008 (Figure II.12).
Conversely, non-market services and the aggregate that regroups
financial intermediation and business services still exhibit positive
growth during the last quarter of 2008 (Figure II.12).
Figures II.13 and II.14 plot two groups of market services against GDP
and reveal the cyclical profile of two groups of services: ‘trade, hotels,
transport and communications’ and ‘financial intermediation and
business services’. The intensity of the crisis is obvious for the group
‘trade, hotels, transport and communications’, which, for the first time
between 1996 and 2008 shows negative growth rates. As regards the
rest of market services, the group ‘financial intermediation and business
services’ is, relative to the past, in a similar situation to the one in the
first quarter of 2002, where the series reached a relative minimum.
Total industry (excluding construction)
Trade, hotels, transport and communications
Financial intermediation and business services
Non-market services
2002 2003 2004 2005 2006 2007 2008
 Chapter II — The economic downturn

FIGUR E II. 1 3 : E U g r o w t h r a t e i n v a l u e a d d e d i n c o n s t a n t p r i c e s r e l a t i v e t o t h e s a m e q u a r t e r o f t h e p r e v i o u s
y e a r, 1 9 9 6 – 2 0 0 8 ( % ) ( q u a r t e r l y d a t a )

–1

–2 Trade, hotels, transport and communications

All branches — Total
–3
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: calculated using Eurostat data.

FIGUR E II. 1 4 : E U g r o w t h r a t e i n v a l u e a d d e d i n c o n s t a n t p r i c e s r e l a t i v e t o t h e s a m e q u a r t e r o f t h e p r e v i o u s
y e a r, 1 9 9 6 – 2 0 0 8 ( % ) ( q u a r t e r l y d a t a )

–1 Financial intermediation and business services

All branches — Total
–2
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: calculated using Eurostat data.

at the time of drafting this text) indicate a deep recession in

II.2 Sectoral developments: the current
downturn
The previous section has shown that the latest developments
in 2008 and early 2009 (according to the information available
manufacturing production, which is stronger than that in 1992–93,
at least in terms of the decrease in manufacturing production and
in terms of the number of sectors affected. The previous section
also indicates deterioration in some services activities that is
much more pronounced than in the last downturns. However, this

Page 27
EU industrial structure 2009 — Performance and competitiveness

information does not allow assessing the duration of the crisis. In
this section the focus is precisely on the most recent developments
and the objective is to assess in more detail the magnitude of the
crisis, the way it is spreading across the whole economy, and what
can be expected in the light of the leading indicators available.
The section starts by a recent manufacturing overview and follows
with a recent state of play in services sectors. The two parts are
structured in a similar way. First, the most recent developments
are analysed by looking at monthly production. For manufacturing
activities only, an indicator is constructed and used to assess
the intensity of the crisis and the speed of diffusion across the
economy. Second, a more detailed analysis is carried out in order
to assess the way different sectors are hit by the crisis. This is done
by examining the most recent business surveys conducted by the
Directorate-General for Economic and Financial Affairs at the time
of the drafting of the report. Developments in the near future
are assessed using information on demand expectation, on new
orders for instance for manufacturing activities and other leading
indicators. To make the most of the indicators available, indicators
used for manufacturing and services activities are not always
similar and do not necessarily cover the same period exactly.
II.2.1 Most recent developments in
manufacturing industries
This section studies the actual developments in 2008 and early
2009. Compared to Section II.1 on growth and cycles, monthly
rather than quarterly data are used. This gives the possibility to
consider a more detailed breakdown of manufacturing and services
sectors.
Figure II.15 presents an indicator which measures how the crisis
spreads across manufacturing industries. It is a diffusion index,
which here is defined as the difference between the percentage
of manufacturing industries that are expanding and of those that
are declining, where ‘expanding’ and ‘declining’ mean positive and
negative growth rates respectively. The total number of industries
considered for the calculation is 93 (defined in terms of the 3-digit
level of NACE Rev. 2). In interpreting this indicator, it has to be noted
that it is based on a definition of expansion, which in this case
simply means no negative or zero growth. Nevertheless, narrower
definitions of expansion give similar results in terms of the profile of
the indicator and its correlation with growth rates in manufacturing.
This indicator is highly correlated with the cycle, as defined by the
growth rate of manufacturing, but has the advantage of having
upper (100) and lower (–100) bounds. The lowest value (–90.5) of
the diffusion index corresponds to February 1993. In February 2009
the indicator (–81.4) is approaching the level of 1993, and is below
the value of the previous trough in December 2001. This confirms
the strong impact of the crisis across manufacturing industries.
Moreover, two facts are worth mentioning: first, the largest decrease
over the whole period occurred between September 2006 and
February 2009; second, this decrease in the value of the index has
already lasted 30 months, longer than the 17 months around 2001.
The diffusion index highlights the strong impact of the crisis and
the previous section has shown the intensity of the crisis increasing

FIGUR E II. 1 5 : E U m a n u f a c t u r i n g d i f f u s i o n i n d e x f r o m J a n u a r y 1 9 9 1 t o F e b r u a r y 2 0 0 9 ( m o n t h l y d a t a )

100

80

60

40

20

–20

–40

–60

–80
M01

M09

M05

M01

M09

M05

M01

M09

M05

M01

M09

M05

M01

M09

M05

M01

M09

M05

M01

M09

M05

M01

M09

M05

M01

M09

M05

–100
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Note: Monthly data. The index is defined as the difference between the percentages of industries with positive and negative growth rates respectively.
Source: own calculations using Eurostat data.

Page 28

substantially in the later months of 2008 and early 2009. The second
step in this approach is to look at the most recent performance of the
individual industries.
Table II.1 shows a summary of growth in EU manufacturing industries
in the long term and monthly developments in 2008 and early 2009.
The columns under the heading ‘growth 1990–2009’ present the
annual average growth rate, the standard deviation as a measure of
volatility, the lower and upper bands as defined in Figure II.10, and the
maximum and minimum values of the series. The series with which
these parameters are calculated is monthly growth rates calculated
on the same month of the previous year. Under the heading ‘latest
developments’ the different columns present various growth rates:
‘2008/2007’ is the growth rate in 2008 compared with 2007. ‘Last
6 months’ is the growth rate in the last six months (September
2008 to February 2009) compared with the same period in 2007–08.
The last six columns are the growth rate in each month over the
same month in the previous year. As regards the industries, the table
includes, first, the five groups of intermediate, capital, consumer,
consumer durables and consumer non-durables. Second, it presents
Chapter II — The economic downturn
the individual industries from mining to construction according to
NACE Rev. 2.
All the data in the table show the continuous deterioration of the
situation in 2008–09. First, growth rates in 2008, relative to 2007, are in
most cases lower than the average over the whole period 1990–2008.
In all cases, growth rates in the last six months are lower than in the
whole year 2008 and affect more industries. Finally, on a monthly basis,
the situation has deteriorated progressively. Indeed, from September
2008 to February 2009 the growth rates are increasingly lower. In fact
the table indicates that a number of industries reached the lowest
point over the whole period precisely in February 2009, which is a
clear indication of the intensity of the crisis. In all the groups from
intermediate goods to consumer non-durables, with the exception of
capital goods, the growth rate in November 2001 is the lowest point
of the whole period (1990–2008). Even for capital goods the growth
rate in November (–7.8 %) is not far from the lowest point (–9.9 %) of
the time period 1990–2008. As for individual manufacturing industries,
half of them reached the lowest growth rate in November. The same
applies to construction, in particular to buildings.
Page 29
 TA B L E II. 1 : E U m a n u f a c t u r i n g p r o d u c t i o n r e c e n t d e v e l o p m e n t s i n 2 0 0 8 a n d 2 0 0 9

Growth 1990–2009 Latest developments

Lower Upper Last 6
Sector Average Std Dev Max. Min. 2008/2007 2008M09 2008M10 2008M11 2008M12 2009M01 2009M02

Page 30
band band months
Capital 1.9 5.3 –3.5 7.2 11.0 –23.3 –0.3 –12.6 –2.1 –5.8 –9.5 –12.1 –21.6 –23.3
Consumer 0.5 2.1 –1.5 2.6 5.1 –7.4 –1.7 –4.8 –2.8 –3.7 –4.4 –4.6 –5.9 –7.4
Consumer dur. 0.2 4.6 –4.5 4.8 9.4 –20.2 –5.0 –13.5 –7.2 –9.2 –12.2 –14.3 –17.9 –20.2
Intermediate 1.3 4.7 –3.4 6.0 12.5 –23.0 –3.6 –15.0 –4.6 –8.8 –12.6 –19.2 –21.2 –23.0
Consumer non-dur. 0.6 1.7 –1.1 2.3 4.7 –5.3 –1.1 –3.3 –1.9 –2.6 –3.0 –2.7 –4.0 –5.3
b-Mining –0.6 4.7 –5.3 4.1 16.8 –10.3 –4.4 –8.6 –4.9 –9.6 –9.0 –10.3 –7.9 –9.9
c-Manufacturing 1.4 3.9 –2.4 5.3 8.9 –19.0 –1.9 –11.4 –3.2 –6.3 –9.3 –12.8 –17.0 –19.0
c10-Food 1.2 1.6 –0.4 2.8 4.8 –3.2 –0.4 –2.2 –0.1 –2.5 –2.8 –1.9 –3.2 –2.4
c11-Beverages 1.0 4.2 –3.2 5.3 13.5 –10.0 –1.9 –4.9 0.2 –6.4 –4.3 –2.1 –7.2 –9.0
c12-Tobacco –3.3 6.1 –9.4 2.9 19.4 –21.3 –16.0 –13.0 –17.7 –15.7 –16.6 –14.7 –8.6 –3.3
c13-Textiles –2.8 4.6 –7.4 1.8 6.8 –23.3 –10.1 –18.4 –13.5 –15.8 –16.9 –18.7 –22.0 –23.3
c14-Clothing –4.4 5.0 –9.4 0.6 9.7 –15.4 –3.5 –6.6 –6.7 –6.7 –2.9 –2.3 –9.8 –11.1
c15-Leather & footwear –4.1 5.1 –9.1 1.0 8.6 –19.9 –7.8 –13.1 –14.7 –11.6 –9.3 –11.1 –11.9 –19.9
c16-Wood 0.6 5.5 –4.9 6.1 13.8 –22.1 –8.4 –16.3 –10.8 –11.9 –13.3 –17.9 –21.8 –22.1
EU industrial structure 2009 — Performance and competitiveness

c17-Paper 1.3 3.9 –2.6 5.2 10.5 –15.2 –3.0 –9.9 –3.3 –5.8 –8.2 –12.3 –15.2 –14.2
c18-Printing & publishing 0.8 3.0 –2.3 3.8 13.0 –7.6 –2.0 –5.6 –3.0 –5.5 –6.0 –6.0 –5.6 –7.6
c19-Refined petrol. 0.4 4.0 –3.6 4.4 13.3 –11.2 2.5 –1.9 2.1 3.6 3.1 –2.1 –6.1 –11.2
c20-Chemicals 2.0 4.6 –2.6 6.6 12.4 –20.7 –3.9 –13.2 –1.7 –9.1 –12.9 –20.7 –17.4 –16.5
c21-Pharmaceuticals 4.7 3.8 0.9 8.5 13.5 –8.7 2.6 2.4 2.3 6.8 2.1 0.7 4.3 –1.4
c22-Rubber & plastics 1.5 4.9 –3.4 6.4 17.6 –21.9 –5.0 –15.3 –5.9 –10.1 –13.3 –20.5 –19.6 –21.9
c23-Non-metl. min. prod. 0.4 5.1 –4.8 5.5 15.0 –27.6 –6.1 –17.3 –5.8 –9.1 –12.5 –20.4 –27.2 –27.6
c24-Basic metals 0.5 6.6 –6.2 7.1 14.0 –33.9 –3.2 –20.9 –2.4 –8.5 –17.6 –29.1 –31.8 –33.9
c25-Metal products 1.2 5.3 –4.1 6.5 12.8 –26.9 –2.3 –15.0 –4.4 –6.6 –11.7 –17.7 –21.7 –26.9
c26-Electronic & optical
3.4 7.9 –4.5 11.3 35.1 –22.3 1.7 –6.8 –1.5 –2.7 –5.2 –8.3 –11.0 –11.7
prod.
c27-Electrical eq. 1.5 5.0 –3.5 6.6 12.4 –22.1 –0.4 –11.5 –1.2 –5.5 –8.6 –12.3 –18.4 –22.1
c28-Machinery n.e.c. 1.5 6.1 –4.6 7.6 13.5 –22.4 1.2 –10.5 –2.0 –3.4 –6.4 –7.7 –20.0 –22.4
c29-Motor vehicles 2.9 7.7 –4.8 10.6 21.1 –41.8 –6.9 –28.5 –11.3 –19.4 –24.3 –34.4 –37.8 –41.8
c30-Other transport eq. 2.6 4.3 –1.7 7.0 16.0 –11.4 4.3 –1.1 3.3 3.1 1.9 4.7 –10.4 –8.5
c31-Furniture –0.2 4.3 –4.5 4.1 11.4 –18.9 –4.9 –13.1 –6.6 –9.4 –13.0 –13.2 –17.6 –18.9
c32-Other manufacturing 0.0 5.4 –5.4 5.4 12.4 –23.1 –2.1 –5.5 –3.0 –3.3 –4.9 –4.4 –8.0 –9.0
c33-Repair of machinery –0.9 9.2 –10.1 8.3 19.1 –31.0 5.8 1.2 6.6 4.8 0.1 1.3 –2.0 –3.2
d-Electricity, gas & water 1.4 3.6 –2.2 5.0 15.3 –8.4 –0.5 –4.0 –0.9 –4.5 –6.4 –5.6 –2.3 –4.4
f-Construction 1.5 3.6 –2.1 5.1 12.3 –12.8 –2.8 –6.7 –4.4 –6.8 –5.2 –9.4 –5.9 –8.2
f_cc1-Buildings 1.9 3.7 –1.8 5.6 11.0 –11.2 –3.7 –8.1 –6.2 –7.7 –6.0 –11.2 –7.8 –9.6
f_cc2-Civil engineering 0.0 4.8 –4.8 4.8 13.4 –19.3 0.3 –2.1 2.0 –4.0 –2.0 –4.2 0.2 –4.0
Source: own calculations using Eurostat data.
 Chapter II — The economic downturn

Business surveys aimed at anticipating future industry trends are much
richer for manufacturing than services industries. Therefore the part on
business surveys for manufacturing sectors will be more elaborated
than the part on services.
The data discussed above show actual growth in production. The third
element for assessing the development of the crisis is information
on new orders and other leading indicators — such as order-book
levels, stock of finished products and production expectations — for
manufacturing sectors, which will shed light on expectations for the
near future and on the degree to which sectoral activity will be hit by the
crisis in the following months16. This information is analysed as follows.
To start with, Figures II.16A to II.16F show monthly growth rates, relative
to 12 months earlier, in production and new orders. These figures refer
to the aggregate of manufacturing sectors working on orders, as well
as to the main types of goods (capital, consumer durables, consumer
non-durables and intermediate). For this comparison the value of
new orders was deflated. The dramatic fall in new orders is obvious
in the later months of the period (to March 2009). Actually in Figure
II.16A, new orders started slowing down in June 2007 and have since
seen growth rates decrease progressively to reach, for the first time
since 2002, negative growth in May 2008. Over the 10 months from
May 2008 to February 2009, the index of new orders has decreased
steadily, and in February 2009 the growth rate was –30.5 %. This
decrease in new orders is expected to exert its negative impact on
production during the following months. A similar picture for the
main types of goods is presented in Figures II.6B to II.16F, in which the
decrease in new orders is obvious. This decrease is particularly dramatic
for capital goods, and, to a lesser extent, for intermediate goods.

16 T he timing depends on the average duration of the production process in each

sector.

FIGUR E II. 1 6 A : E U m a n u f a c t u r i n g g r o w t h r a t e s a n d n e w o r d e r s ( T / T – 1 2 ) f o r m a n u f a c t u r i n g g o o d s f r o m
January 1999 to March 2009 (monthly data)

20

15

10

–5

–10

–15

–20

–25
Manufacturing orders
Manufacturing production
–30
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01

–35
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: own calculations using Eurostat data.

Page 31
EU industrial structure 2009 — Performance and competitiveness

FIGUR E II. 1 6 B : E U m a n u f a c t u r i n g g r o w t h r a t e s a n d n e w o r d e r s ( T / T – 1 2 ) f o r c a p i t a l g o o d s f r o m J a n u a r y 1 9 9 9
to March 2009 (monthly data)

20

10

–10

–20

–30 Capital goods orders

Capital goods production
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
–40
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Source: own calculations using Eurostat data.

FIGUR E II. 1 6 C : E U m a n u f a c t u r i n g g r o w t h r a t e s a n d n e w o r d e r s ( T / T – 1 2 ) f o r c o n s u m e r d u r a b l e g o o d s f r o m
January 1999 to March 2009 (monthly data)

25

20

15

10

–5

–10

–15

–20
Consumer durables orders
Consumer durables production
–25
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11

–30
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Source: own calculations using Eurostat data.

Page 32
 Chapter II — The economic downturn

FIGUR E II. 1 6 D : E U m a n u f a c t u r i n g g r o w t h r a t e s a n d n e w o r d e r s ( T / T – 1 2 ) f o r c o n s u m e r n o n - d u r a b l e g o o d s f r o m
January 1999 to March 2009 (monthly data)

20

15

10

–5 Consumer non-durables orders

Consumer non-durables production
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
–10
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Source: own calculations using Eurostat data.

FIGUR E II. 1 6 E : E U m a n u f a c t u r i n g g r o w t h r a t e s a n d n e w o r d e r s ( T / T – 1 2 ) f o r c o n s u m e r g o o d s f r o m J a n u a r y 1 9 9 9
to March 2009 (monthly data)

10

–2

–4

–6
Consumer goods orders
–8 Consumer goods production
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11

–10
2001 2002 2003 2004 2005 2006 2007 2008 2009
Source: own calculations using Eurostat data.

Page 33
EU industrial structure 2009 — Performance and competitiveness

FIGUR E II. 1 6 F : E U m a n u f a c t u r i n g g r o w t h r a t e s a n d n e w o r d e r s ( T / T – 1 2 ) f o r i n t e r m e d i a t e g o o d s f r o m J a n u a r y
1999 to March 2009 (monthly data)

30

20

10

–10

–20

–30 Intermediate goods orders

Intermediate goods production
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
M01
M03
M05
M07
M09
M11
–40
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Source: own calculations using Eurostat data.

A further step in the analysis of the situation and expectations of sectors
in the current crisis is provided by using indicators from EU business
surveys17. An overall view, for manufacturing, is given in Figure II.17,
which presents the ‘balance’ of opinions regarding order-book levels,
stock of finished products and production expectations for the
coming months. The three indicators confirm the same deterioration
of the situation in the last few months as that described above for
production and new orders. Both the assessment of order-book levels
and production expectations reach the most negative balance over
the whole period covered. These two indicators provide information
on production developments in the near future. The stock of finished
products acts as buffer, allowing production activity to continue at a
higher level than actual demand in a period of crisis. Nevertheless, the
stock of finished products will also have an effect on future production
to the extent that, in a number of cases, demand will be met by non-
sold production stocked during the downturn. In mid-2007 the stock
of finished products started to increase and in April  2009 it reached a
level similar to that in 1993 and higher than in 2001.
For the last three months available Table II.2 summarises, at sector
level, the latest data on opinion balances on production trend, the
confidence indicator, besides the three balances relating to the EU
business surveys indicators presented in Figure II.17. The confidence
indicator brings together the assessment of order-book levels (Q2) and
of the stock of finished products (Q4) and the production expectations
(Q5) and is calculated as follows: (Q2 – Q4 + Q5)/3.

17 Directorate-General for Economic and Financial Affairs business surveys.

Page 34
 Chapter II — The economic downturn

FIGUR E II. 1 7 : E U m a n u f a c t u r i n g o r d e r - b o o k s l e v e l s , s t o c k o f f i n i s h e d p r o d u c t s a n d p r o d u c t i o n e x p e c t a t i o n s
from January 1985 to April 2009 (monthly data)

30

20

10

–10

–20

–30

–40

–50 Assessment of order-book levels

Assessment of stocks of finished products
–60 Production expectations for the months ahead
M01

M01

M01

M01

M01

M01

M01

M01

M01

M01

M01

M01

M01

M01

M01

M01

M01

M01

M01

M01

M01

M01

M01

M01

M01
–70
85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08

Source: Directorate-General for Economic and Financial Affairs.

Page 35
Page 36
TA B L E II. 2 : E U m a n u f a c t u r i n g s i t u a t i o n b a s e d o n b u s i n e s s s u r v e y s ( e n d o f 2 0 0 8 a n d b e g i n n i n g o f 2 0 0 9 )

Recent production trend Stocks of finished products Order-book levels Production expectations Confidence indicator

Sector 2009m02 2009m03 2009m04 2009m02 2009m03 2009m04 2009m02 2009m03 2009m04 2009m02 2009m03 2009m04 2009m02 2009m03 2009m04

Intermediate –57.8 –59.6 –56.9 25.3 27.8 25.5 –69.3 –74.6 –72.8 –39.3 –41.2 –30.3 –44.6 –47.9 –42.9
Capital –53.1 –50.9 –48 25.9 23.1 21.6 –61.7 –65.4 –64.2 –43.1 –43 –34.4 –43.6 –43.8 –40.1
Consumer –27.5 –32.3 –30.2 14.3 14.8 16.8 –44.1 –47.4 –47.1 –25.4 –27.2 –20.3 –27.9 –29.8 –28
Consumer dur. –50.4 –47.4 –40 18.4 17 14.4 –62.9 –63.8 –63.6 –38.3 –39.9 –33.7 –39.9 –40.2 –37.2
Consumer non-dur. –17.5 –20.9 –23.6 10.9 11.3 13.4 –32.7 –37 –36.9 –16.1 –17.5 –12.6 –19.9 –21.9 –21
Manufacturing –45.6 –46.2 –43.9 21.6 21.9 21.5 –56.7 –61 –59.4 –33.7 –34.5 –26.7 –37.3 –39.1 –35.9
Food, drinks & tobacco –12.4 –9.1 –16.8 9.5 8.8 8.1 –21.6 –26.5 –26.8 –3.4 –1.4 0.1 –11.5 –12.2 –11.6
Textiles –55.6 –60.3 –53.7 19.7 29.4 26 –68.5 –73.5 –71.4 –35.9 –35 –28.9 –41.4 –46 –42.1
EU industrial structure 2009 — Performance and competitiveness

Clothing –33.7 –38.4 –40.3 17.8 26.6 22.9 –46.7 –51.4 –58.7 –35.1 –25.9 –29 –33.2 –34.6 –36.9
Leather & footwear –36.7 –40.9 –39.2 11.2 8.7 12.2 –55.8 –57.7 –57.4 –21.5 –25.3 –17.4 –29.5 –30.6 –29
Wood –50.7 –57.1 –53.7 26.6 29.1 25.1 –70.1 –72.4 –66 –38.5 –38.6 –25.9 –45.1 –46.7 –39
Pulp & paper –55.4 –60.3 –48.2 23.9 28.9 30.3 –64.9 –68.8 –69.3 –27.8 –25.5 –25.1 –38.9 –41.1 –41.6
Printing & publishing –35.9 –30.4 –39.6 2 1.4 3.2 –52.1 –48 –49.5 –36.1 –37.4 –31.5 –30.1 –29 –28.1
Refined petrol. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.
Chemicals –27.4 –34.6 –31.1 19.5 16.8 25.7 –44.3 –55 –49.8 –18 –25.8 –15.9 –27.3 –32.5 –30.5
Rubber & plastics –61.5 –61.6 –59.3 22.7 28.3 22.3 –72.2 –78.2 –79.8 –41.7 –42.2 –33.4 –45.6 –49.6 –45.1
Non-metal. min. prod. –54.4 –58.7 –50.4 42.8 43.8 35 –72.5 –74.9 –72.5 –42.8 –48.7 –30.3 –52.7 –55.8 –45.9
Basic metals –68.9 –72 –78.7 20.1 22 18.6 –81.4 –89.2 –91.7 –46.5 –47.8 –40.2 –49.3 –53 –50.2
Metal products –47.8 –53.8 –57 18.8 23.9 22.8 –59.7 –63.6 –67.7 –42.3 –49 –38.4 –40.3 –45.5 –42.9
Machinery n.e.c. –47.6 –52.3 –54.8 21.9 24.6 23.1 –54.6 –61.5 –65.7 –44.8 –47.8 –45 –40.4 –44.7 –44.6
Office machinery n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.
Electrical machin. –49.3 –52.9 –49.2 22.4 21 22.1 –54.8 –62.8 –59.3 –42.5 –43.9 –35.2 –39.9 –42.6 –38.9
Radio & communic. eq. –58.2 –49.3 –47.4 17.7 20.4 21.2 –71.3 –76.7 –64.5 –42.9 –58.2 –39 –43.9 –51.8 –41.6
Scient. & other –29.2 –41.1 –38.4 20.9 18.8 18.4 –33.9 –43.4 –44.7 –30 –41 –30.2 –28.3 –34.4 –31.1
instruments
Motor vehicles –80 –69.3 –49.2 45.7 34 30.3 –86.3 –92.5 –79.9 –57.9 –47.7 –23 –63.3 –58.1 –44.4
Other transport eq. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.
Furniture; other
–53.3 –53.1 –46.1 11.9 14.5 16.6 –69.1 –71.6 –68 –38.4 –39.9 –29.5 –39.8 –42 –38
manufacturing
Source: own calculations using Eurostat and Directorate-General for Economic and Financial Affairs data.
 Chapter II — The economic downturn

II.2.2 Most recent developments in services
industries
Compared to the quarterly data presented in Section II.1.2 that
represented sectors that were much aggregated, Table II.3 sheds
more light on the developments in the various services sectors
over the last months. Looking at the latest month (December 2008
for all services sectors), all sectors, with the exception of post and
telecommunications, exhibit negative growth rates. It is worth
mentioning air transport (–14.2 %) and auxiliary transport activities
(–13.3 %) as the two sectors that are more strongly affected by the
crisis. Their decrease is of the same order of magnitude as the one in
manufacturing (–12.7 %). Other sectors that are worth mentioning, with
growth rates around –5 %, are the sale and repair of motor vehicles,
wholesale trade, hotels and restaurants and water transport.
There are also differences across sectors in the timing. On average, for
all services, negative growth rates appear in October 2008. However,
some sectors exhibit decreasing turnover before this month. Hotels and
restaurants and air transport are two cases that are worth mentioning, as
their downturn starts in March and May 2008 respectively.

TA B L E II. 3 : E U s e r v i c e s p r o d u c t i o n r e c e n t d e v e l o p m e n t s i n 2 0 0 8 a n d 2 0 0 9 : g r o w t h i n s e r v i c e s t u r n o v e r i n
constant prices relative to the same month of the previous year (%)

Sector 2008M04 2008M05 2008M06 2008M07 2008M08 2008M09 2008M10 2008M11 2008M12

Sale and repair of motor vehicles 6.3 4.2 3.7 4.4 2.2 1.5 –2.3 –5.4 –5.9

Wholesale trade 8.0 5.4 5.5 6.3 3.5 2.6 –2.2 –6.0 –6.7

Retail trade 0.3 1.8 –0.6 0.1 –0.5 –0.2 –1.0 –1.4 –1.1

Hotels and restaurants –0.9 –0.3 –3.5 –2.1 –2.9 –3.9 –4.4 –5.4 –4.7

Land transport; transport via

9.3 6.8 7.5 6.7 3.5 3.3 –1.2 –3.2 –2.6
pipelines

Water transport 6.3 1.4 4.5 9.9 5.8 –2.3 –1.1 4.2 –5.1

Air transport 2.8 –2.5 1.2 –7.0 –11.1 –12.3 –10.5 –12.0 –14.2

Supporting and auxiliary

–0.4 0.2 –0.9 –0.8 –1.6 –6.1 –9.2 –11.5 –13.3
transport activities

Post and telecommunications 4.7 3.2 2.2 2.7 3.9 4.1 4.8 3.8 3.2

Computer services, R&D and

–1.5 6.8 4.7 4.4 3.9 3.7 1.6 1.6 0.0
other business services

Total services 5.4 3.9 3.3 3.7 2.2 1.0 –1.4 –3.7 –4.3

Manufacturing 3.2 –0.3 –0.3 –1.3 –1.9 –3.1 –6.2 –9.2 –12.7
Source: own calculations using Eurostat data.

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EU industrial structure 2009 — Performance and competitiveness

xxx

Box II.1 Data issues for measuring services activities

The sources of information used are Eurostat and Directorate-General for Economic and Financial Affairs business surveys. Data
issues are important regarding the analysis carried out. Two are worth mentioning here. The first refers to the deflation of services
turnover, which has been carried out using a proxy variable, although this may cause some bias in the results. The second refers
to the change in the economic activities nomenclature. Based on data availability, the data used come from sources which
present some data in NACE Rev. 1 (e.g. sector shares) or CPA 2002 (input-output tables) and some other in NACE Rev. 2 (short-term
indicators).

The short-term indicator to measure output in services is turnover in current prices, with the exception of retail trade, for which
a series in constant prices is originally presented by Eurostat. However, the comparison with manufacturing developments and
the appropriate measure of growth in services require the deflation of the turnover figures. Price indices are available for a few
services’ sub-sectors but the coverage is poor in terms of the number of activities, and the data, quarterly, ran until the third
quarter of 2008. Therefore, the deflation of services’ turnover figures requires the use of alternative deflators to provide a measure
of developments in real terms. The solution adopted here is to use the components of the harmonised index for consumer prices
which refer to services as a whole or to specific services activities. Obviously, this approach is imperfect and a number of caveats
must be taken into account when interpreting the results. Among others the use of the services output, which is discussed later, is
important. Indeed, in Section II.2.3 sectors are classified according to the type of demand for their output. More precisely, demand
is broken down into two main categories: intermediate demand (services used by other sectors in their process of production) and
final (private consumption and gross fixed capital formation) demand. To the extent that the main component of demand for these
services is private consumption, using the consumer price index as a proxy to deflate turnover will cause less bias than in the case
where the weight of intermediate demand is higher. Two sectors can be mentioned as example of these two situations: hotels and
restaurants, for which 81 % of domestic demand is private consumption and other business services for which 87 % of demand is
intermediate demand and only 4.6 % is private consumption. It is important to take this issue into account when interpreting the
results presented below and to note that further work must be carried out in this field to reach the best possible solution and to
assess the bias caused by the deflator used.

A second issue regarding the use of the consumer price index is to find components of this index that match the services sectors
as defined in terms of the NACE nomenclature. The approach followed here has been to use, for each sector, the closest item in
the consumer price index and, when such an item is not available, the index for all services. To be precise, the turnover of services
has been deflated as follows. Retail trade turnover is presented in constant prices in the original series. For hotels and restaurants,
transport services and communications the corresponding consumer price indices for these sectors have been used. Auxiliary
activities for transport services are deflated using the index for all transport services. As indicated, all the others have been deflated
using the consumer price index for all services.

Page 38
 Chapter II — The economic downturn

The indicator used for services is calculated as the difference between
the percentage of total answers to the survey that consider that demand
(turnover) for the company’s services will increase in the next three
months and the percentage that consider that it will decrease. It must
be noted that the balance of opinions on production expectations
tracks closely the series on production as it is shown in Figure II.17.
For manufacturing the indicator is defined in the same way, although
it applies to production expectations for the months ahead. In Figures
II.18 and II.19A to II.19H production expectations for manufacturing are
taken as the benchmark. The time period runs until March 2009.
Figure II.18 shows the results for all services relative to manufacturing
between April 1996 and March 2009, while Figures II.19A to II.19H
show the results for each services sector relative to total services and
manufacturing, although for each service sector the period covered
is shorter, with the starting point varying between May 2000, for
computer–related services, and January 2003, for transport, post and
telecommunications and real estate activities.
Figure II.18 shows the dramatic deterioration in services since
September 2008. For this sector, which exhibits higher expectations
than manufacturing over the whole period covered, in October 2008
the sign of the balance becomes negative and continues to deteriorate
until March 2009. Although relative to manufacturing the balance is
less negative, the effect and intensity of the crisis is patent.
In March 2009 the expectations are particularly negative in hotels
and restaurants and real estate activities, although all services
sectors appear affected by the crisis, the balance of expectations for
computer and related activities is less negative than for the other
activities. In terms of acceleration of the effects of the crisis, hotels and
restaurants and, precisely, computers and related activities are the
sectors in which the expectations have decreased more rapidly in the
last six months.

FIGUR E II. 1 8 : O p i n i o n b a l a n c e o n p r o d u c t i o n a n d d e m a n d e x p e c t a t i o n s : s e r v i c e s v e r s u s m a n u f a c t u r i n g f r o m
1996 to 2009 (monthly data)

50

40

30

20

10

–10

–20
Services
–30 Manufacturing
M04
M06
M08
M10
M12
M02
M04
M06
M08
M10
M12
M02
M04
M06
M08
M10
M12
M02
M04
M06
M08
M10
M12
M02
M04
M06
M08
M10
M12
M02
M04
M06
M08
M10
M12
M02
M04
M06
M08
M10
M12
M02
M04
M06
M08
M10
M12
M02
M04
M06
M08
M10
M12
M02
M04
M06
M08
M10
M12
M02
M04
M06
M08
M10
M12
M02
M04
M06
M08
M10
M12
M02
M04
M06
M08
M10
M12
M02

–40
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: Directorate-General for Economic and Financial Affairs business surveys.

Page 39
EU industrial structure 2009 — Performance and competitiveness

FIGUR E II. 1 9 A : O p i n i o n b a l a n c e o n p r o d u c t i o n a n d d e m a n d e x p e c t a t i o n s f o r h o t e l s a n d r e s t a u r a n t s f r o m
1996 to 2009 (monthly data)

50
Services
40 Manufacturing
Hotels and restaurants
30

20

10

–10

–20

–30

–40

–50
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Source: Directorate-General for Economic and Financial Affairs business surveys.

FIGUR E II. 1 9 B : O p i n i o n b a l a n c e o n p r o d u c t i o n a n d d e m a n d e x p e c t a t i o n s f o r t r a n s p o r t a c t i v i t i e s f r o m 1 9 9 6
to 2009 (monthly data)

50
Services
40 Manufacturing
Transport (aggregated 60–62)

30

20

10

–10

–20

–30

–40
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Source: Directorate-General for Economic and Financial Affairs business surveys.

Page 40
 Chapter II — The economic downturn

FIGUR E II. 1 9 C : O p i n i o n b a l a n c e o n p r o d u c t i o n a n d d e m a n d e x p e c t a t i o n s f o r a c t i v i t i e s o f t r a v e l a g e n c i e s
from 1996 to 2009 (monthly data)

50

40

30

20

10

–10

–20

–30
Services
–40 Manufacturing
Activities of travel agencies and tour operator, tourist assistance activities (63.3)
–50
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Source: Directorate-General for Economic and Financial Affairs business surveys.

FIGUR E II. 1 9 D : O p i n i o n b a l a n c e o n p r o d u c t i o n a n d d e m a n d e x p e c t a t i o n s f o r p o s t a n d t e l e c o m m u n i c a t i o n s
activities from 1996 to 2009 (monthly data)

70

60

50

40

30

20

10

–10

–20
Services
–30 Manufacturing
Post and telecommunications
–40
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Source: Directorate-General for Economic and Financial Affairs business surveys.

Page 41
EU industrial structure 2009 — Performance and competitiveness

FIGUR E II. 1 9 E : O p i n i o n b a l a n c e o n p r o d u c t i o n a n d d e m a n d e x p e c t a t i o n s f o r r e a l e s t a t e a c t i v i t i e s f r o m 1 9 9 6
to 2009 (monthly data)

50
Services
40 Manufacturing
Real estate activities

30

20

10

–10

–20

–30

–40
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Source: Directorate-General for Economic and Financial Affairs business surveys.

FIGUR E II. 1 9 F : O p i n i o n b a l a n c e o n p r o d u c t i o n a n d d e m a n d e x p e c t a t i o n s f o r r e n t i n g o f m a c h i n e r y a n d
equipment from 1996 to 2009 (monthly data)

50

40

30

20

10

–10

–20

Services
–30 Manufacturing
Renting of machinery and equipment without operator and of personal and household goods
–40
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Source: Directorate-General for Economic and Financial Affairs business surveys.

Page 42
 Chapter II — The economic downturn

FIGUR E II. 1 9 G : O p i n i o n b a l a n c e o n p r o d u c t i o n a n d d e m a n d e x p e c t a t i o n s f o r c o m p u t e r a c t i v i t i e s f r o m 1 9 9 6
to 2009 (monthly data)

60
Services
50 Manufacturing
Computer and related activities
40

30

20

10

–10

–20

–30

–40
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Source: Directorate-General for Economic and Financial Affairs business surveys.

FIGUR E II. 1 9 H : O p i n i o n b a l a n c e o n p r o d u c t i o n a n d d e m a n d e x p e c t a t i o n s f o r o t h e r b u s i n e s s a c t i v i t i e s f r o m
1996 to 2009 (monthly data)

50
Services
40 Manufacturing
Other business activities

30

20

10

–10

–20

–30

–40
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Source: Directorate-General for Economic and Financial Affairs business surveys.

Page 43
EU industrial structure 2009 — Performance and competitiveness
II.3 Effects of sectoral interconnections
The data presented so far shows the deterioration in the economic
situation of the various sectors over the second half of 2008. Although
not all sectors are affected with the same intensity, practically all
industries have exhibited negative growth rates in the last few months.
The sectoral interrelations, measured in Chapter III using output
multipliers, play an important role in the way the crisis spreads through
the whole economy. Table II.4 examines simultaneously the share of
each sector in the economy, the magnitude of their impact on other
sectors, and the latest sectoral developments. Unlike Figure II.11, Table
II.1 and Table II.2 the sectors in this table are presented according to
NACE Rev. 2 and the sectoral growth presented in this table does not
refer to the most recent developments. Because of the change, from
NACE Rev. 1 to NACE Rev. 2, in the dissemination of the production
index data, the most recent data on production do not match the
sectoral classification of the sectoral shares in GDP and the output
multipliers. The production growth figures presented in the table are
based on the latest data presented in terms of NACE Rev. 1. Therefore,
although they show the fall in production at the end of 2008 they do
not yet capture the further deterioration that was described above.
Yet, the purpose of the table is to illustrate the joint use of the three
indicators and this requires them being presented according to the
same nomenclature. Therefore, the use of the growth figures in this
table is for illustrative purposes only, as the latest developments in
manufacturing production are presented in the tables mentioned
above. The table shows the value added in absolute terms (million
EUR) and the share (%) of each sector in the EU’s GDP. The column on
growth presents the growth rate (%) in the last month of 2008, relative
to the same month of 2007, for which data are available in terms of
NACE Rev. 1. For manufacturing and electricity, gas and water supply
growth refers to production in volume terms and the data used are
for December 2008. The same applies to construction, but the last
data available to calculate growth are for November 2008. For services
activities the indicator used is turnover, which has been deflated using
the inflation index. Although this does not reflect properly the deflator
for the various service industries, it is the best proxy for services growth
in volume terms during the period analysed. The last data available
refer to October 2008 for the sale and repair of motor vehicles and
wholesale trade; December 2008 for retail trade and September 2008
for the rest of service activities. The output multiplier presented is the
Page 44
total multiplier as defined in Chapter II. In choosing this, as opposed to
the domestic multiplier, the objective is to capture the effect of each
sector on the EU economy as a whole, although part of the effect spills
over to the rest of the world. Detailed information on each sector’s
influence on other sectors is presented in Table II.5. This table shows
the multiplier effect of one given sector (columns) on each of the other
sectors of the economy (rows). Tables II.4 and II.5 altogether give an
idea of how the effects of the crisis spread over the whole economy.
The size of manufacturing sectors is small compared with services, as
altogether they account for 17 % of GDP. Nevertheless, they exhibit,
in general, high multiplier effects on the rest of the economy. Some
examples of sectors that share similar characteristics are as follows.
It is worth mentioning, first, basic metals and motor vehicles. Basic
metals shows a strong decrease in production (–23.7  %), has a
high multiplier value (2.98) and a relatively high share (0.7 %) of
all manufacturing sectors. The sectors most affected, directly and
indirectly, by this industry are other business services; wholesale
trade; electrical energy, gas, steam and hot water; metal products;
and metal ores. Motor vehicles present similar characteristics in
production growth (–23.6 %) and output multiplier (3.12), although
its share in GDP is higher (1.3 %). The sectors most affected by the
decrease in the production of motor vehicles are basic metals, metal
products, rubber and plastic, and other business services. Two other
large manufacturing sectors — food and drink and machinery and
equipment n.e.c. — combine high shares in GDP (2  % and 1.9  %
respectively) with relatively high multipliers (2.8 and 2.7), although
in this case the decrease in production (–3.2 % and –6.5 %) has lower
values. All in all, the four manufacturing sectors mentioned above are
characterised by their strong negative impact on the economy as a
whole. Following the same logic one can identify sectors which, in the
current situation, have a more neutral effect. Examples are wholesale
and retail trade, which are large sectors (5.4 % and 4.4 %), but which,
at the same time, have lower multiplier effects (1.9 and 1.8) and whose
growth rate is positive or barely negative (1.5 % and –0.5 %) when
compared with the other sectors. To finalise, a scatterplot which
shows the trade-off between output multipliers and the share of the
sectors in total value added is presented in Figure II.20. The inverse
relationship between the share the value of the multiplier is patent in
the figure (the rank order correlation coefficient is –0.49).
 Chapter II — The economic downturn

TA B L E II. 4 : M u l t i p l i e r e f f e c t s ( b y s e c t o r ) , v a l u e a d d e d a n d g r o w t h

Value added
Sector Share (%) Multiplier Growth (%)
(million euro)
Agriculture and forestry 178 657 1.8 n.a. n.a.
Fishing 7 584 0.1 n.a. n.a.
Mining and quarrying 82 744 0.8 n.a. n.a.
Food and drink 197 060 2.0 2.80 –3.2
Tobacco 11 401 0.1 2.30 –13.5
Textiles 34 670 0.4 2.64 –15.4
Clothing 25 052 0.3 2.61 –2.8
Leather and footwear 13 668 0.1 2.71 –11.3
Wood and wood products 38 085 0.4 2.51 –15.3
Pulp and paper 44 583 0.5 2.66 –8.9
Printing and publishing 100 311 1.0 2.40 –6.3
Refined petroleum 39 011 0.4 2.75 0.9
Chemicals 177 024 1.8 2.69 –11.8
Rubber and plastics 77 426 0.8 2.71 –16.7
Non-metallic mineral products 76 518 0.8 2.42 –17.0
Basic metals 72 850 0.7 2.98 –23.7
Metal products 161 303 1.6 2.61 –13.1
Machinery n.e.c. 188 370 1.9 2.69 –6.5
Office machinery 10 869 0.1 3.04 –0.6
Electrical machinery 76 686 0.8 2.76 –9.3
Radio, TV & communic. eq. 49 423 0.5 3.00 –3.6
Scientific & other instrum. 57 423 0.6 2.43 –0.9
Motor vehicles 131 268 1.3 3.12 –23.6
Other transport equipment 49 126 0.5 2.67 3.2
Furniture; other manuf. 59 269 0.6 2.57 –8.7
Recycling 7 788 0.1 2.77 –17.0
Electricity & water supply 187 343 1.9 2.28 –1.2
Collection & distribution of water 25 547 0.3 1.95 –1.2
Construction 594 487 6.0 2.45 –3.7
Sale and repair of motor vehicles 167 566 1.7 2.09 –7.7
Wholesale trade 532 793 5.4 1.99 1.5
Retail trade 435 127 4.4 1.82 –0.5
Hotels and restaurants 288 170 2.9 2.20 –3.0
Inland transport 197 756 2.0 2.03 4.8
Water transport 27 466 0.3 2.47 3.6
Air transport 29 857 0.3 2.70 –1.7
Supporting transport activities 162 494 1.6 2.29 –1.4
Communications 275 647 2.8 1.94 –3.2
Financial intermediation 553 791 5.6 2.02 n.a.
Real estate activities 458 283 4.6 1.58 n.a.
Renting of machinery and eq. 138 594 1.4 1.89 n.a.
Computer and related activities 314 145 3.2 1.92 –0.9
Research and development 40 285 0.4 1.94 n.a.
Other business activities 1 211 321 12.3 1.96 2.9
Public administration 624 442 6.3 n.a. n.a.
Education 508 329 5.1 n.a. n.a.
Health and social work 697 916 7.1 n.a. n.a.
Other services 387 573 3.9 n.a. n.a.
Activities of households 49 934 0.5 n.a. n.a.

Note: Growth refers to the latest data available over the same month of 2007.
Source: own calculations using Eurostat data.

Page 45
EU industrial structure 2009 — Performance and competitiveness

FIGUR E II. 2 0 : S e c t o r s h a r e s i n t o t a l v a l u e a d d e d a n d o u t p u t m u l t i p l i e r ( s h a r e i n % )

3.2

Output multiplier
DM34

DL30
3.0 DL32
DJ27

DA15
2.8 DN37DF23
DL31
DC19DH25 DG24
DM35 DM35DE21
DE21 DK29
DB17 DJ28
2.6 DB18
DN36
DD20
I61 F
D26
DL33
2.4
DE22
DA16 I63
E40
H55
2.2
G50
I60
G51
2.0 K74
E41 I64
K72

G52
1.8

1.6
–2 0 2 4 6 8 10 12 14
Share in total value added
Note: Sectors are presented according to NACE Rev. 1. The name of the sectors corresponding to the codes in this figure can
be found in Annex A.1.
Source: own calculations using Eurostat data.

TA B L E II. 5 : O u t p u t m u l t i p l i e r s

CPA Sector 15 16 17 18 19 20 21 22 23

01 Agriculture 0.410 0.260 0.067 0.038 0.067 0.010 0.010 0.006 0.004
02 Forestry 0.004 0.005 0.002 0.002 0.003 0.187 0.053 0.011 0.007
05 Fishing 0.010 0.000 0.000 0.000 0.001 0.000 0.000 0.000 0.000
10 Coal and lignite 0.004 0.003 0.006 0.004 0.004 0.004 0.009 0.003 0.015
Crude petroleum and
11 0.030 0.021 0.030 0.022 0.028 0.025 0.041 0.021 0.644
natural gas
12 Uranium and thorium ores 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
13 Metal ores 0.004 0.003 0.004 0.003 0.003 0.004 0.005 0.003 0.034
14 Other mining and quarrying 0.004 0.002 0.004 0.002 0.003 0.003 0.007 0.002 0.002
15 Food and drink 1.311 0.040 0.022 0.018 0.099 0.010 0.017 0.011 0.009
16 Tobacco 0.000 1.100 0.000 0.000 0.000 0.000 0.002 0.001 0.000
17 Textiles 0.006 0.005 1.353 0.483 0.086 0.007 0.016 0.007 0.004
18 Clothing 0.002 0.001 0.009 1.109 0.006 0.001 0.001 0.001 0.001
19 Leather and footwear 0.001 0.001 0.003 0.014 1.349 0.001 0.001 0.001 0.001
20 Wood and wood products 0.010 0.010 0.005 0.007 0.009 1.310 0.045 0.014 0.016
21 Pulp and paper 0.046 0.134 0.027 0.024 0.035 0.029 1.405 0.244 0.014
22 Printing and publishing 0.017 0.018 0.014 0.017 0.016 0.012 0.021 1.193 0.011
23 Refined petroleum 0.033 0.021 0.036 0.024 0.028 0.031 0.030 0.018 1.196
24 Chemicals 0.078 0.064 0.220 0.101 0.157 0.082 0.131 0.080 0.079
>>>
Page 46
 Chapter II — The economic downturn

CPA Sector 15 16 17 18 19 20 21 22 23

25 Rubber and plastics 0.040 0.016 0.027 0.026 0.087 0.029 0.037 0.024 0.020
26 Non-metallic mineral products 0.016 0.005 0.010 0.007 0.008 0.018 0.008 0.006 0.009
27 Basic metals 0.027 0.015 0.023 0.020 0.025 0.035 0.030 0.022 0.032
28 Metal products 0.035 0.017 0.022 0.022 0.034 0.049 0.026 0.018 0.037
29 Machinery n.e.c. 0.026 0.019 0.026 0.021 0.022 0.028 0.037 0.020 0.029
30 Office machinery 0.004 0.002 0.004 0.004 0.004 0.004 0.004 0.005 0.003
31 Electrical machinery 0.011 0.007 0.010 0.012 0.011 0.012 0.014 0.011 0.015
32 Radio, TV & communic. eq. 0.005 0.004 0.005 0.006 0.006 0.005 0.006 0.007 0.005
Scientific and other
33 0.003 0.002 0.003 0.003 0.004 0.003 0.003 0.003 0.003
instruments
34 Motor vehicles 0.007 0.004 0.005 0.005 0.008 0.009 0.007 0.005 0.007
35 Other transport eq. 0.004 0.003 0.010 0.018 0.006 0.005 0.005 0.003 0.003
Furniture; other
36 0.005 0.004 0.010 0.013 0.007 0.007 0.005 0.005 0.003
manufacturing
37 Recycling 0.002 0.001 0.005 0.002 0.008 0.002 0.006 0.003 0.002
Electricity and hot water
40 0.055 0.041 0.077 0.050 0.052 0.054 0.099 0.043 0.064
supply
Collection and distribution of
41 0.004 0.002 0.004 0.003 0.003 0.002 0.003 0.002 0.002
water
45 Construction 0.021 0.016 0.020 0.018 0.020 0.023 0.020 0.018 0.027
Sale and repair of motor
50 0.021 0.009 0.011 0.012 0.014 0.018 0.017 0.012 0.022
vehicles
51 Wholesale trade 0.122 0.071 0.104 0.094 0.104 0.103 0.091 0.088 0.061
52 Retail trade 0.026 0.016 0.019 0.022 0.028 0.018 0.018 0.019 0.009
55 Hotels and restaurants 0.010 0.010 0.012 0.011 0.011 0.010 0.011 0.011 0.007
60 Inland transport 0.057 0.037 0.045 0.042 0.046 0.070 0.077 0.044 0.050
61 Water transport 0.004 0.001 0.003 0.004 0.004 0.005 0.005 0.003 0.006
62 Air transport 0.005 0.005 0.006 0.006 0.006 0.005 0.006 0.006 0.006
63 Supporting transport activities 0.032 0.016 0.023 0.027 0.026 0.036 0.036 0.026 0.033
64 Communications 0.025 0.022 0.029 0.028 0.030 0.026 0.030 0.046 0.020
65 Financial intermediation 0.037 0.040 0.045 0.036 0.035 0.035 0.040 0.038 0.029
Insurance and pension
66 0.008 0.008 0.012 0.009 0.009 0.009 0.009 0.007 0.007
funding
Activities auxiliary to financial
67 0.006 0.008 0.006 0.006 0.005 0.006 0.006 0.006 0.006
intermediation
70 Real estate activities 0.026 0.021 0.025 0.031 0.026 0.025 0.026 0.032 0.028
Renting of machinery and
71 0.016 0.015 0.021 0.019 0.017 0.020 0.020 0.020 0.021
equipment
Computer and related
72 0.012 0.012 0.012 0.013 0.012 0.011 0.015 0.018 0.011
activities
73 Research and development 0.012 0.005 0.007 0.012 0.012 0.008 0.013 0.018 0.015
74 Other business activities 0.117 0.129 0.118 0.112 0.100 0.083 0.112 0.151 0.093
Public administration and
75 0.003 0.002 0.002 0.003 0.004 0.003 0.003 0.003 0.008
defence
80 Education services 0.003 0.004 0.003 0.003 0.003 0.003 0.004 0.003 0.005
Health and social work
85 0.006 0.003 0.002 0.002 0.002 0.001 0.002 0.002 0.001
services
Sewage and refuse disposal
90 0.007 0.005 0.010 0.006 0.008 0.006 0.008 0.005 0.006
services
Membership organisation
91 0.002 0.002 0.002 0.003 0.003 0.002 0.002 0.002 0.002
services n.e.c.
Recreational and cultural
92 0.007 0.008 0.006 0.007 0.006 0.004 0.006 0.031 0.004
services
93 Other services 0.003 0.004 0.003 0.003 0.004 0.003 0.004 0.004 0.002

Source: own calculations using Eurostat data.

Page 47
EU industrial structure 2009 — Performance and competitiveness

TA B L E II. 5 : O u t p u t m u l t i p l i e r s ( c o n t . )

CPA Sector 24 25 26 27 28 29 30 31 32

01 Agriculture 0.013 0.015 0.005 0.006 0.005 0.007 0.006 0.006 0.006
02 Forestry 0.004 0.005 0.004 0.003 0.004 0.003 0.003 0.003 0.003
05 Fishing 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
10 Coal and lignite 0.010 0.006 0.013 0.029 0.010 0.008 0.005 0.007 0.004
11
Crude petroleum and natural 0.075 0.039 0.046 0.060 0.031 0.026 0.021 0.026 0.021
gas
12 Uranium and thorium ores 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
13 Metal ores 0.010 0.006 0.013 0.073 0.021 0.014 0.007 0.013 0.005
14 Other mining and quarrying 0.011 0.005 0.069 0.015 0.006 0.004 0.002 0.005 0.003
15 Food and drink 0.028 0.016 0.010 0.010 0.009 0.011 0.011 0.011 0.012
16 Tobacco 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
17 Textiles 0.009 0.032 0.008 0.006 0.006 0.007 0.006 0.007 0.011
18 Clothing 0.001 0.002 0.001 0.002 0.002 0.002 0.001 0.002 0.002
19 Leather and footwear 0.001 0.002 0.001 0.001 0.001 0.001 0.001 0.001 0.001
20 Wood and wood products 0.007 0.010 0.015 0.011 0.013 0.009 0.008 0.010 0.009
21 Pulp and paper 0.037 0.036 0.031 0.020 0.018 0.020 0.022 0.025 0.025
22 Printing and publishing 0.021 0.018 0.015 0.014 0.013 0.015 0.020 0.016 0.021
23 Refined petroleum 0.104 0.044 0.051 0.065 0.034 0.028 0.019 0.029 0.019
24 Chemicals 1.475 0.408 0.086 0.072 0.063 0.063 0.062 0.091 0.077
25 Rubber and plastics 0.037 1.206 0.029 0.023 0.030 0.053 0.044 0.073 0.063
26 Non-metallic mineral products 0.015 0.020 1.152 0.032 0.021 0.019 0.014 0.024 0.022
27 Basic metals 0.040 0.054 0.060 1.560 0.413 0.232 0.091 0.223 0.087
28 Metal products 0.036 0.049 0.043 0.099 1.210 0.149 0.072 0.094 0.056
29 Machinery n.e.c. 0.027 0.030 0.042 0.045 0.043 1.202 0.054 0.045 0.030
30 Office machinery 0.005 0.005 0.004 0.005 0.005 0.007 1.477 0.012 0.026
31 Electrical machinery 0.015 0.019 0.018 0.027 0.025 0.091 0.137 1.335 0.203
32 Radio, TV & communic. eq. 0.006 0.012 0.007 0.008 0.008 0.026 0.176 0.059 1.549
33
Scientific and other 0.005 0.004 0.004 0.006 0.005 0.020 0.015 0.016 0.024
instruments
34 Motor vehicles 0.006 0.007 0.010 0.015 0.013 0.032 0.010 0.008 0.006
35 Other transport eq. 0.005 0.005 0.004 0.008 0.006 0.008 0.026 0.006 0.008
36
Furniture; other 0.004 0.004 0.004 0.004 0.005 0.005 0.010 0.005 0.009
manufacturing
37 Recycling 0.003 0.007 0.008 0.055 0.021 0.016 0.004 0.010 0.005
40 Electricity and hot water 0.100 0.075 0.100 0.124 0.070 0.060 0.043 0.056 0.047
supply
41 Collection and distribution of 0.004 0.003 0.003 0.004 0.003 0.003 0.002 0.002 0.002
water
45 Construction 0.023 0.023 0.029 0.037 0.026 0.025 0.023 0.026 0.026
50
Sale and repair of motor 0.017 0.017 0.021 0.023 0.018 0.020 0.018 0.016 0.011
vehicles
51 Wholesale trade 0.086 0.089 0.082 0.110 0.098 0.100 0.138 0.096 0.105
52 Retail trade 0.019 0.020 0.017 0.016 0.015 0.019 0.025 0.016 0.021
55 Hotels and restaurants 0.012 0.011 0.011 0.010 0.011 0.013 0.013 0.012 0.017
60 Inland transport 0.053 0.051 0.083 0.067 0.048 0.046 0.038 0.044 0.038
61 Water transport 0.004 0.004 0.006 0.009 0.004 0.004 0.003 0.004 0.003
62 Air transport 0.006 0.006 0.006 0.006 0.005 0.006 0.009 0.006 0.008
63 Supporting transport activities 0.028 0.028 0.041 0.039 0.028 0.028 0.027 0.026 0.024
64 Communications 0.029 0.026 0.025 0.025 0.026 0.029 0.036 0.028 0.036
65 Financial intermediation 0.040 0.041 0.038 0.041 0.038 0.041 0.042 0.043 0.046
66
Insurance and pension 0.008 0.008 0.008 0.008 0.007 0.008 0.006 0.007 0.007
funding
67
Activities auxiliary to financial 0.006 0.006 0.006 0.006 0.006 0.007 0.006 0.007 0.007
intermediation
70 Real estate activities 0.027 0.029 0.027 0.027 0.029 0.029 0.039 0.031 0.029
71
Renting of machinery and 0.019 0.020 0.024 0.023 0.020 0.020 0.023 0.020 0.020
equipment
72
Computer and related 0.017 0.014 0.013 0.015 0.013 0.017 0.041 0.019 0.023
activities
73 Research and development 0.028 0.020 0.013 0.012 0.012 0.019 0.025 0.031 0.040
>>>
Page 48
 Chapter II — The economic downturn

CPA Sector 24 25 26 27 28 29 30 31 32

74 Other business activities 0.144 0.120 0.104 0.104 0.099 0.119 0.138 0.118 0.150
75
Public administration and 0.003 0.003 0.004 0.004 0.003 0.003 0.003 0.003 0.004
defence
80 Education services 0.005 0.004 0.004 0.004 0.004 0.004 0.005 0.004 0.007
85
Health and social work 0.002 0.002 0.002 0.002 0.002 0.002 0.002 0.002 0.002
services
90
Sewage and refuse disposal 0.010 0.007 0.007 0.009 0.006 0.006 0.006 0.006 0.006
services
91
Membership organisation 0.002 0.002 0.002 0.003 0.002 0.002 0.002 0.002 0.002
services n.e.c.
92
Recreational and cultural 0.008 0.007 0.005 0.005 0.005 0.006 0.006 0.006 0.006
services
93 Other services 0.003 0.003 0.002 0.003 0.003 0.003 0.002 0.003 0.004

Source: own calculations using Eurostat data.

TA B L E II. 5 : O u t p u t m u l t i p l i e r s ( c o n t . )

CPA Sector 33 34 35 36 37 40 41 45 50

01 Agriculture 0.006 0.008 0.005 0.012 0.010 0.004 0.004 0.006 0.005
02 Forestry 0.002 0.003 0.003 0.034 0.005 0.004 0.002 0.010 0.002
05 Fishing 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
10 Coal and lignite 0.004 0.007 0.006 0.005 0.008 0.059 0.007 0.004 0.003
11
Crude petroleum and natural 0.018 0.028 0.023 0.025 0.043 0.181 0.030 0.026 0.022
gas
12 Uranium and thorium ores 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
13 Metal ores 0.008 0.011 0.011 0.007 0.013 0.024 0.006 0.008 0.004
14 Other mining and quarrying 0.004 0.005 0.003 0.015 0.005 0.004 0.004 0.021 0.002
15 Food and drink 0.010 0.011 0.010 0.013 0.017 0.006 0.007 0.009 0.010
16 Tobacco 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
17 Textiles 0.011 0.028 0.010 0.079 0.008 0.003 0.004 0.007 0.008
18 Clothing 0.002 0.002 0.003 0.003 0.003 0.001 0.001 0.001 0.002
19 Leather and footwear 0.002 0.004 0.001 0.024 0.001 0.001 0.001 0.001 0.002
20 Wood and wood products 0.007 0.013 0.015 0.175 0.013 0.010 0.007 0.053 0.007
21 Pulp and paper 0.019 0.019 0.016 0.034 0.062 0.009 0.011 0.014 0.015
22 Printing and publishing 0.015 0.016 0.017 0.016 0.016 0.010 0.012 0.012 0.017
23 Refined petroleum 0.019 0.030 0.023 0.031 0.054 0.055 0.023 0.030 0.024
24 Chemicals 0.067 0.099 0.059 0.102 0.077 0.027 0.046 0.058 0.044
25 Rubber and plastics 0.056 0.106 0.036 0.054 0.036 0.014 0.017 0.048 0.034
26 Non-metallic mineral products 0.024 0.028 0.016 0.018 0.018 0.008 0.014 0.112 0.014
27 Basic metals 0.086 0.214 0.168 0.095 0.316 0.030 0.039 0.080 0.039
28 Metal products 0.054 0.139 0.114 0.069 0.090 0.030 0.031 0.083 0.035
29 Machinery n.e.c. 0.042 0.086 0.086 0.027 0.038 0.031 0.035 0.038 0.026
30 Office machinery 0.019 0.005 0.011 0.004 0.005 0.003 0.004 0.005 0.005
31 Electrical machinery 0.092 0.086 0.061 0.015 0.020 0.038 0.018 0.048 0.030
32 Radio, TV & communic. eq. 0.082 0.024 0.024 0.008 0.012 0.008 0.006 0.015 0.009
33
Scientific and other 1.209 0.018 0.021 0.004 0.005 0.006 0.007 0.006 0.005
instruments
34 Motor vehicles 0.008 1.461 0.017 0.009 0.054 0.006 0.006 0.008 0.121
35 Other transport eq. 0.006 0.005 1.305 0.004 0.005 0.003 0.002 0.004 0.006
36
Furniture; other 0.006 0.018 0.013 1.097 0.006 0.007 0.005 0.008 0.007
manufacturing
37 Recycling 0.004 0.011 0.007 0.005 1.170 0.002 0.002 0.006 0.003
40 Electricity and hot water 0.042 0.060 0.054 0.054 0.062 1.291 0.094 0.040 0.035
supply
41 Collection and distribution of 0.002 0.003 0.003 0.003 0.003 0.004 1.042 0.002 0.002
water
45 Construction 0.022 0.024 0.022 0.021 0.026 0.038 0.084 1.198 0.022
50
Sale and repair of motor 0.014 0.046 0.026 0.017 0.026 0.012 0.016 0.019 1.061
vehicles
>>>
Page 49
EU industrial structure 2009 — Performance and competitiveness

CPA Sector 33 34 35 36 37 40 41 45 50

51 Wholesale trade 0.097 0.103 0.087 0.103 0.100 0.044 0.038 0.088 0.045
52 Retail trade 0.019 0.017 0.015 0.021 0.012 0.008 0.008 0.018 0.011
55 Hotels and restaurants 0.013 0.011 0.012 0.010 0.009 0.007 0.008 0.011 0.011
60 Inland transport 0.034 0.055 0.038 0.055 0.078 0.037 0.023 0.046 0.039
61 Water transport 0.003 0.004 0.004 0.004 0.005 0.003 0.002 0.003 0.003
62 Air transport 0.007 0.006 0.006 0.005 0.005 0.004 0.003 0.005 0.006
63 Supporting transport activities 0.022 0.032 0.025 0.030 0.039 0.019 0.017 0.023 0.029
64 Communications 0.029 0.027 0.026 0.026 0.027 0.021 0.030 0.025 0.038
65 Financial intermediation 0.033 0.039 0.043 0.036 0.039 0.029 0.044 0.033 0.038
66
Insurance and pension 0.006 0.007 0.015 0.009 0.008 0.007 0.007 0.008 0.008
funding
67
Activities auxiliary to financial 0.006 0.006 0.007 0.006 0.004 0.005 0.005 0.006 0.006
intermediation
70 Real estate activities 0.028 0.030 0.030 0.030 0.033 0.018 0.026 0.032 0.048
71
Renting of machinery and 0.018 0.019 0.024 0.017 0.017 0.019 0.022 0.027 0.018
equipment
72
Computer and related 0.018 0.017 0.018 0.013 0.013 0.013 0.016 0.013 0.016
activities
73 Research and development 0.025 0.027 0.022 0.014 0.011 0.011 0.009 0.010 0.011
74 Other business activities 0.116 0.117 0.120 0.103 0.098 0.078 0.080 0.105 0.117
75
Public administration and 0.003 0.003 0.003 0.003 0.005 0.005 0.004 0.003 0.003
defence
80 Education services 0.004 0.005 0.004 0.003 0.003 0.003 0.003 0.003 0.003
85
Health and social work 0.003 0.002 0.002 0.002 0.003 0.001 0.002 0.002 0.002
services
90
Sewage and refuse disposal 0.006 0.006 0.008 0.006 0.019 0.007 0.015 0.006 0.006
services
91
Membership organisation 0.002 0.002 0.002 0.002 0.002 0.001 0.002 0.002 0.002
services n.e.c.
92
Recreational and cultural 0.006 0.006 0.006 0.006 0.006 0.004 0.004 0.005 0.007
services
93 Other services 0.003 0.003 0.003 0.003 0.006 0.002 0.002 0.003 0.003

Source: own calculations using Eurostat data.

TA B L E II. 5 : O u t p u t m u l t i p l i e r s ( c o n t . )

CPA Sector 51 52 55 60 61 62 63 64 65

01 Agriculture 0.012 0.016 0.103 0.004 0.012 0.010 0.009 0.003 0.004
02 Forestry 0.002 0.002 0.003 0.002 0.002 0.002 0.002 0.001 0.002
05 Fishing 0.000 0.001 0.006 0.000 0.001 0.000 0.000 0.000 0.000
10 Coal and lignite 0.002 0.002 0.003 0.003 0.003 0.003 0.002 0.002 0.002
11
Crude petroleum and natural 0.022 0.015 0.023 0.065 0.059 0.092 0.034 0.011 0.008
gas
12 Uranium and thorium ores 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
13 Metal ores 0.002 0.002 0.003 0.006 0.003 0.006 0.003 0.002 0.002
14 Other mining and quarrying 0.002 0.002 0.003 0.002 0.002 0.002 0.002 0.001 0.001
15 Food and drink 0.021 0.035 0.249 0.008 0.025 0.025 0.020 0.007 0.008
16 Tobacco 0.001 0.002 0.002 0.000 0.000 0.000 0.000 0.000 0.000
17 Textiles 0.007 0.008 0.009 0.004 0.005 0.006 0.004 0.003 0.002
18 Clothing 0.002 0.003 0.002 0.001 0.002 0.003 0.002 0.002 0.001
19 Leather and footwear 0.002 0.003 0.001 0.001 0.001 0.001 0.001 0.001 0.000
20 Wood and wood products 0.007 0.006 0.007 0.006 0.007 0.008 0.007 0.004 0.004
21 Pulp and paper 0.020 0.019 0.020 0.009 0.011 0.013 0.013 0.012 0.018
22 Printing and publishing 0.022 0.021 0.013 0.012 0.014 0.017 0.018 0.019 0.025
23 Refined petroleum 0.024 0.016 0.020 0.081 0.078 0.138 0.038 0.012 0.009
24 Chemicals 0.033 0.025 0.035 0.026 0.029 0.034 0.023 0.017 0.013
25 Rubber and plastics 0.018 0.016 0.016 0.024 0.014 0.019 0.015 0.013 0.006
26 Non-metallic mineral products 0.009 0.008 0.012 0.007 0.006 0.007 0.007 0.007 0.005
27 Basic metals 0.019 0.014 0.015 0.023 0.024 0.030 0.017 0.014 0.007
>>>

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 Chapter II — The economic downturn

CPA Sector 51 52 55 60 61 62 63 64 65

28 Metal products 0.017 0.015 0.017 0.019 0.021 0.027 0.017 0.014 0.007
29 Machinery n.e.c. 0.015 0.009 0.014 0.016 0.016 0.025 0.014 0.010 0.005
30 Office machinery 0.006 0.005 0.003 0.004 0.005 0.005 0.004 0.008 0.008
31 Electrical machinery 0.012 0.010 0.010 0.014 0.014 0.016 0.012 0.031 0.006
32 Radio, TV & communic. eq. 0.008 0.007 0.005 0.006 0.007 0.009 0.007 0.058 0.007
33
Scientific and other 0.003 0.002 0.002 0.003 0.003 0.006 0.003 0.005 0.001
instruments
34 Motor vehicles 0.007 0.005 0.005 0.031 0.009 0.009 0.011 0.004 0.003
35 Other transport eq. 0.004 0.002 0.003 0.021 0.053 0.117 0.014 0.003 0.001
36
Furniture; other 0.007 0.006 0.009 0.006 0.005 0.008 0.006 0.004 0.004
manufacturing
37 Recycling 0.003 0.001 0.001 0.002 0.002 0.002 0.001 0.001 0.001
40 Electricity and hot water 0.027 0.036 0.050 0.037 0.040 0.032 0.029 0.025 0.019
supply
41 Collection and distribution of 0.002 0.002 0.005 0.002 0.002 0.002 0.002 0.001 0.002
water
45 Construction 0.024 0.029 0.028 0.022 0.026 0.024 0.035 0.032 0.022
50
Sale and repair of motor 0.017 0.011 0.016 0.054 0.024 0.026 0.022 0.010 0.008
vehicles
51 Wholesale trade 1.066 0.037 0.081 0.033 0.041 0.055 0.034 0.032 0.021
52 Retail trade 0.011 1.021 0.023 0.010 0.009 0.011 0.007 0.007 0.005
55 Hotels and restaurants 0.017 0.011 1.022 0.013 0.031 0.044 0.055 0.011 0.012
60 Inland transport 0.069 0.032 0.038 1.082 0.067 0.060 0.140 0.021 0.014
61 Water transport 0.006 0.003 0.002 0.008 1.141 0.012 0.026 0.002 0.001
62 Air transport 0.010 0.005 0.004 0.007 0.022 1.096 0.060 0.009 0.007
63 Supporting transport activities 0.068 0.022 0.022 0.100 0.279 0.279 1.236 0.017 0.008
64 Communications 0.045 0.038 0.029 0.026 0.035 0.041 0.044 1.229 0.059
65 Financial intermediation 0.049 0.040 0.034 0.030 0.038 0.046 0.045 0.032 1.406
66
Insurance and pension 0.009 0.007 0.007 0.015 0.015 0.016 0.011 0.006 0.013
funding
67
Activities auxiliary to financial 0.007 0.006 0.005 0.006 0.008 0.007 0.006 0.005 0.052
intermediation
70 Real estate activities 0.045 0.077 0.057 0.025 0.032 0.036 0.040 0.033 0.037
71
Renting of machinery and 0.017 0.014 0.013 0.028 0.052 0.078 0.026 0.016 0.016
equipment
72
Computer and related 0.017 0.012 0.011 0.015 0.020 0.025 0.020 0.031 0.035
activities
73 Research and development 0.003 0.002 0.007 0.008 0.013 0.012 0.009 0.016 0.008
74 Other business activities 0.146 0.116 0.092 0.075 0.115 0.118 0.105 0.114 0.120
75
Public administration and
0.003 0.003 0.003 0.005 0.003 0.005 0.004 0.003 0.003
defence
80 Education services 0.003 0.002 0.002 0.003 0.003 0.007 0.003 0.004 0.005
85
Health and social work 0.002 0.001 0.003 0.001 0.002 0.002 0.002 0.002 0.001
services
90
Sewage and refuse disposal 0.006 0.007 0.009 0.007 0.006 0.007 0.006 0.005 0.006
services
91
Membership organisation 0.003 0.002 0.002 0.002 0.002 0.002 0.002 0.002 0.002
services n.e.c.
92
Recreational and cultural 0.007 0.006 0.011 0.004 0.006 0.006 0.007 0.010 0.007
services
93 Other services 0.003 0.003 0.007 0.004 0.007 0.006 0.010 0.002 0.002

Source: own calculations using Eurostat data.

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EU industrial structure 2009 — Performance and competitiveness

TA B L E II. 5 : O u t p u t m u l t i p l i e r s ( c o n t . )

CPA Sector 66 67 70 71 72 73 74

01 Agriculture 0.004 0.004 0.003 0.006 0.004 0.009 0.006

02 Forestry 0.002 0.002 0.002 0.002 0.002 0.002 0.002
05 Fishing 0.000 0.000 0.000 0.000 0.000 0.000 0.000
10 Coal and lignite 0.002 0.004 0.004 0.002 0.002 0.003 0.002
11
Crude petroleum and natural 0.010 0.010 0.009 0.023 0.011 0.017 0.015
gas
12 Uranium and thorium ores 0.000 0.000 0.000 0.000 0.000 0.000 0.000
13 Metal ores 0.002 0.002 0.004 0.003 0.002 0.003 0.003
14 Other mining and quarrying 0.001 0.001 0.003 0.001 0.001 0.002 0.002
15 Food and drink 0.008 0.008 0.005 0.010 0.009 0.012 0.012
16 Tobacco 0.000 0.000 0.000 0.000 0.000 0.000 0.000
17 Textiles 0.003 0.002 0.003 0.005 0.003 0.005 0.004
18 Clothing 0.001 0.001 0.001 0.003 0.001 0.002 0.002
19 Leather and footwear 0.000 0.000 0.000 0.001 0.001 0.001 0.001
20 Wood and wood products 0.005 0.005 0.009 0.005 0.005 0.006 0.007
21 Pulp and paper 0.021 0.021 0.007 0.014 0.017 0.020 0.027
22 Printing and publishing 0.029 0.029 0.008 0.020 0.023 0.035 0.047
23 Refined petroleum 0.011 0.010 0.010 0.021 0.011 0.014 0.014
24 Chemicals 0.014 0.012 0.015 0.021 0.020 0.049 0.027
25 Rubber and plastics 0.007 0.006 0.009 0.014 0.010 0.014 0.013
26 Non-metallic mineral products 0.004 0.004 0.017 0.006 0.005 0.009 0.008
27 Basic metals 0.008 0.008 0.015 0.020 0.014 0.024 0.017
28 Metal products 0.008 0.008 0.016 0.021 0.012 0.019 0.016
29 Machinery n.e.c. 0.006 0.006 0.009 0.021 0.011 0.015 0.010
30 Office machinery 0.008 0.008 0.003 0.006 0.036 0.008 0.010
31 Electrical machinery 0.008 0.007 0.009 0.012 0.024 0.019 0.014
32 Radio, TV & communic. eq. 0.006 0.008 0.004 0.007 0.018 0.012 0.009
33
Scientific and other 0.002 0.002 0.002 0.003 0.004 0.011 0.005
instruments
34 Motor vehicles 0.003 0.003 0.003 0.016 0.005 0.008 0.004
35 Other transport eq. 0.002 0.002 0.001 0.010 0.003 0.007 0.003
36
Furniture; other 0.007 0.004 0.003 0.007 0.005 0.006 0.008
manufacturing
37 Recycling 0.001 0.001 0.001 0.001 0.001 0.002 0.001
40 Electricity and hot water 0.019 0.019 0.031 0.029 0.023 0.039 0.026
supply
41 Collection and distribution of 0.001 0.001 0.005 0.001 0.001 0.003 0.001
water
45 Construction 0.025 0.020 0.096 0.017 0.018 0.020 0.035
50
Sale and repair of motor 0.008 0.008 0.006 0.045 0.011 0.010 0.009
vehicles
51 Wholesale trade 0.023 0.021 0.019 0.031 0.041 0.039 0.036
52 Retail trade 0.006 0.006 0.006 0.010 0.009 0.011 0.009
55 Hotels and restaurants 0.014 0.014 0.004 0.011 0.015 0.016 0.016
60 Inland transport 0.015 0.016 0.012 0.031 0.018 0.022 0.021
61 Water transport 0.001 0.001 0.001 0.003 0.001 0.002 0.002
62 Air transport 0.007 0.007 0.002 0.006 0.008 0.008 0.008
63 Supporting transport activities 0.011 0.010 0.007 0.026 0.014 0.017 0.017
64 Communications 0.060 0.069 0.020 0.040 0.062 0.039 0.051
65 Financial intermediation 0.091 0.129 0.044 0.042 0.033 0.026 0.043
66
Insurance and pension 1.159 0.027 0.007 0.012 0.006 0.006 0.007
funding
67
Activities auxiliary to financial 0.181 1.130 0.004 0.008 0.005 0.005 0.009
intermediation
70 Real estate activities 0.046 0.047 1.048 0.042 0.044 0.035 0.041
71
Renting of machinery and 0.014 0.014 0.006 1.082 0.023 0.015 0.015
equipment
>>>

Page 52
 Chapter II — The economic downturn

CPA Sector 66 67 70 71 72 73 74

72
Computer and related 0.029 0.043 0.007 0.016 1.129 0.026 0.022
activities
73 Research and development 0.006 0.010 0.005 0.010 0.015 1.090 0.005
74 Other business activities 0.163 0.128 0.059 0.119 0.147 0.130 1.247
75
Public administration and 0.003 0.003 0.002 0.005 0.003 0.004 0.004
defence
80 Education services 0.005 0.006 0.001 0.003 0.006 0.014 0.005
85
Health and social work 0.002 0.002 0.001 0.001 0.003 0.004 0.002
services
90
Sewage and refuse disposal 0.006 0.004 0.010 0.006 0.007 0.007 0.007
services
91
Membership organisation 0.002 0.002 0.001 0.002 0.002 0.003 0.003
services n.e.c.
92
Recreational and cultural 0.008 0.007 0.003 0.007 0.012 0.011 0.030
services
93 Other services 0.002 0.002 0.002 0.004 0.004 0.006 0.005

Source: own calculations using Eurostat data.

Page 53

Chapter III
Industrial structure
in the EU
III.1 Introduction
Chapter III presents indicators of the sectoral structure of the economy.
These indicators are used to describe the basic characteristics of the
sectoral structure in the EU and Member States. Furthermore, the
information provided in this chapter is used in Chapter II, to analyse the
effects of the crisis on the real economy, and in Chapter V to analyse the
competitiveness of EU industries in international markets. The chapter is
organised as follows. Section III.2 gives a general overview of the sectoral
structure of the EU economy. It is based on the share of sectors in EU GDP,
which are used to calculate the sectoral specialisations of EU Member
States. Section III.3 presents sectoral taxonomies which group sectors by
various criteria. These taxonomies are applied in order to characterise
the economy of Member States from a sectoral point of view. Section III.4
presents the distribution of sectoral economic activity by enterprise size
classes. Finally, Section III.5 covers sectoral interrelations in EU countries
and presents output multipliers for the various sectors in the EU.
III.2 The share of industries and sectoral
specialisation in the EU
The industrial structure of the economy is the result of long-term trends
in sectoral growth, associated with the process of economic growth, in
which an important role is played by productivity development, the
increase in the standard of living, the structure of demand — closely
related to income per capita development — and international trade.
Chapter IV analyses the growth of sectors from a long-term perspective
and Chapter II focuses on the most recent developments, but this section
outlines the distribution across sectors of total value added in the EU.
This approach reflects the relative importance of the industries and
provides a basis for analysing the specialisation of Member States.
Chapter III — Industrial structure in the EU
It is important to note that the sectors analysed in this report are
determined by the statistical nomenclatures used, by the different levels
of aggregation chosen for the analysis and by the availability of data. In
particular, working at a certain level of aggregation implies that some
sectors will be partially or not at all recognisable in this report, either
because no data are available at a detailed level or because the statistical
classification does not reflect the reality of the sector. One example is
the pharmaceutical industry, which is a subdivision of manufacture of
chemicals and chemical products. Very often, data are not available for
the pharmaceutical sector but only for manufacture of chemicals and
chemical products. Another example is manufacture of office, accounting
and computing machinery, for which some data are not available for
manufacturing of office machinery and manufacturing of computers
separately. Other cases are economic activities which encompass
manufacturing and repairing activities under the same heading.
Examples of these are the building and repairing of ships and boats and
manufacturing of aircraft and spacecraft. With NACE Rev. 1 these economic
activities cannot be split into further detail. This means that the aggregates
may mask different trends and performance of sub-sectors, an example of
which is the building and repairing of ships and boats in the EU.
III.2.1 The share of industries
An overall picture which highlights some basic features of the EU’s
industrial structure is presented in Figure III.1, which shows the share
of the sectors in the total value added of the EU, in 1995 and 2007.
Agriculture, fishing and forestry account for 1.8 % of total value added,
manufacturing industry for 17.1  % and market services for 49.2  %.
As regards developments over time, two more aspects are worth
mentioning: the loss of nearly 3.5 percentage points in the share of
manufacturing, and the increase, 4 percentage points, in the share of
market services. It is important to underline that this trend reflects the
process of structural change, but does not necessarily mean a decline in
the output of the industry as a whole, which has continued to increase
in the EU (see Chapter IV).
Page 55
EU industrial structure 2009 — Performance and competitiveness

FIGURe III.1: Share in eU-27 GDP in 1995 and 2007 (%)

60
1995
2007
50

40

30

20

10

0
Agriculture, Mining and Manu- Electricity, Construction Market Non-market
forestry quarrying facturing gas and services services
and fishing water supply
Source: own calculation using Eurostat data.

While these are the main characteristics in the EU, there is high variability
in several respects. Table III.1 shows the current share of the main sectors in
EU countries’ GDP, and the change in the share over the period considered.
The variation across countries is presented in Figure III.2, in which the focus
is on the share of manufacturing and market services. For presentational
reasons, the shares of each sector are divided into four categories, which
are defined in terms of the parameters of the distribution of the shares
across countries. Countries in the ‘high’ (‘low’) categories are those for
which the share is greater (smaller) than the average plus (minus) one
standard deviation of the distribution. The two other categories, namely
‘medium-high’ and ‘medium-low’, include the countries whose share is
between the average and the upper and lower categories respectively. At
the extremes of the distribution are two groups of three countries. The first
group has the highest share of manufacturing, above 23 %, and the lowest
of market services, below 42 %. This group consists of Czech Republic,
Slovakia and Romania. The second group is formed by Luxembourg, Latvia
and Cyprus, in which the share of manufacturing is lower than 11 % and
the share of manufacturing, and market services accounts for more than
54 %. It is also worth mentioning Germany, Slovenia and Finland, which
are also in the upper category as regards the share of manufacturing, and
the UK which is the fourth country in the group with the largest share of
market services. A word of caution is in order regarding the position of the

FIGURe III.2: Distribution of eU countries by share of manufacturing and

market services

70
Market services share (%)

LU
68
66
64
High

62
60
58
LV
56 UK
CY
54 EE
Low Med-low Med-high

52 EL FR BE

50 NL IT
EU-27
48 MT
AT
PT LT DE
46 PL IE
DK ES
BG SE HU SI
44
FI
42 SK
CZ

40 RO
38
6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Low Medium-low Medium-high High
Manufacturing share (%)
Source: own calculation using Eurostat data.
Page 56
 Chapter III — Industrial structure in the EU

EU, which does not match the average point in the plane. This is due to
the fact that the average used to group the sectors is the average of the
distribution, while the EU represents the weighted average.
While Figure III.2 shows the diversity across EU countries due to the
different weight of manufacturing and market services sectors, some
other aspects are noticeable in Table III.1. A relevant fact is the high
share of the construction sector (above 9 %) in Spain, Lithuania,
Ireland and Cyprus compared to 6.5 % in the overall EU in 2007.
Moreover, in Spain and Ireland, this is the result of a large increase
in the last decade. In Ireland, the size of this sector doubled in 1995–
2007 and in Spain, the share moved from 7.6 % to 12.2 % over the
same period. These developments are particularly noticeable, as
the share of this sector in the EU increased by only 0.5 percentage
points.
Finally, Table III.1 also shows some strong changes that have taken place
in 1995–2007, which refer basically, but not exclusively, to new Member
States. In the process of change characterising new Member States
during this period, there is a noticeable shrinking of primary sectors,
both agriculture and mining. In Bulgaria, Lithuania, Latvia, Romania
and Ireland the share of primary activities decreased by more than
5 percentage points. This process of transformation brings countries
towards market service activities (Lithuania, Latvia and Ireland), although
the role of the construction sector, with an increase in its share in some
countries, is also relevant in this process. In the case of Bulgaria and
Romania, particularly the former, the shift from primary industries also
benefits non-market services, which, even after the increase over the
period in question, is still the lowest among all EU countries. As regards
changes in manufacturing, it is worth mentioning the Czech Republic
and Romania, where the share of manufacturing has increased by 3.2 and
2.6 percentage points respectively, following the opposite trend to the
EU as a whole. Germany and, to a lesser extent, Austria are the two other
countries where manufacturing activities have increased their share.

Ta b l e I I I . 1 : S h a re i n G D P i n 2 0 0 7 a n d c h a n g e i n s h a re i n 1 9 9 5 – 2 0 0 7 ( % )

Agriculture and Electricity, gas & Non-market

Manufacturing Construction Market services
mining water services
Country Change Share (%) Change Share (%) Change Share (%) Change Share (%) Change Share (%) Change Share (%)
AT –0.8 2.2 0.5 20.1 0.0 2.9 –0.8 7.1 3.3 47.3 –2.2 20.4
BE –0.8 0.9 –3.8 16.4 –0.7 2.1 0.2 5.3 4.5 52.0 0.6 23.3
BG –5.5 11.5 –2.2 18.6 0.9 4.0 1.6 5.9 –0.6 44.9 6.5 15.1
CY –2.8 2.6 –4.3 7.5 –0.1 2.0 0.8 9.1 3.2 54.9 3.1 23.9
CZ –3.7 3.5 3.2 27.4 –1.2 4.1 –0.3 6.3 0.7 41.9 1.3 16.8
DE –0.7 1.1 1.3 23.9 0.1 2.2 –2.7 4.0 2.5 46.9 –0.3 21.9
DK 1.0 5.3 –2.9 14.2 –0.4 2.1 0.7 5.4 1.6 46.1 0.1 27.0
EE –3.6 4.1 –4.3 16.7 0.2 3.6 1.8 8.5 9.8 53.3 –1.7 16.0
ES –1.8 3.2 –2.6 16.0 –1.0 1.9 4.6 12.2 0.5 45.8 0.2 20.9
FI –1.1 3.6 –1.7 23.6 –0.5 2.2 2.0 6.4 3.2 42.8 –1.8 21.4
FR –0.8 2.3 –3.9 12.2 0.0 1.7 1.4 6.5 3.2 51.9 0.1 25.3
EL –2.9 4.2 –0.8 10.3 0.4 2.6 0.0 7.0 1.3 52.0 2.1 23.9
HU –3.0 4.2 –0.6 21.9 –0.4 2.9 0.0 4.6 2.5 44.4 1.5 22.0
IE –5.7 2.1 –8.2 21.9 –0.4 1.4 4.5 9.9 11.4 46.1 –1.6 18.7
IT –1.4 2.4 –3.9 18.4 –0.2 2.0 1.0 6.3 3.6 50.1 0.9 20.8
LT –6.9 4.9 –0.9 19.0 –2.0 3.1 2.9 10.2 6.8 46.4 0.1 16.3
LU –0.6 0.5 –5.1 8.6 –0.3 1.1 –0.6 5.9 7.2 67.8 –0.5 16.2
LV –5.6 3.6 –9.8 10.8 –2.5 2.4 3.8 8.4 16.1 56.5 –2.0 18.2
MT –0.3 2.9 –4.7 17.0 –0.9 0.6 –1.3 3.6 0.3 47.9 6.8 28.0
NL –1.1 5.1 –3.7 13.7 0.2 2.0 0.2 5.6 4.3 50.2 0.2 23.4
PL –5.1 6.7 –2.2 18.9 –0.1 3.5 –0.3 6.5 7.5 45.7 0.3 18.8
PT –3.1 3.3 –4.1 14.3 0.0 2.9 0.2 6.6 2.3 46.4 4.6 26.5
RO –6.9 10.4 2.6 23.8 –1.7 2.4 2.8 8.4 0.6 40.1 2.6 14.8
SE –1.2 2.1 –2.9 19.7 –0.3 2.8 0.3 4.7 2.3 45.3 1.7 25.3
SI –2.6 2.8 –2.3 23.4 0.1 2.6 2.0 8.0 3.5 44.4 –0.7 18.8
SK –2.9 4.1 –2.1 24.7 1.3 6.1 2.8 7.9 –0.6 41.4 1.5 15.8
UK –1.2 3.3 –8.1 13.6 –0.1 2.3 0.9 6.1 8.2 55.8 1.4 23.7
EU-27 –1.1 2.7 –3.4 17.1 –0.2 2.2 0.5 6.5 4.1 49.2 0.2 22.4
Note: Change is the difference between the shares at the end and beginning of the period. The time period covered varies with countries as follows. UK: 1995–05; EE, ES,
PL, PT, SE: 1995–2006; AT, BE, CY, CZ, DE, DK, EU-27, FI, HU, IE, IT, LT, LU, LV, MT, NL, SI, SK: 1995–2007; BG: 1996–2007; RO: 1999–2006; FR: 1999–2007; EL: 2000–07.
Source: own calculations using Eurostat data.

Page 57
EU industrial structure 2009 — Performance and competitiveness

A more detailed picture is provided by Table III.14 in the Appendix, graph. The same applies to primary sectors (from agriculture to mining)
which presents the share of sectors in 1995 and 2007. A graphical and electricity. On the contrary, market services exhibit increases in
representation of the table is given in Figure III.3 and Figure III.4. The their shares, with the exception of the wholesale and retail trade. To
former shows the shares of industries in 1997 and 2007, while the provide more detail on the sectors’ shares, Figure III.13 in the Appendix
latter shows gains and losses of weight, in percentage points, over the breaks down manufacturing and market services into further sectors.
whole period in the form of a ranking. The share of all manufacturing This produces a classification of 48 sectors, with data for 2006, but for
industries, with the exception of refined petroleum, which practically which the change over time cannot be measured.
remains stable, decreases over the 12-year period covered by the

F igur e I I I . 3 : E U i n d u s t r i e s ’ s h a r e s i n G D P i n 1 9 9 7 a n d 2 0 0 7 ( % )

25
1997
2007
20

15

10

0
Agriculture, hunting & forestry
Fishing
Mining and quarrying
Food products, beverages & tobacco
Textiles and textile products
Leather and leather products
Wood and wood products
Paper products, publishing & printing
Refined petroleim products
Chemicals, chemical products
Rubber and plastic products
Other non-metallic mineral products
Basic metals and metal products
Machinery and equpment n.e.c.
Electrical and optical equipment
Transport equipment
Manufacturing n.e.c.
Electricity, gas & water supply
Construction
Wholesale and retail trade
Hotels and restaurants
Transport, storage and communication
Financial intermediation
Real estate, renting & business activities
Public administration & defence
Education
Health and social world
Other social & personal services
Activities of households
Source: own calculations using Eurostat data.

F igur e I I I . 4 : C h a n g e i n t h e s h a r e o f s e c t o r s i n t h e E U 1 9 9 5 – 2 0 0 7 ( p e r c e n t a g e p o i n t s )

Real estate, renting & business activities (18.9 %)

Health and social work (6.3 %)
Construction (5.9 %)
Financial intermediation (5.1 %)
Hotels and restaurants (2.6 %)
Other social & personal services (3.6 %)
Transport, storage and communication (6.8 %)
Refined petroleum products (0.3 %)
Activities of households (0.5 %)
Fishing (0.1 %)
Education (5 %)
Mining and quarrying (0.9 %)
Leather and leather products (0.2 %)
Wood and wood products (0.5 %)
Manufacturing n.e.c. (0.8 %)
Transport equipment (2 %)
Rubber and plastic products (0.9 %)
Electricity, gas and water supply (2.3 %)
Other non-metallic mineral products (1 %)
Machinery and equipment n.e.c. (2.2 %)
Basic metals and metal products (2.7 %)
Chemicals, chemical products (2.1 %)
Electrical and optical equipment (2.3 %)
Wholesale and retail trade (11.7 %)
Textiles and textile products (1 %)
Food products; beverages & tobacco (2.5 %)
Paper products; publishing & printing (1.9 %)
Public administration & defence (6.7 %)
Agriculture, hunting & forestry (2.8 %)
-2 -1 0 1 2 3 4
Note: The share in 1995 is shown in brackets after the name of each sector.
Source: own calculations using Eurostat data.
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 Chapter III — Industrial structure in the EU

III.2.2 Sectoral specialisation
This section analyses sectoral specialisation in EU Member States, using
an index which compares the share of a given sector in one country with
the share of the same sector in the EU as a whole (see Box III.1). More
precisely, the indicator compares the sectoral structure in a country with
the structure of an area of reference, namely the EU. By giving information
on the relative weight of a sector, the indicator shows whether a country
is specialised in certain sectors and helps identify the strengths and
weaknesses of countries in terms of their sectoral structure. For example,
if a country is specialised in sectors hit by a recession or in which other
countries are performing particularly well, it will be more exposed to the
effects of these events than the average. Also, if countries are very large
and diversified, they will be more resilient to the crisis.

Box III.1: Indicator of sectoral specialisation

The indicator of sectoral specialisation compares the share of a given sector in one country with the share of the same sector in the
EU as a whole. A value of 1 for a sector indicates the same share for that sector in the country and in the EU. Values above (below) 1
indicate the specialisation (lack of specialisation) of the country in that sector, and the higher the value of the indicator, the higher
the country’s specialisation compared to the EU average. The index is calculated, for country ‘i’ and industry ‘j’, as follows:

where VA is value added and EU refers to the EU-27.

When interpreting the coefficient three caveats are in order:

1. Large countries have a large influence on the sectoral profile of the EU, in which they are included. One is therefore less likely
to find significant differences between large countries and the EU as a whole. For the same reason one is more likely to find a
substantially different profile in small countries from that of the EU. This arithmetic property of the indicator affects the value of
the index but not the specialisation profile of the country. However, the results are not substantially affected by the method of
calculation, because changing the area of reference by excluding the country under analysis does not substantially alter those
indicators (see Figure III.7). Nevertheless, besides the way the indicator is calculated, other factors explain the fact that small
countries tend to show a sectoral profile that is different from the average. The obvious limitations that hinder small countries
in efficiently undertaking a large range of economic activities lead these countries to specialise on the basis of, among other
things, their own comparative advantages, their degree of development, the availability of specific resources, historical reasons,
geographical and location advantages and technical characteristics of the sectors (e.g. economies of scale). The opposite applies
to large countries, which are in a more favourable position to undertake a larger number of activities with success.

2. The level of sectoral aggregation also affects the results, as aggregation may mask the level of specialisation or lack of
specialisation of a country in a given sector. This applies to the results presented in Section III.3, as the taxonomies for which the
indicator is calculated are the result of aggregating sectors as defined in the NACE Rev. 1 nomenclature.

3. Specialisation and size of the sector are not necessarily related. The fact that a country is specialised in a sector does not
necessarily imply that the share of this sector in the economy of the country is large.

Degree of specialisation in a country

While the indicator of sectoral specialisation provides a value for each sector in a given country, the degree of specialisation in
a country is measured as the Euclidean distance between the country’s vector of specialisation and the vector corresponding to
the hypothetical case of non-specialisation, in which the coefficient of specialisation would take the value 1 for each sector. For
country ‘i’ and ‘n’ sectors the coefficient that measures the degree of specialisation is calculated as follows.

Page 59
EU industrial structure 2009 — Performance and competitiveness

Before discussing the results in more detail, it is worth presenting
a summary picture of the degree of specialisation in EU countries.
Figure III.5 shows a ranking of countries based on the index Si (see
Box III.1). From Malta, Romania and Bulgaria, in the top positions, to
France, Belgium, Austria, Germany and the UK at the bottom of the
ranking, the figure shows high variation across EU countries. This
indicator is plotted against GDP in Figure III.6 showing the inverse
relationship between country size and sectoral specialisation, which
makes small countries more fluctuating and vulnerable to sectoral
shocks, both domestic and international.
Malta and Luxembourg are evident examples of a high degree of
specialisation in small countries. At the other end of the spectrum large
countries, such as Germany, the UK and France, show a more balanced
sectoral distribution, which is closer to that of the EU as a whole. It is
worth mentioning some countries which appear as an exception to
this rule, in that, despite their relatively small size, they exhibit a more
balanced sectoral structure than other countries of similar size. Austria,
Belgium and Sweden show a relatively low degree of specialisation,
similar to that of large countries such as Germany and the UK.

FIGURe III.5: Ranking of countries by degree of specialisation

MT
RO
BG
EL
LV
PT
LU
LT
IE
SK
DK
FI
CZ
CY
HU
IT
PL
NL
SI
ES
SE
UK
DE
AT
BE
FR
0 2 4 6 8 10 12 14

Source: own calculations using Eurostat data.

FIGURe III.6: Sectoral specialisation v country size

14
Degree of specialisation

MT
12

10

8
RO
BG

6 EL
LV PT
LU
LT IE
SK
4 CY DK
FI CZ PL NL IT
HU ES
SI SE UK DE
BE
2 AT
FR

0 200 400 600 800 1 000 1 200 1 400 1 600 1 800 2 000 2 200 2 400 2 600
GDP PPP (billion)
Source: own calculations using Eurostat data.

Page 60
 Chapter III — Industrial structure in the EU

The index of specialisation of EU countries by sector, Sij, is presented Among the least specialised countries are France, Belgium, Austria
in Table III.2. In this table the total economy is broken down into 29 and Germany. Nevertheless, it is worth mentioning some sectors in
sectors, from agriculture to non-market services, and the index is which these countries show some specialisation. France is specialised
presented for the first and last years of available data for each country. in agriculture and fishing, real estate and business services and two
non-market services, namely public administration and defence and
The top five countries exhibiting a strong specialisation profile are Malta, health and social work. As regards Germany, its specialisation is in
Bulgaria, Romania, Greece and Latvia. The top position of Malta in the capital goods such as machinery and equipment n.e.c., electrical and
ranking in Figure III.5 is explained, to a large extent, by its very high level optical equipment, and transport equipment. Austria is specialised in
of specialisation in fishing. Other sectors that characterise the economy wood and wood products, hotels and restaurants, other non-metallic
of this country are other manufacturing, other services, and electrical mineral products, basic metals and fabricated metal products, and
and optical equipment. Bulgaria and Romania have in common their machinery and equipment n.e.c. Finally, Belgium’s specialisation is
specialisation in agriculture, textiles and refined petroleum products. in coke, refined petroleum products and nuclear fuel and chemicals,
Besides, Bulgaria is highly specialised in mining and Romania in food chemical products and man-made fibres.
and leather. The highest levels of specialisation in Greece relate to
fishing, refined petroleum and hotels and restaurants. As regards Latvia, The specialisation indices discussed above are calculated using as
this country exhibits high specialisation in wood and wood products. reference the EU as a whole, which includes the country for which the

F I G U R e I I I . 7 : S p e c i a l i s at i o n i n G e r m a ny, Fra n ce, U K a n d I t a l y

excluded in EU aggregate

3.0 6

IT excluded in EU aggregate
DC
DM

5
3.52.5
Standard deviation of the distribution
DE excluded indices

DK

3.0 DL
of the specialisation

4
2.52.0

2.0
DH
1.51.5 DJ
D 3 DB

O DG
K
1.0
DE
0.51.0 G
E 2 B
DN L N
J DD
DI
DF M DI DK
0 10000 20000 I DA
30000 40000 50000 60000 70000 80000 90000 DN
F
DD I A H DJ
Population (th.) F GM DF
0.5 DB 1
H DAE D
DE KL
A DG DH
NJ DL
DC C O
DM
C
B
0.0 0.5 1.0 1.5 2.0 2.5 3.0 0 1 2 3 4 5 6
DE included in EU aggregate IT included in EU aggregate
FR excluded in EU aggregate

7 4.5
UK excluded in EU aggregate

LN C
A B
4.0
6

M
3.5
F
5
O
G 3.0
DH
I
J
4 E DJ DA
2.5
H
DG
DID
DE
DM
2.0
3 DC DN
DK DB
DL J
DD
1.5
DF O
2 K DE
HGE
DA M
1.0 DN FIN
L DH
DDD DG
DL DM
1 DK
0.5 A DJ DI
DF
B DB
C DC

0 1 2 3 4 5 6 7 0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5

FR included in EU aggregate UK included in EU aggregate

Note: This figure compares the values of the specialisation index Si when the country is included in the EU aggregate (horizontal axis) and excluded from it (vertical
axis). Data refer to 2007 for France and Italy, 2006 for Germany and 2005 for the UK. The data points correspond to sector acronyms summarised in Annex A.1,
statistical nomenclatures.
Source: own calculations using Eurostat data.

Page 61
 Ta b l e I I I . 2 : S e c t o ra l s p e c i a l i s at i o n i n d ex 1 9 9 5 – 2 0 0 7

AT BE BG CY CZ DE DK EE ES FI FR EL HU
Code Sector 1995 2007 1995 2007 1998 2006 1995 2007 1995 2007 1995 2006 1995 2005 1995 2006 1995 2006 1995 2007 1999 2007 2000 2007 1995 2007

Page 62
A Agriculture and forestry 0.93 1.01 0.53 0.44 7.37 4.95 1.72 1.16 1.76 1.36 0.45 0.49 1.15 0.72 1.87 1.70 1.45 1.56 1.50 1.82 1.23 1.21 2.65 1.92 2.39 2.29
B Fishing 0.03 0.06 0.28 0.29 0.46 0.50 2.07 2.58 0.48 0.25 0.10 0.15 2.33 1.69 5.56 2.63 3.05 2.48 1.21 0.64 1.16 1.22 5.63 5.82 0.23 0.20
C Mining and quarrying 0.41 0.54 0.20 0.13 2.45 3.34 0.32 0.42 2.49 1.35 0.67 0.27 0.97 4.66 2.15 1.10 0.65 0.32 0.40 0.42 0.21 0.17 0.60 0.50 0.52 0.22
D Manufacturing 0.96 1.18 0.98 0.96 0.95 1.08 0.57 0.44 1.18 1.60 1.10 1.35 0.83 0.83 1.02 0.97 0.91 0.93 1.23 1.38 0.82 0.71 0.57 0.60 1.10 1.28
DA Food, drinks and tobacco 0.99 0.96 1.05 1.03 2.20 1.44 1.53 1.21 1.41 1.32 0.83 0.87 1.23 1.19 1.78 n.a. 1.23 1.02 1.01 0.78 0.91 0.84 1.22 1.41 1.66 1.14
DB Textiles and clothing 0.85 0.77 1.10 1.08 2.55 4.80 1.48 0.38 1.62 1.44 0.56 0.62 0.54 0.38 2.55 n.a. 1.08 0.98 0.54 0.51 0.75 0.66 1.62 1.13 1.55 0.81
DC Leather & footwear 0.67 0.58 0.29 0.23 3.02 1.76 1.49 0.33 1.18 0.66 0.34 0.34 0.27 0.07 1.18 n.a. 1.64 1.22 0.50 0.46 0.68 0.61 0.63 0.78 1.77 1.04
DD Wood and wood products 2.09 2.48 0.61 0.84 0.86 0.98 1.35 1.38 1.85 2.43 1.05 0.91 1.00 1.11 2.00 6.40 0.98 0.89 2.87 2.90 0.64 0.54 0.66 0.49 1.20 0.85

DE Pulp, paper & publishing 0.97 1.07 0.86 0.86 0.63 0.58 0.44 0.47 0.72 0.96 0.94 1.08 0.96 0.90 0.70 0.00 0.82 0.98 3.57 2.66 0.75 0.68 0.43 0.65 0.70 0.83
DF Refined petroleum 1.22 0.69 1.38 1.82 5.30 3.09 0.41 0.00 2.20 0.50 0.35 0.71 0.08 0.06 0.00 0.88 1.45 2.33 0.85 1.32 1.11 0.52 2.06 2.34 5.54 3.31
DG Chemicals 0.54 0.86 1.74 1.75 0.66 0.67 0.26 0.27 0.78 0.74 1.13 1.32 0.77 1.11 0.61 0.41 0.81 0.79 0.77 0.83 0.80 0.75 0.38 0.33 1.24 1.21
DH Rubber & plastics 0.85 1.05 0.79 0.86 0.42 0.69 0.48 0.32 0.52 2.45 1.20 1.40 0.81 0.92 0.29 0.92 0.89 0.86 0.81 0.94 0.91 0.88 0.42 0.31 0.90 1.25
Non-metallic mineral
DI 1.32 1.47 1.13 1.05 0.58 1.87 1.23 1.46 1.67 2.49 1.07 0.89 0.80 0.79 0.82 1.97 1.44 1.70 0.69 1.08 0.72 0.71 1.06 0.86 1.11 1.36
products
Basic metals and metal
DJ
EU industrial structure 2009 — Performance and competitiveness

1.08 1.50 1.12 1.11 0.78 1.33 0.28 0.35 1.80 1.95 1.10 1.33 0.68 0.63 0.36 0.00 0.86 1.09 1.06 1.35 0.90 0.80 0.43 0.63 0.89 0.90
products
DK Machinery n.e.c. 0.98 1.49 0.52 0.62 0.72 0.78 0.16 0.10 1.24 1.46 1.49 1.82 1.21 1.06 0.31 0.37 0.50 0.61 1.32 1.54 0.68 0.60 0.19 0.18 0.73 0.86
Electrical & optical
DL 1.05 1.20 0.73 0.56 0.29 0.57 0.07 0.07 0.77 1.77 1.31 1.76 0.70 0.84 0.39 n.a. 0.57 0.47 1.37 2.96 0.82 0.61 0.17 0.28 0.93 2.22
equipment
DM Transport equipment 0.50 0.88 0.97 0.70 0.31 0.23 0.05 0.04 0.66 2.14 1.47 2.08 0.36 0.22 0.53 n.a. 1.03 0.87 0.52 0.37 0.94 0.71 0.23 0.22 0.64 1.82
DN Other manufacturing 1.38 1.36 0.76 0.75 0.18 1.12 1.15 0.65 1.57 1.73 0.89 0.89 1.33 1.16 1.50 n.a. 0.95 1.22 0.79 0.75 0.74 0.68 0.79 0.57 0.74 0.63
Electricity, gas & water
E 1.23 1.34 1.21 1.00 2.54 1.86 0.90 0.94 2.27 1.88 0.93 1.08 1.05 0.95 1.47 1.64 1.23 0.87 1.19 1.04 0.82 0.79 1.16 1.20 1.42 1.35
supply
F Construction 1.33 1.09 0.86 0.82 0.87 0.94 1.39 1.41 1.10 0.97 1.13 0.62 0.78 0.90 1.12 1.36 1.27 1.95 0.74 0.99 0.91 1.00 1.26 1.08 0.78 0.72
G Wholesale and retail trade 1.13 1.10 1.04 1.17 0.54 0.81 1.15 1.15 0.95 1.12 0.93 0.92 1.13 1.05 1.06 1.38 0.98 0.92 0.83 0.91 0.90 0.89 1.26 1.43 0.97 1.06

H Hotels and restaurants 1.53 1.53 0.61 0.55 0.78 0.87 3.57 2.38 1.10 0.60 0.55 0.56 0.59 0.49 0.54 0.57 2.87 2.51 0.57 0.50 0.81 0.80 2.59 2.29 0.78 0.55
Transport and
I 1.10 0.90 1.20 1.17 1.22 1.79 1.18 1.05 1.52 1.47 0.83 0.82 1.11 1.21 1.64 1.77 1.16 0.96 1.42 1.40 0.90 0.91 1.12 1.41 1.31 1.17
communication
J Financial intermediation 1.12 0.97 1.27 1.01 0.51 0.91 1.06 1.45 0.63 0.66 0.91 0.85 1.02 0.96 0.43 0.66 1.08 0.84 0.84 0.52 0.94 0.88 1.13 0.86 1.03 0.83
Real estate and business
K 0.72 0.84 1.01 1.04 0.84 0.70 0.82 0.87 0.72 0.61 1.15 1.11 0.90 0.86 0.86 0.89 0.69 0.75 0.77 0.82 1.20 1.26 0.72 0.65 0.76 0.80
activities
L Public administration 1.03 0.92 1.05 1.17 0.93 1.11 1.31 1.63 0.80 0.90 0.99 0.94 1.01 0.99 0.80 0.84 0.94 0.96 0.81 0.76 1.25 1.21 1.31 1.40 1.05 1.37
M Education 1.11 1.03 1.35 1.28 0.66 0.72 0.94 1.13 0.80 0.82 0.86 0.87 1.10 1.09 1.20 0.85 0.95 0.95 1.06 0.93 1.12 1.06 1.01 1.09 1.02 1.01
N Health and social work 0.92 0.83 0.97 1.00 0.38 0.34 0.52 0.54 0.55 0.54 0.99 1.01 1.59 1.53 0.53 0.43 0.85 0.80 1.36 1.22 1.20 1.22 0.58 0.62 0.73 0.61
O Other services 1.14 1.00 0.64 0.64 0.38 0.55 0.96 0.97 0.68 0.88 1.27 1.19 1.20 1.06 0.78 0.87 0.85 0.95 1.04 0.93 0.84 0.92 1.03 1.26 1.00 1.13
Note: Bulgaria — data were not available before 1998.
Source: own calculations using Eurostat data.
 Ta b l e I I I . 2 : S e c t o ra l s p e c i a l i s at i o n i n d ex 1 9 9 5 – 2 0 0 7 ( co n t. )

IE IT LT LU LV MT NL PL PT RO SE SI SK UK
Code Sector 1995 2007 1995 2007 1995 2007 1995 2007 2000 2006 1996 2007 1995 2007 2003 2005 1995 2006 1999 2006 1995 2006 1995 2007 1995 2006 1995 2005
A Agriculture and forestry 2.35 0.83 1.12 1.09 4.05 2.52 0.37 0.24 1.84 1.97 0.97 0.97 1.20 1.13 2.11 2.49 1.92 1.48 6.24 5.13 1.02 0.82 1.57 1.35 2.10 2.06 0.66 0.50
B Fishing 4.14 2.74 1.52 1.66 0.54 1.01 0.00 0.00 4.28 1.52 2.18 12.56 0.96 0.51 0.40 0.28 3.69 3.68 0.06 0.07 0.31 0.36 0.18 0.15 0.04 0.06 0.62 0.42
C Mining and quarrying 0.85 0.53 0.59 0.43 0.43 0.51 0.17 0.15 0.13 0.39 0.33 0.34 3.04 3.61 2.15 3.03 0.61 0.49 3.25 1.77 0.40 0.72 1.11 0.53 1.18 0.49 2.86 2.80
D Manufacturing 1.47 1.28 1.08 1.07 0.97 1.11 0.67 0.50 0.70 0.69 1.04 0.99 0.85 0.80 1.00 1.08 0.90 0.84 1.08 1.39 1.10 1.15 1.25 1.37 1.30 1.40 1.06 0.79
DA Food, drinks and tobacco 2.42 2.02 0.87 0.85 2.45 1.80 0.49 0.33 1.66 1.09 1.19 1.14 1.29 1.25 1.35 1.63 0.96 1.15 2.73 3.19 0.74 0.71 1.14 0.84 1.39 0.92 1.14 0.98
DB Textiles and clothing 0.86 0.26 2.41 2.52 2.96 3.14 1.15 0.85 1.78 1.70 2.44 1.30 0.40 0.38 1.27 1.27 3.27 3.33 2.24 3.07 0.25 0.27 2.46 1.87 1.51 1.49 1.01 0.56
DC Leather & footwear 0.33 0.23 3.41 3.69 2.05 0.42 0.00 0.00 0.17 0.12 2.16 0.39 0.26 0.21 0.94 0.85 4.76 4.03 2.58 4.26 0.16 0.19 3.14 2.26 1.96 2.47 0.69 0.23
DD Wood and wood products 0.65 0.68 1.23 0.98 1.96 4.11 0.16 0.45 5.93 5.22 0.14 0.16 0.53 0.62 1.87 1.87 1.34 1.55 3.82 2.55 1.64 2.39 2.06 2.19 1.82 3.16 0.62 0.73

DE Pulp, paper & publishing 1.67 1.59 0.76 0.73 0.85 0.78 0.46 0.38 0.64 0.81 0.83 1.09 1.16 1.09 0.88 0.96 1.02 1.03 0.48 0.66 2.17 1.58 1.18 1.09 1.19 0.90 1.46 1.23
DF Refined petroleum 0.12 0.11 1.65 1.22 0.00 0.00 0.00 0.00 0.01 0.01 0.03 0.01 0.89 1.58 1.84 1.23 0.03 0.75 3.14 3.20 0.38 0.49 0.31 0.02 6.38 2.47 1.34 0.65
DG Chemicals 3.89 4.10 0.82 0.71 0.69 1.12 0.45 0.12 0.21 0.29 0.64 1.47 1.39 1.28 0.68 0.79 0.63 0.42 0.57 0.57 1.07 1.39 1.26 1.82 1.71 0.63 1.11 0.87
DH Rubber & plastics 0.78 0.50 1.05 0.96 0.20 1.41 2.29 1.03 0.25 0.53 1.15 1.31 0.61 0.51 1.31 1.46 0.61 0.68 0.47 1.07 0.67 0.71 1.47 1.87 1.15 1.38 1.11 0.96
Non-metallic mineral
DI 1.26 0.84 1.22 1.36 1.10 1.38 1.53 1.24 0.45 0.90 0.85 0.84 0.67 0.58 1.59 1.52 1.90 1.59 1.40 1.51 0.47 0.53 1.24 1.42 1.33 1.68 0.80 0.70
products
Basic metals and metal
DJ 0.38 0.34 1.26 1.37 0.20 0.51 1.42 1.34 0.52 0.55 0.27 0.24 0.75 0.64 0.85 0.97 0.65 0.63 0.76 0.88 1.25 1.20 1.28 1.79 1.49 2.00 0.92 0.62
products
DK Machinery n.e.c. 0.52 0.29 1.16 1.38 0.44 0.34 0.50 0.35 0.25 0.28 0.14 0.13 0.60 0.69 0.71 0.77 0.37 0.42 0.68 0.60 1.26 1.35 0.92 1.31 1.11 0.92 0.87 0.62
Electrical & optical
DL 2.57 2.42 0.87 0.94 0.42 0.50 0.20 0.26 0.21 0.25 2.19 2.36 0.64 0.40 0.75 0.70 0.52 0.41 0.50 0.91 1.10 1.35 1.22 1.34 0.67 1.41 1.17 0.67
equipment
DM Transport equipment 0.30 0.20 0.60 0.56 0.25 0.47 0.03 0.07 0.23 0.26 0.71 0.25 0.41 0.38 0.75 0.87 0.29 0.44 0.61 1.38 1.40 1.37 0.55 0.79 0.58 1.54 1.04 0.80
DN Other manufacturing 0.79 0.46 1.40 1.32 1.18 2.62 0.27 0.18 0.94 1.34 3.57 3.10 1.45 1.52 1.56 1.50 1.12 1.02 0.23 1.61 0.73 0.75 1.95 1.75 1.01 1.09 0.96 0.89
Electricity, gas & water
E 0.75 0.63 0.96 0.95 2.24 1.46 0.62 0.50 1.85 1.10 0.72 0.27 0.78 0.94 2.00 1.69 1.26 1.33 1.92 1.12 1.36 1.31 1.07 1.20 2.09 3.10 1.04 1.07
supply
F Construction 0.90 1.52 0.89 0.97 1.23 1.58 1.08 0.91 1.10 1.18 0.78 0.56 0.91 0.87 1.02 1.00 1.07 1.06 1.00 1.35 0.75 0.76 1.00 1.23 0.86 1.23 0.87 1.01
G Wholesale and retail trade 0.79 0.93 1.19 0.99 1.44 1.48 0.91 0.88 1.43 1.82 1.31 1.06 1.11 1.16 1.64 1.65 1.21 1.12 1.06 1.01 0.91 0.98 1.03 1.08 1.06 1.31 1.00 1.06

H Hotels and restaurants 1.00 0.80 1.30 1.31 0.58 0.44 0.95 0.64 0.40 0.65 2.57 1.86 0.72 0.64 0.41 0.42 1.42 1.54 0.98 0.88 0.51 0.51 0.87 0.86 0.61 0.50 0.98 1.03
Transport and
I 0.80 0.74 1.02 1.08 1.28 1.86 1.21 1.24 2.02 1.65 1.26 1.37 1.01 1.00 1.06 1.03 0.95 1.01 1.59 1.59 1.14 1.05 1.00 1.11 1.54 1.05 1.17 1.06
communication
J Financial intermediation 1.59 1.92 0.92 0.92 0.43 0.63 4.34 4.95 1.01 1.22 0.95 0.79 1.24 1.09 0.78 0.78 1.23 1.34 0.38 0.36 0.87 0.66 1.09 0.82 1.12 0.75 1.31 1.54
Real estate and business
K 0.49 0.78 0.93 1.00 0.55 0.53 0.91 0.89 0.67 0.67 0.62 0.74 0.94 0.99 0.65 0.63 0.72 0.66 0.55 0.58 0.99 0.98 0.76 0.78 0.62 0.61 0.99 1.12
activities
L Public administration 0.84 0.70 0.90 1.04 0.90 1.06 0.82 0.84 1.30 1.18 1.16 1.11 1.17 1.12 1.00 0.97 1.22 1.48 0.58 0.85 0.83 0.79 0.82 0.91 0.77 1.15 0.89 0.80
M Education 1.05 0.88 0.98 0.99 0.91 0.86 0.80 0.73 1.04 0.89 1.07 1.17 0.92 0.91 0.95 0.99 1.23 1.40 0.65 0.71 1.03 1.09 1.04 1.03 0.69 0.60 1.12 1.11
N Health and social work 0.96 1.02 0.76 0.82 0.42 0.44 0.61 0.70 0.52 0.41 0.71 0.84 1.18 1.25 0.64 0.52 0.77 0.97 0.34 0.39 1.49 1.54 0.82 0.66 0.54 0.41 1.01 1.06
O Other services 0.86 0.74 0.86 0.72 0.78 0.62 0.75 0.55 1.06 1.03 1.16 2.43 0.78 0.77 1.03 0.95 0.52 0.69 0.78 0.83 0.92 1.05 0.97 0.89 0.61 0.73 1.04 1.25

Note: Romania — data were not available before 1999.

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Chapter III — Industrial structure in the EU

Source: own calculations using Eurostat data.

EU industrial structure 2009 — Performance and competitiveness
specialisation index is being calculated. As this inclusion affects the
results, particularly for large countries, it is useful to look at the bias it
creates. Figure III.7 shows the specialisations in Germany, France, the UK
and Italy calculated in two ways, including and excluding the country in
the EU aggregate. Excluding the country from the EU aggregate used
as reference controls for the arithmetic effect mentioned in Box III.1
shows the specialisation of the country relative to other EU countries.
Figure III.7 compares the results of calculating the index in the two ways
mentioned. While the results are not significantly different when the
value of the specialisation index is close to 1, this is not the case for
sectors with high levels of specialisation. Two examples are leather in
Italy and mining in the UK. In the former the value of the index moves
from 3.7 to 6.0 when Italy is not included in the EU aggregate. As regards
mining in the UK, the value of the index changes from 2.8 to 4.3 when
the country is excluded from the EU aggregate used as reference.
Although the specialisation profile of the countries has not changed
substantially during the period considered, some examples of
significant changes can be mentioned. Apart from the change in Malta
as regards fishing activities, some other cases are the rise in Bulgaria’s
specialisation in textiles and clothing, and that of Lithuania in wood
and wood products. Also important are the increases in Romania’s
specialisation in leather and leather products, and Finland’s in electrical
and optical equipment. Another interesting case is the Czech Republic,
for which the specialisation profile changed between 1995 and
2007, by becoming specialised in rubber and plastics and transport
equipment, while other sectors, such as mining, leather and leather
products, coke and refined petroleum, lost weight in relative terms.
III.3 A tool to analyse sectors: from
nomenclatures to taxonomies
The raw data used to calculate the indicators in this publication
are presented in terms of statistical nomenclatures. Although the
nomenclatures depend on the type of data analysed, the Statistical
Classification of Economic Activities in the European Community
(NACE Rev. 1) plays a central role here to the extent that this is the basic
instrument to present data on economic activities and enterprises. It is
not the only nomenclature used, as other nomenclatures, such as the
Classification of Products by Activity (CPA) and Classification of Individual
Consumption by Purpose (COICOP), are used when the objective is to
analyse statistics on products. However, while the nomenclatures
mirror economic activities as they appear in economic reality, some
characteristics of sectors and countries are more visible when sectors
are grouped according to various criteria, which in general are related
to certain economic or technological categories. Accordingly we use
three taxonomies in this section to analyse the sectoral structure and
specialisation of EU countries. These taxonomies relate to technology,
labour skills and the growth of sectors. Despite the limitations stemming
from the use of taxonomies, these must be understood as an analytical
tool to facilitate the interpretation of the data.
Page 64
III.3.1 Labour skills
The first taxonomy refers to labour skills and it is presented in Box III.2. This
taxonomy is used to characterise the sectoral structure and specialisation
of EU countries.
Between 1995 and 2005 all EU countries shifted towards activities
characterised by higher labour skills (Table III.3). Looking at the high skills
category the only exception in this shift is Slovakia. Progress seems to be
stronger in Hungary, Cyprus, Luxembourg, Poland and Ireland where
the gain in the share of high labour skill activities is the highest, above
5 percentage points. This trend is even more pronounced when the high
and medium-high skills categories are merged, although in this case too
Slovakia appears to have lost some of its share in these industries. This
process of transformation has been accompanied by a generalised decrease
in the share of low labour skill industries, which is particularly apparent in
some new Member States. Latvia, Lithuania, Hungary and Poland are good
examples of this change, although others could be mentioned. Ireland is also
worth mentioning, as the share of low labour skill industries has decreased
by more than 10 percentage points. Relative to the US, the EU profile is
slightly biased towards low and medium-low skills, although the differences
are not large.
Country specialisation according to the skills taxonomy is presented in
Table III.4, which shows the value of the specialisation index (see Box III.1)
in 1995 and 2005 for the four skills groups. There is substantial variation
across both countries and skills categories. Some stylised facts that are
worth mentioning are as follows. The number of EU countries with strong
specialisation in highly skilled labour industries is low. Belgium, France and
Luxembourg are the three countries that exhibit the highest values in this
category. At the other extreme, in low skills, the number of countries with high
specialisation is more numerous. With the exception of Belgium, Luxembourg
and Sweden which exhibit specialisation coefficients well below 1 (actually
below 0.8), and Germany, Denmark, Italy, Latvia, the Netherlands and the UK,
which are in a more neutral position (the specialisation index is closer to 1),
a group of 7 countries has coefficients higher than 1.2, among which Czech
Republic, Greece, Spain, Malta and Slovakia take the first places in the low skill
category in 2005, with specialisation coefficients higher than 1.2.
The change over the period considered is in many cases minor, relative to
what can be observed at sector level. This can be explained by the fact that
each category averages out the change in several sectors. Nevertheless,
major changes can be observed in a few countries and sector categories;
the most significant changes are as follows: Cyprus, Hungary, Luxembourg
and Poland are examples of a shift from low to high labour skills. Indeed,
these four countries have considerably diminished their specialisation in
low skills, with a reinforcement of higher skills sectors. Some other countries
are examples of transformation, particularly as regards the decrease in the
specialisation in low skills: Estonia, Ireland, Lithuania, and Latvia, are examples
where the specialisation in low skills has decreased substantially, although
to a large extent this has been replaced by an increased specialisation in
low-intermediate skills.
 Chapter III — Industrial structure in the EU

Box III.2: Labour skills taxonomy

The taxonomy of labour skills is presented and discussed in Chapter II of O’Mahony and van Ark (2003), EU productivity and
competitiveness — An industry perspective, European Commission. This taxonomy concentrates on general labour force skills,
defined by educational attainment. The taxonomy distinguishes four groups ranging from high to low-skill intensive.

High skills: Mineral oil refining, coke and nuclear fuel, chemicals, office machinery, electronic valves and tubes, telecommunication
equipment, radio and television receivers.

High-intermediate: Scientific instruments, other instruments, other transport equipment, building and repairing of ships and
boats, aircraft and spacecraft, railroad equipment and transport equipment n.e.c.

Low-intermediate: Wood and products of wood and cork, pulp, paper and paper products, printing and publishing, fabricated
metal products, machinery and equipment n.e.c., insulated wire, other electrical machinery and apparatus n.e.c.

Low: Food, drink and tobacco, textiles, clothing, leather and footwear, rubber and plastics, non-metallic mineral products, basic
metals, motor vehicles, furniture, miscellaneous manufacturing, recycling.

Ta b l e I I I . 3 : S h a re o f i n d u s t r i e s by l a b o u r s k i l l s i n 1 9 9 5 a n d 2 0 0 5 ( % )

hs his lis ls

1995 2005 1995 2005 1995 2005 1995 2005

AT 34.0 35.9 14.6 14.4 32.0 30.8 19.4 18.9
BE 43.8 46.1 15.3 15.7 25.5 25.5 15.3 12.6
CY 34.5 40.2 12.3 13.2 27.1 26.2 26.1 20.3
CZ 28.8 29.0 15.6 15.0 30.7 32.7 24.8 23.3
DE 39.3 41.8 14.7 17.0 28.9 25.0 17.1 16.2
DK 36.3 37.6 17.9 18.7 28.7 27.7 17.2 16.1
EE 31.6 33.0 14.4 15.3 30.6 33.4 23.4 18.3
ES 32.6 33.4 13.2 13.2 27.2 30.4 27.0 22.9
FI 33.2 36.5 18.1 18.4 31.7 31.1 17.0 14.0
FR 43.2 46.6 15.9 16.1 24.8 23.2 16.2 14.0
EL 34.1 34.2 12.3 13.3 25.4 28.3 28.2 24.2
HU 35.7 41.8 12.7 13.5 25.6 25.6 25.9 19.1
IE 39.7 43.5 13.6 15.7 22.6 26.4 24.1 14.5
IT 35.9 38.6 12.5 15.4 30.5 28.8 21.1 17.2
LT 26.3 27.6 12.5 14.3 33.0 37.2 28.1 20.9
LU 49.3 55.0 11.7 14.1 23.9 21.5 15.1 9.5
LV 28.4 31.9 20.0 16.7 26.1 35.0 25.5 16.4
MT 32.7 36.5 15.9 16.4 26.0 23.4 25.5 23.7
NL 39.6 41.7 15.1 16.8 26.9 25.4 18.4 16.1
PL 26.7 32.2 10.9 12.6 35.0 33.9 27.5 21.3
PT 35.8 38.7 13.1 15.2 27.9 26.8 23.2 19.3
SE 37.0 39.4 19.1 20.3 28.4 26.9 15.5 13.4
SI 34.3 37.2 12.6 13.6 29.9 30.6 23.2 18.7
SK 31.6 31.0 14.5 12.5 31.6 35.7 22.3 20.8
UK 37.8 41.6 16.2 16.7 26.7 25.3 19.3 16.4
EU-25 37.8 39.9 14.7 15.8 28.0 27.0 19.5 17.3
Note: Bulgaria and Romania are not included for lack of data. hs: high skills; his: high-intermediate skills; lis: low-intermediate skills; ls: low skills.
Source: own calculations using EUKLEMS data.

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EU industrial structure 2009 — Performance and competitiveness

Ta b l e I I I . 4 : Co u n t r y s p e c i a l i s at i o n by l a b o u r s k i l l s i n 1 9 9 5 a n d 2 0 0 5

hs his lis ls

1995 2005 1995 2005 1995 2005 1995 2005

AT 0.90 0.90 0.99 0.91 1.14 1.14 0.99 1.09
BE 1.16 1.16 1.04 1.00 0.91 0.94 0.79 0.73
CY 0.91 1.01 0.84 0.84 0.97 0.97 1.34 1.18
CZ 0.76 0.73 1.06 0.95 1.10 1.21 1.27 1.35
DE 1.04 1.05 1.00 1.08 1.03 0.93 0.88 0.94
DK 0.96 0.94 1.22 1.18 1.02 1.02 0.88 0.93
EE 0.84 0.83 0.98 0.97 1.09 1.24 1.20 1.06
ES 0.86 0.84 0.90 0.84 0.97 1.12 1.39 1.33
FI 0.88 0.91 1.23 1.17 1.13 1.15 0.87 0.81
FR 1.14 1.17 1.08 1.02 0.88 0.86 0.83 0.81
EL 0.90 0.86 0.83 0.85 0.91 1.05 1.45 1.40
HU 0.95 1.05 0.86 0.86 0.91 0.95 1.33 1.11
IE 1.05 1.09 0.92 0.99 0.81 0.98 1.23 0.84
IT 0.95 0.97 0.85 0.98 1.09 1.06 1.08 1.00
LT 0.70 0.69 0.85 0.91 1.18 1.38 1.44 1.21
LU 1.30 1.38 0.79 0.89 0.85 0.79 0.78 0.55
LV 0.75 0.80 1.36 1.06 0.93 1.29 1.31 0.95
MT 0.87 0.91 1.08 1.04 0.93 0.87 1.30 1.37
NL 1.05 1.05 1.03 1.06 0.96 0.94 0.94 0.93
PL 0.71 0.81 0.74 0.80 1.25 1.26 1.41 1.23
PT 0.95 0.97 0.89 0.96 0.99 0.99 1.19 1.12
SE 0.98 0.99 1.30 1.29 1.01 1.00 0.79 0.78
SI 0.91 0.93 0.85 0.86 1.07 1.13 1.19 1.08
SK 0.84 0.78 0.98 0.79 1.13 1.32 1.14 1.20
UK 1.00 1.04 1.10 1.06 0.95 0.93 0.99 0.95
EU-25 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00
Note: Bulgaria and Romania are not included for lack of data. hs: high skills; his: high-intermediate skills; lis: low-intermediate skills; ls: low skills.
Source: own calculations using EUKLEMS data.

III.3.2 Technology
As regards technology categories, developments in EU countries
are mixed (Table III.5), particularly when they are compared to
developments in labour skills (Table III.3). For the EU as a whole the
trend is towards a slight increase in high, medium-high and medium-
low technology industries, accompanied by a decrease in the share
of low-technology industries. At country level, the situation is more
heterogeneous, although lack of data does not allow assessing
completely the situation in a few countries. It is worth underlining that
the technology taxonomy refers uniquely to manufacturing sectors
and the shares and specialisation indexes are therefore calculated
using total manufacturing as reference. In four countries, namely Malta
(24.8 %), Finland (22.4 %), Ireland (24.6 %) and Sweden (20.9 %), high-
technology activities account for more than 20 % of manufacturing.
Besides, the Nordic countries comprising Finland (22.4 %), Sweden
(20.9 %), Denmark (16.8 %) as well as Hungary (18.2 %) have seen their
share of high-technology manufacturing activities rise substantially.
In general, nearly all countries show a decrease in the share of low-
technology industries, and this decrease is in some cases very
significant. Lithuania, Hungary and Finland are three examples worth
mentioning.

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 Chapter III — Industrial structure in the EU

Ta b l e I I I . 5 : S h a re o f i n d u s t r i e s by t e c h n o l o g y c at e g o r i e s i n 1 9 9 5 a n d 2 0 0 5 ( % )

ht mht mlt lt

1995 2005 1995 2005 1995 2005 1995 2005

AT 9.9 10.1 24.4 29.0 27.9 29.6 37.7 31.3
BE 8.6 9.8 33.1 31.2 27.0 29.1 31.3 29.9
CY 1.7 5.7 8.5 10.7 23.9 7.7 65.8 75.9
CZ 4.9 6.3 26.1 34.9 32.3 31.0 36.8 27.8
DE 8.7 11.8 42.5 44.7 23.7 22.5 25.1 21.0
DK 11.0 16.8 25.7 25.2 22.2 21.1 41.0 36.9
EE 5.2 4.7 15.9 14.6 16.6 19.5 62.3 61.1
ES 7.7 6.1 24.7 26.1 29.6 32.8 38.0 35.1
FI 10.8 22.4 21.8 21.8 20.4 22.9 47.0 32.9
FR 13.2 13.5 25.6 26.6 26.5 27.9 34.7 32.0
EL 4.3 5.4 11.1 10.2 22.6 33.6 61.9 50.9
HU 10.6 18.2 23.2 34.6 27.8 24.1 38.4 23.1
IE n.a. 24.6 n.a. 33.3 10.3 7.2 37.2 34.9
IT 8.1 8.9 25.2 26.6 28.3 29.8 38.3 34.7
LT 5.6 5.4 12.2 12.1 16.6 31.8 65.6 50.8
LU n.a. n.a. n.a. n.a. n.a. 47.9 26.1 32.0
LV n.a. 4.1 n.a. 9.3 n.a. 19.0 74.3 67.6
MT n.a. 24.8 n.a. 10.7 n.a. 17.9 52.6 46.6
NL 9.3 6.9 26.9 27.6 22.1 25.2 41.7 40.2
PL 5.8 5.2 22.0 23.1 27.4 33.3 44.8 38.4
PT 5.7 5.2 15.1 16.7 23.7 23.9 55.4 54.2
SE 15.1 20.9 30.5 30.9 21.0 20.8 33.4 27.5
SI 10.2 12.4 23.4 28.4 24.3 28.5 42.1 30.8
SK n.a. 5.2 n.a. 26.5 n.a. 38.6 35.6 29.7
UK 14.5 16.4 26.5 24.6 22.9 21.4 36.1 37.7
EU-25 10.1 11.4 29.9 30.7 25.3 26.2 34.7 31.8
Note: Bulgaria and Romania are not included for lack of data. ht: high technology; mht: medium-high technology; mlt: medium-low technology; lt: low technology.
Source: own calculations using EUKLEMS data.

EU countries’ specialisation by technology level also shows a mixed clearly specialised in intermediate technology categories. Examples
picture (Table III.6), from which some stylised facts can be extracted. are the Czech Republic (medium-high and medium-low), Germany
A group of countries — Denmark, Finland, France, Hungary, Ireland, (medium-high) and Spain (medium-low). Austria and Belgium exhibit
Malta, Sweden and the UK — exhibit a clear specialisation in high-tech a more balanced technology-specialisation profile.
industries. At the other extreme is a group of countries specialised in
low-technology industries: Cyprus, Estonia, Greece, Lithuania, Latvia,
Malta and Portugal. While some countries exhibit a clear profile with
specialisation in one single technology category — of which Finland
in 2005 is a good example — some other countries present a mixed
dual pattern with specialisation in both high and low-technology
industries: Denmark, Malta and the UK. Finally, some countries are

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EU industrial structure 2009 — Performance and competitiveness

Ta b l e I I I . 6 : Co u n t r y s p e c i a l i s at i o n by t e c h n o l o g y c at e g o r i e s

ht mht mlt lt

1995 2005 1995 2005 1995 2005 1995 2005

AT 0.98 0.89 0.82 0.95 1.11 1.13 1.09 0.99
BE 0.85 0.86 1.11 1.02 1.07 1.11 0.90 0.94
CY 0.17 0.50 0.29 0.35 0.95 0.29 1.89 2.39
CZ 0.48 0.56 0.87 1.14 1.28 1.18 1.06 0.87
DE 0.86 1.04 1.42 1.46 0.94 0.86 0.72 0.66
DK 1.09 1.48 0.86 0.82 0.88 0.80 1.18 1.16
EE 0.51 0.42 0.53 0.48 0.66 0.75 1.79 1.92
ES 0.76 0.53 0.83 0.85 1.17 1.25 1.09 1.10
FI 1.07 1.97 0.73 0.71 0.81 0.87 1.35 1.03
FR 1.31 1.19 0.86 0.87 1.05 1.07 1.00 1.01
EL 0.42 0.47 0.37 0.33 0.90 1.28 1.78 1.60
HU 1.05 1.60 0.78 1.13 1.10 0.92 1.11 0.73
IE n.a. 2.16 n.a. 1.09 0.41 0.28 1.07 1.10
IT 0.80 0.78 0.84 0.87 1.12 1.14 1.10 1.09
LT 0.55 0.48 0.41 0.39 0.66 1.21 1.89 1.60
LU n.a. n.a. n.a. n.a. n.a. 1.83 0.75 1.01
LV n.a. 0.36 n.a. 0.30 n.a. 0.72 2.14 2.13
MT n.a. 2.18 n.a. 0.35 n.a. 0.68 1.51 1.47
NL 0.92 0.61 0.90 0.90 0.87 0.96 1.20 1.27
PL 0.57 0.46 0.74 0.75 1.09 1.27 1.29 1.21
PT 0.57 0.46 0.51 0.55 0.94 0.91 1.59 1.71
SE 1.49 1.84 1.02 1.01 0.83 0.79 0.96 0.86
SI 1.01 1.09 0.78 0.93 0.96 1.09 1.21 0.97
SK n.a. 0.46 n.a. 0.86 n.a. 1.47 1.03 0.93
UK 1.43 1.44 0.89 0.80 0.91 0.82 1.04 1.19
EU-25 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00
Note: Bulgaria and Romania are not included for lack of data. ht: high technology; mht: medium-high technology; mlt: medium-low technology; lt: low technology.
Source: own calculations using EUKLEMS data.

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 Chapter III — Industrial structure in the EU

Box III.3: Technology taxonomy

The Organisation for Economic Cooperation and Development (OECD) classification of sectors by technological level uses R&D
intensity as the criterion18. The taxonomy distinguishes four groups of sectors as follows.

High-technology manufactures: Pharmaceuticals; office, accounting and computing machinery; radio, television and
communication equipment; medical, precision and optical instruments; aircraft and spacecraft.

Medium-high technology manufactures: Chemicals excluding pharmaceuticals; machinery and equipment n.e.c.; electrical
machinery and apparatus, n.e.c.; motor vehicles, trailers and semi-trailers; railway equipment and transport equipment n.e.c.

Medium-low technology manufactures: Coke, refined petroleum products and nuclear fuel; rubber and plastic products; other
non-metallic mineral products; basic metals; fabricated metal products; building and repairing of ships and boats.

Low-technology manufactures: Food products, beverages and tobacco; textiles, textile products, leather and footwear; wood and
products of wood and cork; pulp, paper, paper products, printing and publishing; manufacturing n.e.c.; recycling.

18 For more information, see OECD (1997).

III.3.3 Growth intensity
While the two previous sections refer to the technology of the sectors,
in this section the criterion for grouping sectors is long-term growth
in the EU. More precisely, sectors are classified into five groups: high,
medium-high, medium-low, low, and negative growth according to the
average annual growth rate in the EU from 1995 to 2007. The average
growth of the whole economy or of the corresponding group of sectors
(e.g. manufacturing), splits sectors into two main groups, namely
above average and below average growth. The group of negative
growth sectors is naturally defined by the sign of their growth rate.
The two other groups, above and below the average, are subsequently
split into two subgroups using the median of the distribution of the
growth rates. This taxonomy is particularly interesting to analyse the
pattern of specialisation of EU countries.
The fastest growing sectors are a mix of manufacturing sectors
(electrical and optical equipment, chemicals) and services (transport,
storage and communication, financial intermediation, real estate,
renting and business activities). Within the market economy, all the
negatively or low growing sectors are from the primary or secondary
sectors (agriculture, fishing and manufacturing). Where some of the
fast growing sectors, such as retail and wholesale, also have a high
GDP share, it means that they contribute more significantly to GDP
growth.

This exercise is carried out for three levels of sectoral detail. Table III.7
shows the growth groups based on sections of NACE Rev. 1, and covers
a range of sectors from agriculture to non-market services. Two tables
which show the two other growth groups created for more detailed
definitions of sectors are presented in the companion website. These
cover only manufacturing at the 2- and 3-digit level of NACE Rev. 1 and
encompass 22 and 90 sectors respectively.

Growth is calculated over the 1995–2007 period for all sectors, and
1995–2008 for manufacturing sectors. Therefore this taxonomy is
based on growth over the reference period and says nothing about
potential growth in the future. The aim is to apply it to the analysis
of growth in EU countries from a sectoral perspective over the same
periods of time.

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EU industrial structure 2009 — Performance and competitiveness

Ta b l e I I I . 7 : S e c t o r a l g r o w t h t a xo n o my i n 1 9 9 5 – 2 0 0 7 ( s u b s e c t i o n s o f n a c e R e v. 1 )

Group Code Sector 1995–2007

DL Electrical and optical equipment 6.5
DG Chemicals 4.2
High I Transport and communication 4.0
J Financial intermediation 3.5
K Real estate and business activities 3.4
DM Transport equipment 3.0
DH Rubber and plastics 2.9
Medium-high DJ Basic metals and metal products 2.7
G Wholesale and retail trade 2.6
DK Machinery n.e.c. 2.5
Average growth TOTAL TOTAL 2.5
H Hotels and restaurants 2.3
O Other services 2.3
N Health and social work 2.1
Medium-low DI Non-metallic mineral products 1.9
DN Other manufacturing 1.7
P Activities of households 1.7
DE Pulp, paper and publishing 1.5
DD Wood and wood products 1.4
F Construction 1.3
DA Food, drinks and tobacco 1.1
M Education 0.9
Low
L Public administration 0.9
A Agriculture and forestry 0.7
E Electricity, gas and water supply 0.5
DF Refined petroleum 0.4
DB Textiles and clothing –1.2
B Fishing –1.7
Negative
DC Leather and footwear –3.4
C Mining and quarrying –3.9

Note: The figures in this table refer to value added growth in constant prices.
Source: own calculations using Eurostat data.

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 Chapter III — Industrial structure in the EU

The application of the growth taxonomy to the sectoral structure of
EU countries sheds light on another characteristic of the EU countries’
growth profile. Table III.8 presents the share of the different categories
of sectors in the country’s GDP. A first reading of the table suggests
some basic conclusions. When looking at the share of negative growth
sectors, a few countries exhibit, in 2007, shares well above the EU
average (1.6 %). These countries are, in descending order, Bulgaria,
Denmark, and Romania. Other countries follow them closely, such as
Poland and the Netherlands. As regards developments over time, some
contrasting cases can be spotted. Among the three cases mentioned
above, it is worth mentioning Bulgaria and Denmark, for which the
share of negative growth sectors increased between 1995 and 2007,
while in Romania this share decreased.
A number of countries have a very small share of negative growth
sectors: Belgium, Cyprus, Germany, Luxembourg, Hungary, Ireland and
Sweden. Furthermore, some countries are worth mentioning because
they exhibit a significant decrease in this share. This is the case for
Cyprus, Czech Republic, Hungary and Slovenia.
While focusing on negative growth sectors emphasises the most
negative component for the growth of countries, the share of these
sectors is still relatively low. It is more significant to look at both negative
and low-growth sectors together, as these account for a significant part
of GDP (25.9 % in the EU in 2007) and can exert a substantial negative
influence on the general performance of the country. Five countries
can be mentioned in this respect, namely Romania (41.2 %), Bulgaria
(39.4 %), Lithuania (36.2 %), Portugal (34.7 %) and Poland (34.3 %). It
is encouraging to see that in all these countries the share decreased
between 1995 and 2007, but nevertheless it remains high.
High-growth sectors also point to some interesting conclusions.
When looking at high-growth sectors, Belgium, France, Ireland,
Luxembourg and the UK are the countries with the highest share in
the most dynamic sectors. Germany follows this group very closely.
By combining high and medium-high growth sectors we get a picture
that is not very different. Indeed, the six countries mentioned exhibit
high shares in these sectors, as do the Czech Republic, Latvia and
Slovenia.

T a b l e I I I . 8 : S h a r e i n gdp o f s e c t o r s b y g r o w t h i n t e n s i t y i n 1 9 9 5 a n d 2 0 0 7 ( % )

High Medium-high Medium-low Low Negative

1995 2007 1995 2007 1995 2007 1995 2007 1995 2007
AT 30.5 34.4 20.0 21.4 18.2 17.6 29.9 25.7 1.4 1.0
BE 39.2 41.5 19.0 19.1 13.7 13.8 26.7 24.9 1.4 0.8
BG 30.0 35.5 11.0 15.0 7.8 10.1 46.2 33.5 4.9 6.0
CY 29.7 35.7 15.1 14.4 19.3 17.4 33.5 31.8 2.3 0.8
CZ 30.7 32.4 20.6 26.1 13.1 13.3 31.4 26.1 4.2 2.1
DE 37.5 41.0 21.2 22.2 16.1 16.5 23.9 19.6 1.3 0.6
DK 33.1 36.3 19.2 16.6 19.7 19.2 26.3 23.6 1.7 4.3
ES 29.6 30.3 17.8 16.7 20.6 21.0 29.7 30.8 2.4 1.2
FI 33.4 38.3 17.2 18.1 21.9 18.6 26.4 24.3 1.1 0.7
FR 39.3 42.2 17.0 15.1 16.3 16.8 26.2 25.2 1.1 0.7
EL 29.6 30.4 17.1 18.6 18.2 18.5 32.6 30.9 2.6 1.6
HU 33.3 37.3 17.4 20.2 13.3 12.8 33.5 28.9 2.5 0.8
IE 37.1 45.3 12.8 12.6 16.9 15.5 31.1 25.7 2.1 0.8
IT 33.1 38.3 22.0 19.0 15.9 16.2 25.0 24.1 3.9 2.4
LT 23.8 31.4 19.0 20.6 10.6 10.7 41.6 33.8 3.9 2.3
LU 48.9 56.7 17.8 14.8 12.1 10.9 19.8 17.0 1.3 0.6
LV 33.9 34.2 19.3 23.6 10.9 11.6 33.8 29.2 2.1 1.5
MT 31.8 37.8 18.7 14.3 20.9 25.0 25.2 20.9 3.5 2.0
NL 35.5 38.3 17.7 17.1 16.5 16.9 26.9 24.4 3.3 3.3
PL n.a. 27.7 n.a. 25.2 n.a. 12.9 n.a. 30.7 n.a. 3.6
PT 28.9 30.6 17.8 16.5 15.8 18.1 32.2 31.5 5.3 3.2
RO 26.6 28.9 17.5 18.2 10.3 11.8 40.7 37.3 5.0 3.9
SE 35.8 37.8 20.3 19.8 19.2 19.6 24.0 22.0 0.7 0.8
SI 32.2 35.7 20.0 22.0 16.0 14.3 27.6 26.2 4.2 1.8
SK 33.2 29.1 21.2 25.6 11.6 10.5 31.1 32.2 3.0 1.6
UK 37.1 41.5 18.5 16.2 16.8 18.0 23.8 21.6 3.7 2.6
EU-27 35.3 38.8 19.5 18.3 16.7 17.0 26.2 24.3 2.2 1.6
Note: Estonia is not included for lack of data. Data for Bulgaria, France and Latvia refer to 1998, 1999 and 2000 respectively, rather than to 1995. For Poland the data
presented refer to 2004.

Source: own calculations using Eurostat data.

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EU industrial structure 2009 — Performance and competitiveness

As regards specialisation (Table III.9) one small group of countries
is specialised in high-growth sectors, among which Luxembourg
and Ireland take an outstanding place. Besides the high level of
specialisation in 2007, they also exhibit a substantial increase between
1995 and 2007. The other countries in this group are Belgium, Germany
and France, although their degree of specialisation is weaker, with a
coefficient below 1.1. In any case, Belgium and, particularly, Germany
are worth mentioning as they are also specialised in medium-high
growth sectors.
There is a group of a few countries that are clearly specialised in
negative and low-growth sectors. Bulgaria, Italy, the Netherlands,
Portugal, Romania and the UK exhibit high specialisation coefficients
in these groups of sectors. When interpreting the specialisation index
it is worth underlining that the share of negative growth sectors is for
all countries very low. As the specialisation index is calculated relative
to the EU average, a high degree of specialisation in negative growth
sectors does not imply a high share of these sectors in the economy
of the country.
A group of new Member States have specialised in ‘medium-high’
growing sectors, the most noticeable being the Czech Republic, Latvia,
Poland, Slovenia, Slovakia, and, to a lesser extent, Hungary. However,
these countries present a mixed specialisation profile, as they also
appear specialised in negative and low-growth sectors. In the case
of the Netherlands and Poland the specialisation in negative growth
sectors has even increased over time.
Some countries present a more balanced position, such as Austria,
Belgium, France, Finland, Sweden and the UK, although the UK has a
high coefficient in negative growth sectors. Cyprus, Denmark, Spain
and Greece are more biased towards low-growth sectors.

Ta b l e I I I . 9 : S p e c i a l i s at i o n i n d ex by g row t h i n t e n s i t y i n 1 9 9 5 a n d 2 0 0 7

High Medium-high Medium-low Low Negative

1995 2007 1995 2007 1995 2007 1995 2007 1995 2007
AT 0.86 0.89 1.03 1.17 1.09 1.03 1.14 1.06 0.62 0.60
BE 1.11 1.07 0.98 1.04 0.82 0.81 1.02 1.03 0.63 0.48
BG 0.83 0.92 0.56 0.81 0.46 0.59 1.84 1.38 2.45 3.59
CY 0.84 0.92 0.78 0.79 1.16 1.02 1.28 1.31 1.05 0.50
CZ 0.87 0.83 1.05 1.43 0.79 0.78 1.20 1.08 1.87 1.28
DE 1.06 1.07 1.09 1.21 0.96 0.96 0.91 0.81 0.56 0.39
DK 0.94 0.95 0.98 0.91 1.18 1.11 1.00 0.97 0.77 2.57
ES 0.84 0.79 0.91 0.90 1.24 1.22 1.13 1.27 1.06 0.72
FI 0.94 0.99 0.88 0.99 1.31 1.09 1.01 1.00 0.51 0.46
FR 1.06 1.09 0.88 0.83 0.96 0.99 1.06 1.04 0.55 0.43
EL 0.79 0.78 0.89 1.02 1.06 1.09 1.34 1.27 1.24 0.99
HU 0.94 0.96 0.89 1.10 0.80 0.75 1.28 1.19 1.10 0.49
IE 1.05 1.17 0.65 0.69 1.01 0.91 1.19 1.06 0.96 0.51
IT 0.94 0.99 1.13 1.04 0.96 0.95 0.95 0.99 1.74 1.47
LU 1.38 1.46 0.91 0.81 0.73 0.64 0.76 0.70 0.60 0.38
LV 0.91 0.89 1.00 1.28 0.64 0.67 1.39 1.21 0.99 0.88
MT 0.89 0.97 0.97 0.78 1.24 1.47 0.97 0.86 1.56 1.24
NL 1.01 0.99 0.91 0.94 0.99 0.99 1.03 1.00 1.46 2.06
PL 0.75 0.73 1.34 1.39 0.81 0.74 1.23 1.24 1.58 2.08
PT 0.82 0.80 0.91 0.90 0.95 1.05 1.23 1.30 2.38 1.90
RO 0.72 0.75 0.91 0.99 0.60 0.68 1.65 1.54 2.56 2.34
SE 1.01 0.98 1.04 1.07 1.15 1.14 0.92 0.91 0.30 0.51
SI 0.91 0.92 1.02 1.20 0.96 0.84 1.05 1.08 1.88 1.12
SK 0.94 0.83 1.08 1.27 0.69 0.69 1.18 1.26 1.35 1.29
UK 1.05 1.08 0.95 0.88 1.01 1.04 0.91 0.89 1.63 1.58
Note: Estonia is not included for lack of data. Data for Bulgaria, France and Latvia refer to 1998, 1999 and 2000 respectively, rather than to 1995. For Poland the data
presented refer to 2004.
Source: own calculations using Eurostat data.

III.4 Value added by enterprise size
categories
The distribution of economic activity according to the size of the enterprises
provides a measure of the degree of concentration and of the share of large
and small enterprises in the economy. This is of interest to understand
sectoral performance, to analyse competitiveness, and for policy analysis.
This distribution reflects certain characteristics of sectors and, simultaneously,
influences performance and competitiveness. Sectoral technology (e.g.
economies of scale) and market size are some of the factors explaining the
enterprise-size structure of the sector, which, in turn, determines market
power and sectoral performance and competitiveness. It is clear that the
resilience or vulnerability of sectors and enterprises to certain market shocks
is affected by the size of enterprises, and also that the latter plays a crucial
role in the development of new activities, innovation, and development of
new products. For these reasons, among others, it is important to bear in
mind the size of enterprises in sectoral analysis, and to incorporate it into the
policy formulation of industrial policy.

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 Chapter III — Industrial structure in the EU

The distribution of sectoral value added by enterprise size is shown in
Figure III.8. To aid interpretation, sectors in the graph are ordered according
to the distribution of value added by size classes: sectors on the left-hand
side of the graph are those with highest share of large enterprises in the
total value added of the sector. Moving from left to right, the weight of
large enterprises becomes smaller, and the share of small and medium-
sized enterprises increases progressively. The distribution of value added in
manufacturing, market services and the whole economy (more precisely the
aggregate of manufacturing, utilities and market services) is presented on
the right-hand side of the graph. Owing to lack of data, financial services are
not included in the graph.
The units underlying these distributions are enterprises. The concentration
of value added in large enterprises characteristic of some of the sectors
does not necessarily imply that these industries apply economies of scale
in production, since enterprises, and more particularly the largest ones,
may operate several small plants. Economies of scale can relate to different
functions of the enterprise, such as production, marketing, financing, and
R&D. The first is directly linked to the activity carried out in plants, while
the others are more linked to the enterprise level. It is nevertheless worth
mentioning that some of the sectors with the highest share of large firms
are known to implement economies of scale in production. Examples are
office machinery, motor vehicles, electronic valves and tubes, chemicals, and
aircraft and spacecraft.
The figure shows the high variation in the shape of the distribution across
sectors. Six sectors, from tobacco to air transport, exhibit a high presence of
large firms, with at least 80 % of value added generated by large enterprises.
These sectors feature, among other things, sizeable economies of scale. With
the exception of communications and air transport, which are among the
top six sectors mentioned, all sectors dominated by large enterprises (more
than 60 % of the value added of the sector) are manufacturing, extractive
industries and utilities.
The sectors located on the right half of the graph exhibit a different pattern,
which is based on the predominance of the various categories of small and
medium-sized enterprises. All services activities, with the exception of the
two mentioned above, are in this area of the graph, along with a series of
manufacturing sectors. In some cases, such as hotels and catering or renting
of machinery and construction, the largest share corresponds to the smallest
enterprises (less than 10 persons employed). The manufacturing sectors
with the highest share of small and medium-sized enterprises are wood and
wood products, metal products, leather and footwear, clothing, furniture
and other manufacturing, and textiles.
Finally, while Figure III.8 is based on the distribution for the EU as a whole,
there is substantial variation across countries and sub-sectors, although lack
of data makes it difficult to examine this issue (see Box III.4).

F igur e I I I . 8 : D i s t r i b u t i o n o f v a l u e a d d e d b y e n t e r p r i s e s i z e i n 2 0 0 4 ( % )

1–9 10–19 20–49 50–249 250 or more

Tobacco
Communications
Motor vehicles
Mineral oil refining and nuclear fuel
Other transport equiment
Air transport
Radio and TV equip.; electronic comp.
Electricity, gas and water supply
Chemicals
Basic metals
Office machinery
Electrical machinery
Pulp, paper and paper products
Supporting transport activities
Food and drink
Research and development
Machinery and equipment n.e.c.
Non-metallic mineral products
Scientific and other instruments
Water transport
Rubber and plastic
Retail trade
Computer and related activities
Inland transport
Printing and publishing
Other busines activities
Textiles
Furniture; other manufacturing
Renting of machinery equipment
Hotels and restaurants
Clothing
Wholesale trade
Fabricated metal products
Wood and wood products
Sale and repair of motor vehicles
Leather and footwear
Recycling
Construction
Real estate activities
MANUFACTURING
SERVICES
TOTAL ECONOMY

0 10 20 30 40 50 60 70 80 90 100
Source: own calculations using Eurostat data.

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EU industrial structure 2009 — Performance and competitiveness

Box III.4: Distribution of value added by enterprise size classes — Variation

across sub-sectors and countries
Enterprises in different size categories (particularly those in large and small categories) may mask economic activities of a
substantially different nature. These enterprises may serve different markets (local, regional, national and international), use
different technology (capital or labour intensive), produce products of different nature (large-scale production v customer-tailored
products), and have different forms of organisation, management and financial structure. This emphasises the value of looking
at enterprises in various size categories as substantially distinct entities that require particular attention in terms of analysis,
diagnosis, and policy design. Indeed, the level of industrial aggregation presented in Figure III.8 masks significant variation within
some of the sectors presented. This variation can take place across sub-sectors and across countries, two examples of which are
presented in Figure III.9 and Figure III.10, which refer to the chemicals industry in the EU, which is split into five sub-sectors, and to
the preparation and spinning of textile fibres, whose variation is shown across a sample of countries.

F igur e I I I . 9 : C h e m i c a l s — d i s t r i b u t i o n o f v a l u e a d d e d b y s u b - s e c t o r i n t h e E U i n 2 0 0 4 ( % )

100

90 1–9 10–19 50–249

20–49 250 or more
80

70

60

50

40

30

20

10

0
Chemicals Basic chemicals Pharmaceuticals, Soap and Other chemical
medicinal detergents, products
chemicals cleaning
and botanical and polishing
products preparations,
perfumes and toilet
preparations
Note: Firm-size categories are defined in terms of the number of persons employed. The distribution is in %.
Source: own calculations using Eurostat data.

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F igur e I I I . 1 0 : P r e p a r a t i o n a n d s p i n n i n g o f t e x t i l e f i b r e s — d i s t r i b u t i o n o f v a l u e a d d e d b y s i z e c l a s s i n s i x
EU countries in 2004
70
60
50
40
30
20
10
0
1–9 10–19
Note: Firm-size categories are defined in terms of the number of persons employed. The distribution is in %.
Source: own calculations using Eurostat data.
III.5 Sectoral interrelations: output
multipliers
Modern economies are characterised by strong interconnection
between industries; these interrelationships are central for the
analysis of competitiveness. This section presents basic elements and
measures of industrial interrelations based on standard input-output
(IO) techniques19. Sound industrial policy requires going beyond the
analysis of each industry separately by considering each industry as
part of a complex set of interdependencies.
Production is a combination of primary inputs (services of labour and
capital), intermediate inputs (from other sectors of the economy),
and technology. Input-output tables, which concern the web of
intermediate inputs, encapsulate interrelations through which
innovation and technology embedded in intermediate inputs
diffuse throughout the economy. Input-output analysis shows that
the competitiveness of the EU economy is not the result of merely
aggregating individual industries’ performances but is the result of a
complex network of relationships between them.
The output multipliers for the EU are first presented. A case study on
Denmark showing the difference between the multiplier effect in the
country and outside the country is then presented. The manufacturing
industry plays an important role both as a client sector for services
and as provider of inputs. These two roles of manufacturing are
reviewed with respect to market services. These interlinkages between
manufacturing and market services are presented for each Member
State using three types of indicators.
19 A classical reference is Leontief (1986). For a detailed methodological presentation
of the compilation of IO tables and related issues, see Eurostat (2008).
Chapter III — Industrial structure in the EU
DE ES IT UK
FR PL 6 EU
20–49 50–249 250 or more
III.5.1 Output multipliers in the EU
This section presents output multipliers, which are useful to analyse
how the effects of changes in final demand for a given sector spread
over the other sectors and, ultimately, the economy as a whole. This
indicator is of interest to analyse, in Chapter II, the economic effects of
the current crisis on the real economy. The output multiplier for sector
‘i’ measures the total value of production in all sectors of the economy
necessary, directly and indirectly, to produce one monetary unit of
production of the sector ‘i’ for final demand.
The approach followed is standard in input-output analysis and consists
of the calculation of output multipliers using Eurostat’s input-output
tables for 22 EU countries20. Several qualifications are in order here. The
multipliers are static and provide information on the size of the effect
but not on the timing (lag) of the effect. The most recent input-output
tables are used, but they do not refer to the same year for the different
countries. Given the structural nature of the sectoral interrelations
it can be assumed that the results presented are applicable to the
current situation, although it cannot be ignored that changes in
relative prices, e.g. in energy products, but not only those, may have
an effect on the technical coefficients and therefore on the value of
the multipliers. It must also be noted that the effect of the demand
for the output of a particular sector does not capture the purchases
of capital goods. The production of capital goods goes directly to the
final demand (gross fixed capital formation (GFCF)) and is not therefore
included in the matrix of sectoral interrelations. One indication of the
effect on the production of capital goods can be obtained from the
indicator of capital intensity that is presented in Chapter IV, but this
would be an indication of direct needs and therefore different from
20 T he countries, for which symmetric IO tables are available are: BE, CZ, DK, DE, EE,
IE, EL, ES, FR, IT, LV, LT, NL, AT, PL, PT, RO, SI, SK, FI, SE and UK.
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EU industrial structure 2009 — Performance and competitiveness

the one considered here. The multipliers can be broken down into two
components, domestic and leakage. The former measures the effect
on the country itself while the latter gives the multiplier effect that is
leaked to the other countries via imports of intermediate inputs. As
the tables used are at country level this means that part of the leakage
corresponds to the effect on the rest of the EU. To provide insight into
this effect on the rest of the EU, Box III.5 presents results for Denmark,
whose IO table breaks down total imports of intermediate inputs into
those from the rest of the EU and the rest of the world. The multiplier
was calculated for these two origins and the results are presented
and discussed in the box. In interpreting the multipliers it should be
stressed that they measure the value of production required to produce
one monetary unit of output for final demand, regardless of the size of
the sector. One sector may have a high multiplier and, at the same time,
be very small in a given country.
The results obtained are summarised in Table III.10. The table presents
the mean, median, standard deviation and maximum and minimum
values, across countries, of the total and domestic multipliers for a
range of sectors, including manufacturing, electricity, gas and water
supply, construction and market services. The five sectors with the
highest average value for the total multiplier are: motor vehicles,
trailers and semi-trailers; basic metals; food products and beverages;
office machinery and computers and chemicals and chemical products.
However, when we focus on the effect on the domestic economy,
the five top sectors are: food products and beverages; construction
work; wood and products of wood and cork (except furniture); articles
of straw and plaiting materials; recovered secondary raw materials;
supporting and auxiliary transport services and travel agency
services. These two lists of top five sectors, in which only one sector
coincides, show the importance of imported intermediate inputs for
the production of goods and services in each country, and how the
impact of changes in the final demand in one country will leak to other
countries, particularly to other Member States. Apart from the nature
of the sector itself, and the kind of inputs consumed, the size of the
country is a significant factor to take into account.

Ta b l e I I I . 1 0 : O u t p u t m u l t i p l i e r s : s u m m a r y

Average Median Std Dev Maximum Minimum

Product CPA Total Domestic Total Domestic Total Domestic Total Domestic Total Domestic
Food and drink 15 2.80 2.05 2.83 2.00 0.25 0.18 3.15 2.43 2.27 1.78
Tobacco 16 2.30 1.52 2.20 1.56 0.52 0.24 3.81 2.02 1.76 1.13
Textiles 17 2.64 1.56 2.48 1.56 0.33 0.17 3.48 1.93 2.27 1.30
Clothing 18 2.61 1.52 2.56 1.50 0.40 0.23 3.33 1.98 2.00 1.15
Leather & footwear 19 2.71 1.60 2.61 1.59 0.43 0.23 3.58 2.14 2.17 1.12
Wood and wood products 20 2.51 1.83 2.55 1.87 0.25 0.19 3.06 2.06 2.01 1.51
Pulp & paper 21 2.67 1.67 2.60 1.69 0.23 0.21 3.11 1.97 2.34 1.25
Printing & publishing 22 2.41 1.71 2.36 1.73 0.24 0.18 2.93 1.95 2.08 1.12
Refined petroleum 23 2.75 1.39 2.69 1.29 0.53 0.28 4.01 2.08 1.95 1.08
Chemicals 24 2.70 1.55 2.78 1.58 0.32 0.21 3.28 1.92 2.15 1.07
Rubber & plastics 25 2.71 1.55 2.70 1.56 0.34 0.16 3.44 1.84 2.21 1.29
Non-metallic mineral products 26 2.43 1.72 2.46 1.73 0.23 0.19 2.83 2.01 2.00 1.34
Basic metals 27 2.98 1.72 2.90 1.71 0.48 0.24 4.02 2.11 1.91 1.38
Metal products 28 2.61 1.63 2.55 1.63 0.32 0.17 3.34 1.93 2.06 1.28
Machinery n.e.c. 29 2.69 1.64 2.61 1.61 0.30 0.18 3.29 2.03 2.32 1.34
Office machinery 30 3.04 1.52 2.82 1.58 0.70 0.20 4.85 1.77 2.23 1.08
Electrical machinery 31 2.76 1.56 2.68 1.53 0.43 0.24 4.12 1.93 2.06 1.15
Radio, TV & communic. eq. 32 3.00 1.48 2.75 1.50 0.86 0.22 6.06 1.95 2.17 1.01
Scientific and other
instruments
33 2.43 1.52 2.38 1.52 0.36 0.16 3.65 1.83 1.97 1.17
Motor vehicles 34 3.12 1.61 3.02 1.60 0.48 0.27 4.05 2.06 2.32 1.12
Other transport equipment 35 2.67 1.66 2.72 1.64 0.41 0.24 3.41 2.13 1.53 1.13
Furniture; other manufacturing 36 2.57 1.65 2.51 1.67 0.37 0.18 3.27 2.01 1.86 1.31
Recycling 37 2.77 1.87 2.66 1.83 0.56 0.33 3.91 2.69 1.93 1.30
Electricity and hot water
supply
40 2.28 1.69 2.17 1.66 0.43 0.30 3.21 2.62 1.54 1.34
Collection and distribution of
water
41 1.96 1.62 1.87 1.54 0.36 0.29 2.55 2.22 1.41 1.27
Construction 45 2.46 1.85 2.42 1.89 0.30 0.18 3.09 2.10 1.93 1.52
Sale and repair of motor
vehicles
50 2.09 1.58 2.06 1.54 0.31 0.19 2.56 2.08 1.53 1.24
Wholesale trade 51 1.99 1.62 2.03 1.67 0.27 0.19 2.49 1.97 1.48 1.25
Retail trade 52 1.82 1.56 1.78 1.57 0.22 0.14 2.29 1.83 1.49 1.29
Hotels and restaurants 55 2.20 1.77 2.16 1.73 0.30 0.17 2.77 2.19 1.74 1.45
Inland transport 60 2.03 1.57 2.01 1.56 0.29 0.15 2.62 1.85 1.52 1.28
>>>
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 Chapter III — Industrial structure in the EU

Average Median Std Dev Maximum Minimum

Product CPA Total Domestic Total Domestic Total Domestic Total Domestic Total Domestic
Water transport 61 2.47 1.69 2.51 1.69 0.50 0.36 3.78 2.31 1.49 1.06
Air transport 62 2.70 1.78 2.66 1.71 0.49 0.27 4.00 2.52 1.88 1.47
Supporting transport activities 63 2.29 1.79 2.36 1.79 0.43 0.19 3.26 2.12 1.44 1.42
Communications 64 1.95 1.57 1.99 1.55 0.24 0.17 2.35 1.86 1.43 1.22
Financial intermediation 65 2.06 1.66 1.76 1.46 1.00 0.70 5.70 4.31 1.42 1.21
Insurance and pension funding 66 2.09 1.66 2.02 1.65 0.42 0.29 3.33 2.19 1.47 1.24
Activities auxiliary to financial
intermediation
67 1.92 1.66 1.84 1.62 0.39 0.34 3.11 2.72 1.27 1.16
Real estate activities 70 1.58 1.41 1.50 1.38 0.28 0.17 2.17 1.80 1.16 1.18
Renting of machinery and
equipment
71 1.90 1.58 1.93 1.60 0.34 0.20 2.55 1.89 1.34 1.30
Computer and related activities 72 1.92 1.56 1.86 1.59 0.21 0.14 2.47 1.77 1.53 1.22
Research and development 73 1.94 1.55 1.89 1.59 0.23 0.17 2.48 1.85 1.60 1.27
Other business activities 74 1.97 1.61 1.96 1.61 0.28 0.12 2.59 1.85 1.41 1.37

Note: Based on 22 countries: BE, CZ, DK, DE, EE, IE, EL, ES, FR, IT, LV, LT, NL, AT, PL, PT, RO, SI, SK, FI, SE and UK.
Source: own calculation using Eurostat’s IO tables.

Box III.5: The geographical origin of intermediate inputs — the case of Denmark

So far the values of the multiplier and the difference between the total and the domestic multiplier have been discussed. It is
interesting to measure the spillover caused by imports of intermediate inputs from the EU and the rest of the world. In other
words, what is measured is how the effect of the change in final demand for a product in a country is distributed among the rest
of the EU and the rest of the world. A complete measure of this would require the formulation of a multi-country input-output
model, in order to capture the feedback between the different regions. Although this is beyond the scope of this publication, one
can obtain a rough estimate by looking at the geographical origin of the imports of intermediate inputs. The case studied here is
that of Denmark, a country for which the input-output table splits the imported intermediate inputs into those coming from the
EU and the rest.

Table III.11 presents the intermediate inputs of different geographical origin as a percentage of the total intermediate inputs
consumed by each sector. On average, two thirds of intermediate inputs used by Danish industries are of domestic origin. As
regards imports, more than half are of EU origin and the rest come from the rest of the world. In other words, and roughly speaking,
for Denmark the non-domestic multiplier effect exerts its influence in both the rest of the EU and the rest of the world. A rough
measure of this is given by the geographical origin of the intermediate inputs imported: 17.7 % are of EU origin, while the rest of
the world supplies 14.6 % of the intermediate inputs used by Danish industries.

As can be expected, there is high variation in these percentages across sectors. For a large number of sectors the internal market
is the main supplier of imported intermediate inputs in Denmark. In 27 sectors out of 43, the internal market is the origin of
more than 60 % of the intermediate inputs imported into Denmark, and this percentage is substantially higher in some cases.
For example, the top five are as follows: rubber and plastic products (84.7 %), pulp, paper and paper products (88.3 %), sale,
maintenance and repair of motor vehicles and motorcycles; retail sale of automotive fuel (80.2 %), textiles (79.7 %) and electrical
machinery and apparatus n.e.c. (79.3 %). The analysis in Section V.3.3, using different data, confirms the importance of the internal
market as a supplier of intermediate goods to the EU and its Member States.

The results presented here cannot be extrapolated to other countries. The size of the country and its industrial structure determine
to a large extent the type and amount of inputs to be supplied by domestic and foreign firms. However, they show that the
geographical decomposition of the effect on all sectors of changes in the final demand for a product, via the output multipliers,
deserves careful consideration.

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EU industrial structure 2009 — Performance and competitiveness

Ta b l e I I I . 1 1 : Denmark — geographic al origin of intermediate inputs in 2003 (%)

Intermediate inputs

CPA Domestic Imported

Product Total Imported
origin from EU
15 Food and drink 100 76.9 23.1 13.8
16 Tobacco 100 43.2 56.8 19.6
17 Textiles 100 46.9 53.1 42.3
18 Clothing 100 44.8 55.2 36.1
19 Leather and footwear 100 48.7 51.3 38.2
20 Wood and wood products 100 56.7 43.3 33.4
21 Pulp and paper 100 51.2 48.8 43.1
22 Printing and publishing 100 79.2 20.8 15.6
23 Refined petroleum 100 62.6 37.4 2.6
24 Chemicals 100 57.3 42.7 29.8
25 Rubber and plastics 100 47.8 52.2 44.2
26 Non-metallic mineral products 100 67.9 32.1 23.3
27 Basic metals 100 46.1 53.9 27.8
28 Metal products 100 59.2 40.8 32.0
29 Machinery n.e.c. 100 55.8 44.2 33.4
30 Office machinery 100 38.0 62.0 46.3
31 Electrical machinery 100 54.0 46.0 36.4
32 Radio, TV & communic. eq. 100 43.5 56.5 42.7
33 Scientific and other instruments 100 54.3 45.7 31.3
34 Motor vehicles 100 50.6 49.4 37.5
35 Other transport eq. 100 52.1 47.9 35.0
36 Furniture; other manufacturing 100 57.4 42.6 28.7
37 Recycling 100 69.5 30.5 23.0
40 Electricity and hot water supply 100 79.1 20.9 2.8
41 Collection and distribution of water 100 92.2 7.8 3.3
45 Construction 100 78.0 22.0 16.4
50 Sale and repair of motor vehicles 100 65.3 34.7 27.9
51 Wholesale trade 100 82.3 17.7 10.7
52 Retail trade 100 86.6 13.4 7.3
55 Hotels and restaurants 100 77.0 23.0 16.2
60 Inland transport 100 83.5 16.5 7.8
61 Water transport 100 5.0 95.0 30.0
62 Air transport 100 54.8 45.2 27.9
63 Supporting transport activities 100 59.2 40.8 7.6
64 Communications 100 84.2 15.8 9.8
65 Financial intermediation 100 88.1 11.9 6.7
66 Insurance and pension funding 100 86.6 13.4 9.8

67
Activities auxiliary to financial 100 87.3 12.7 6.6
intermediation
70 Real estate activities 100 96.7 3.3 1.8

71
Renting of machinery and 100 84.3 15.7 7.9
equipment
72 Computer and related activities 100 79.9 20.1 8.9
73 Research and development 100 81.9 18.1 12.0
74 Other business activities 100 87.1 12.9 5.9
Total 100 67.7 32.3 17.7
Source: own calculations from Denmark’s input–output table.

Page 78

III.5.2 The role of manufacturing in the economy:
beyond its share
This section presents and discusses three types of measures that reveal
the role of manufacturing in the production system and the economy
at large. Manufacturing, despite its modest share in value added
(17.1 %) or employment (16.4 %) in developed economies, which
have become dominated by service sectors, plays an important role
both as a client sector for services and as provider of inputs. These two
roles of manufacturing are reviewed with respect to market services21.
These interlinkages between manufacturing and market services are
presented for each Member State using three types of indicators.
In its client role manufacturing creates a pull effect on the remaining
sectors which can be gauged by the fraction of its production value
that is accounted for by inputs bought from a specific sector, this effect
appears in Table III.12 under the title ‘Pull of manufacturing’.
A more encompassing measure of the pull effect of manufacturing on
services would go beyond the direct effect captured by the previous
indicator and account also for all the subsequent effects that run
through the production system. One such measure is the so-called
multiplier effect of manufacturing which reflects the direct and indirect
needs of market services’ production triggered by an additional euro
of manufacturing’s final demand.
On the other hand, manufacturing is also essential for the production
of services in providing them with production inputs. This supplier role
creates a push effect of manufacturing on other sectors which can be
measured by the fraction of the total supply of manufacturing output
that is sold to services and incorporated into their production.
Table III.12 reports, for each Member State22, the three indicators of
the importance of manufacturing for market services described above.
The first two indicators pertain to the client role of manufacturing
and can be understood as an expression of its pull impact on market
services sectors while the last reflects manufacturing’s supplier
role and therefore its push impact. Table III.13 summarises further
the information in Table III.12 by reporting for each indicator the
average across countries as well as its lower and higher value. A
visual presentation of this information is provided in Figure III.11
where the pull and push effect of manufacturing on market services
across countries is charted by decreasing order of pull effect and in
Figure III.12 where these two effects are plotted against each other.
21 T he interlinkages between manufacturing and market services are much stronger
than with non-market services. For a more detailed description of the role of
manufacturing also with respect to non-market services, the background analysis
is available on the companion website. The data are available online for the 18
Member States for which data were available.
22 Input-output tables are not available for all 27 Member States. This section covers
18 Members States including all the big ones and a sample of the some others for
which IO tables are available. These tables report the destination of each sector’s
total supply towards final demand (divided into private consumption, public
consumption, investment and exports) and intermediate use by other sectors.
They also report for each sector the various elements of its total production
value (use of intermediate inputs from each sector, value added; imports). The
calculations are based on matrices which include all inputs regardless of their
geographical origin. In other words this implies that the pull effect of a sector
is not only on the economy of the country under study but it also includes the
effects on the countries from which the inputs are imported. Given the more
structural nature of the interlinkages reported in input-output tables these
differences in reference years are unlikely to substantially affect the comparability
across Member States.
Chapter III — Industrial structure in the EU
As Tables 12 and 13 show, in its client role, manufacturing ‘pulls’ on
average 17 % of its total production from market services’ output
and this pull effect ranges from 27 % for Ireland to 12 % in Portugal.
Moreover, one additional euro of demand addressed to manufacturing
triggers on average — through all the linkages across sectors in the
productive system — an extra EUR 0.50 of production from market
services. This multiplier effect ranges from a rather high EUR 0.70 in
Ireland to EUR 0.33 in Romania23. In its supplier role, manufacturing
‘pushes’ on average 8 % of its total supply into the market services
productive system with this push effect ranging from 11 % in Poland
to 3.5 % in Ireland.
Inspection of Figure III.12 (that presents Table III.12 data in a scatter
plot) reveals a general positive relationship between the pull and push
effects of manufacturing on market services with a few exceptions,
particularly the case of Ireland and, to a lesser extent, Germany. Both
Ireland and Germany present a rather high pull effect given their
modest push. Given the level of aggregation used here, the differences
across countries in their composition of manufacturing production
plays an important role in determining the degree of interlinkages with
market services24; for example, countries where sectors which require
that significant inputs from market services are more represented, such
as office machinery and computers or chemical products, will display
a stronger pull effect. This is likely in the case of Ireland and Germany.
On the other hand, the push effect of manufacturing on services will
have a downward bias for export-oriented countries, such as Ireland,
in which manufacturing is accounted for as final demand, though it is
very likely that a fraction of it will be used as intermediary inputs into
production abroad. In the same vein, countries where the production
share of capital goods is high will also tend to exhibit low push effects;
Germany is one such case. Ireland and, to a lesser extent, also Germany
are indeed good examples of these two phenomena displaying both
the highest pull and the lowest push effects.
23 N ote that multiplier values depend strongly on the aggregation level and
decrease with the level of aggregation which, in this note, is reduced to four main
sectors (market services, non-market services, manufacturing and agriculture).
24 Clearly, even for a given sector, different countries may have different patterns
in its manufacture outsourcing of market services and this fact can also explain
country variations in pull effects.
Page 79
EU industrial structure 2009 — Performance and competitiveness

Ta b l e I I I . 1 2 : M a i n i n d i c at o r s o f m a n u f a c t u r i n g ro l e by co u n t r y

Multiplier of
Pull of Push of
manufacturing on
manufacturing (%) manufacturing (%)
market services
Austria (2005) 16.0 0.5 8.0
Czech Republic (2005) 14.2 0.6 5.5
Finland (2005) 16.1 0.4 8.9
France (2005) 21.0 0.6 7.6
Germany (2005) 18.3 0.5 4.5
Greece (2005) 16.8 0.3 10.0
Hungary (2005) 14.7 0.5 5.9
Ireland (2000) 27.1 0.7 3.5
Italy (2005) 19.5 0.5 10.9
Latvia (1998) 12.2 0.4 10.0
Netherlands (2005) 16.6 0.5 6.8
Poland (2000) 18.5 0.5 11.1
Portugal (2005) 12.0 0.4 7.7
Romania (2005) 14.2 0.3 7.1
Slovakia (2000) 12.9 0.5 5.1
Spain (2005) 17.7 0.5 9.6
Sweden (2005) 20.8 0.6 11.0
Note: ‘Manufacturing’, for short, includes in fact construction and energy, gas and water supply. Market services include
a broad range of activities, from retail trade to other business services. The years of reference after the country name
vary across Member States due to data availability.
Source: calculated using Eurostat input-output tables.

Ta b l e I I I . 1 3 : S u m m a r y — p a ra m e t e r s o f d i s t r i b u t i o n o f m a n u f a c t u r i n g ro l e s
across countries

Multiplier of
Pull of manufacturing Push of
manufacturing on
(%) manufacturing (%)
market services
Average 16.9 0.5 8.0
Maximum 27.0 0.7 11.1
Country max. Ireland Ireland Poland
Minimum 12.0 0.3 3.5
Country min. Portugal Romania Ireland
Note: ‘Manufacturing’, for short, includes in fact construction and energy, gas and water supply. Market services include
a broad range of activities, from retail trade to other business services. The years of reference after the country name
vary across Member States due to data availability.
Source: calculated using Eurostat input-output tables.

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 Chapter III — Industrial structure in the EU

F igur e I I I . 1 1 : P u l l a n d p u s h e f f e c t s o f m a n u f a c t u r i n g o n s e r v i c e s e c t o r s b y c o u n t r y

30
Push of manufacturing on market services (%)
Pull of manufacturing on market services (%)
25

20

15

10

0
Ireland (2000)

France (2005)

Sweden (2005)

Italy (2005)

Poland (2000)

Germany (2005)

Greece (2005)

Netherlands (2005)

UK (1995)

Finland (2005)

Austria (2005)

Hungary (2005)

Spain (2005)

Romania (2005)

Czech Republic (2005)

Slovakia (2000)

Latvia (1998)

Portugal (2005)
Note: The years of reference after the country name vary across Member States due to data availablility.
Source: own calculations using UNIDO data.

F igur e I I I . 1 2 : P u l l a n d p u s h e f f e c t s o f m a n u f a c t u r i n g o n s e r v i c e s e c t o r s

12
Push of manufacturing on market services (%)

PL SE
11 IT

LV UK EL
10 ES
FI
9
RO AT
8 PT FR

7 NL

HU
6 CZ
SK
5 DE

4 IE

3
10 12 14 16 18 20 22 24 26 28
Pull of manufacturing on market services (%)
Source: own calculations using Eurostat input-output tables.

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EU industrial structure 2009 — Performance and competitiveness

III.6 Appendix tables

Ta b l e I I I . 1 4 : S e c t o r s h a re i n E U - 2 7 G D P i n 1 9 9 5 a n d 2 0 0 7 ( % )

Sector 1995 2007 Change

AGRICULTURE AND FISHING 2.9 1.8 –1.1
 Agriculture and forestry 2.8 1.8 –1.1
  Fishing 0.1 0.1 0.0
INDUSTRY 23.7 20.1 –3.6
  Mining and quarrying 0.9 0.8 0.0
  Manufacturing 20.5 17.1 –3.4
   Food, drinks and
2.5 2.0 –0.5
   tobacco
   Textiles and clothing 1.0 0.6 –0.5
   Leather & footwear 0.2 0.1 –0.1
   Wood and wood
0.5 0.4 –0.1
   products

   Pulp, paper & publishing 1.9 1.4 –0.5

   Refined petroleum 0.3 0.4 0.0

   Chemicals 2.1 1.8 –0.4
   Rubber & plastics 0.9 0.8 –0.2
   Non-metallic mineral
1.0 0.8 –0.2
   products
   Basic metals and metal
2.7 2.5 –0.3
   products
   Machinery n.e.c. 2.2 2.0 –0.2
   Electrical & optical
2.3 2.0 –0.4
   equipment
   Transport equipment 2.0 1.8 –0.1
   Other manufacturing 0.8 0.7 –0.1
 Electricity, gas & water
2.3 2.2 –0.2
 supply
CONSTRUCTION 6.0 6.5 0.5
MARKET SERVICES 45.1 49.2 4.1
   Wholesale and retail
11.7 11.3 –0.4
   trade
   Hotels and restaurants 2.6 2.9 0.3
   Transport and
6.8 7.0 0.2
   communication
   Financial
5.1 5.5 0.4
   intermediation
   Real estate and business
19.0 22.5 3.6
   activities
NON-MARKET SERVICES 22.2 22.4 0.2
   Public administration 6.8 6.1 –0.7
   Education 5.0 5.0 0.0
   Health and social work 6.3 6.9 0.6
   Other services 3.6 3.9 0.2
   Activities of
0.5 0.5 0.0
   households
   Extraterritorial
- - 0.0
   organisations and bodies
TOTAL 100.0 100.0 0.0
Source: own calculations using Eurostat data.

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 Chapter III — Industrial structure in the EU

F I G U R e I I I . 1 3 : S e c to r s h a re i n e U - 2 7 G D P i n 2 0 0 6 N aC e R ev. 1 , 2 - d i g i t s ( % )

Agriculture and forestry

Fishing
Mining and quarrying
Food and drink
Tobacco
Textiles
Clothing
Leather and footwear
Wood and wood products
Pulp and paper
Printing and publishing
Refined petroleum
Chemicals
Rubber and plastics
Non-metallic mineral products
Basic metals
Metal products
Machinery n.e.c.
Office machinery
Electrical machinery
Radio, TV & communic. eq.
Scientific and other instruments
Motor vehicles
Other transport eq.
Furniture; other manufacturing
Recycling
Electricity, gas and water supply
Construction
Sale and repair of motor vehicles
Wholesale trade
Retail trade
Hotels and restaurants
Inland transport
Water transport
Air transport
Supporting transport activities
Communications
Financial intermediation
Real estate activities
Renting of machinery and equipment
Computer and related activities
Research and development
Other business activities
Public administration
Education
Health and social work
Other services
Activities of households

% 2 4 6 8 10 12 14
Source: own calculations using Eurostat input-output tables.

Page 83

Chapter IV
Sectoral growth
IV.1 Introduction
This chapter analyses economic growth in the EU from a sectoral
perspective. The chapter is organised as follows. Section IV.2 focuses
on growth in sectoral output. Industrial performance is analysed
from a long-term perspective to capture the main trends in sectoral
developments. In this analysis the EU’s performance is looked at from
a global perspective, by comparing sectoral developments in the EU
with those in the world and in other countries, particularly the US.
Section IV.3 focuses on indicators of sectoral competitiveness. Two
specific indicators are considered in this section: labour productivity
and unit labour costs (ULC). These indicators are used to make
comparisons across sectors in the EU; for labour productivity, the US
is taken as the benchmark. In Section IV.4 the focus shifts to indicators
for various factors of production: labour inputs, human capital,
capital formation, energy and technology. Finally, Section IV.5 looks
into sectoral growth from the demand side, by looking at private
consumption and investment.
IV.2 Output growth
This section analyses long-term sectoral production trends in the EU.
Long-term trends reflect structural factors, show the steady structural
changes in the economy, and reveal the competitiveness of countries
and regions, and the competitiveness of sectors themselves.
IV.2.1 EU manufacturing in the global context
This concentrates on the place of EU manufacturing in the world.
Although data availability does not permit detailed analysis and, in any
case, limits it to the manufacturing sector, the figures available provide
an interesting picture. Table IV.1 shows an estimate of the share of EU
manufacturing sectors in the world. On average the EU accounts for
23.2 % of total world manufacturing. Two facts are apparent in the
table: The high variation in the share across sectors shows a very
different position of the EU. Indeed, in 2006 the EU’s share ranges from
4.7 % in radio, television and communications equipment to 41.3 % in
fabricated metal products. The sectors with a share below the average
are: tobacco products; textiles; wearing apparel; leather, leather
products and footwear; coke, refined petroleum products, nuclear
Chapter IV — Sectoral growth
fuel; basic metals; office, accounting and computing machinery;
radio, television and communication equipment and other transport
equipment. The top products, with a share greater than 30 %, are:
wood products; printing and publishing; chemicals and chemical
products; rubber and plastics products; non-metallic mineral products,
fabricated metal products; machinery and equipment n.e.c.; medical,
precision and optical instruments and motor vehicles, trailers and
semi-trailers.
A second aspect worth underlining is the changes between 1995 and
2006. In this period of increasing globalisation, the position of the EU
in world manufacturing changed substantially, and exhibits both gains
and losses. The bottom six sectors, where the EU has lost significant
share in world manufacturing are: tobacco products; textiles; wearing
apparel; leather, leather products and footwear; office, accounting
and computing machinery and radio, television and communication
equipment. On the contrary, in some sectors EU shares developed
positively: wood products; paper and paper products, printing and
publishing; fabricated metal products, and motor vehicles, trailers and
semi-trailers.
Another angle on the position of the EU is given in Table IV.2, which
presents the EU’s production specialisation index (see Chapter III25)
relative to the world. The EU appears strongly specialised in three
sectors, with an index value higher than 1.5: metal products, printing
and publishing and machinery and equipment. To a lesser extent,
rubber and plastics and non-metallic mineral products are also sectors
in which the EU exhibits relatively high specialisation. Furthermore, for
all the sectors mentioned, the specialisation of the EU has increased
between 1995 and 2006.
Finally, Figure IV.1 shows EU growth in manufacturing sectors compared
with world growth in the period 1995–2006. While the world growth
rates are in general higher, it should be borne in mind that the graph
only shows manufacturing — services are not covered. In the EU
services have exhibited higher growth than manufacturing (see Section
IV.2.2). Nevertheless, when the size of the sectors in the EU is taken into
consideration one can see that, in the largest sectors, growth in the EU
is similar to, or in some cases slightly higher than, that in the world.
25 T he definition of the specialisation index is provided in Chapter III, Section III.2.2.
While Chapter III took the EU as the area of reference, this section takes the world
as the area of reference.
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EU industrial structure 2009 — Performance and competitiveness

Ta b l e I V. 1 : E U s h a r e i n w o r l d m a n u f a c t u r i n g v a l u e a d d e d b y b r a n c h ( % )

Sector 1995 2006

Food and beverages 26.5 27.4
Tobacco products 14.6 7.3
Textiles 27.3 21.4
Wearing apparel, fur 27.1 19.4
Leather, leather products and footwear 35.8 22.0
Wood products (excluding furniture) 26.5 31.2
Paper and paper products 25.6 28.6
Printing and publishing 32.4 37.5
Coke, refined petroleum products, nuclear fuel 12.8 11.0
Chemicals and chemical products 28.0 30.7
Rubber & plastics products 35.4 34.3
Non-metallic mineral products 31.1 33.1
Basic metals 20.7 18.1
Fabricated metal products 34.9 41.3
Machinery and equipment n.e.c. 33.3 35.6
Office, accounting and computing machinery 17.2 11.3
Electrical machinery and apparatus 30.5 25.0
Radio, television and communication equipment 14.6 4.7
Medical, precision and optical instruments 32.0 33.0
Motor vehicles, trailers, semi-trailers 27.9 33.2
Other transport equipment 24.6 19.1
Furniture; manufacturing n.e.c. 24.1 25.6
Source: own calculations using UNIDO data.

Ta b l e I V. 2 : E U s e c t o r a l s p e c i a l i s a t i o n r e l a t i v e t o w o r l d

Sector 1995 2006

Food and beverages 0.98 1.18
Tobacco products 0.54 0.31
Textiles 1.01 0.93
Wearing apparel, fur 1.00 0.84
Leather, leather products and footwear 1.32 0.95
Wood products (excluding furniture) 0.98 1.35
Paper and paper products 0.94 1.23
Printing and publishing 1.20 1.62
Coke, refined petroleum products, nuclear fuel 0.47 0.48
Chemicals and chemical products 1.03 1.33
Rubber & plastics products 1.31 1.48
Non-metallic mineral products 1.15 1.43
Basic metals 0.76 0.78
Fabricated metal products 1.29 1.78
Machinery and equipment n.e.c. 1.23 1.54
Office, accounting and computing machinery 0.64 0.49
Electrical machinery and apparatus 1.13 1.08
Radio, television and communication equipment 0.54 0.20
Medical, precision and optical instruments 1.18 1.42
Motor vehicles, trailers, semi-trailers 1.03 1.43
Other transport equipment 0.91 0.82
Furniture; manufacturing n.e.c. 0.89 1.11
Note: As regards the calculation of the specialisation index see Chapter III.
Source: own calculations using UNIDO data.

Page 86
 Chapter IV — Sectoral growth

F igur e I V . 1 : G r o w t h i n m a n u f a c t u r i n g 1 9 9 5 – 2 0 0 6 — E U v w o r l d

20

World growth rate

18 TELECOM

16

14

12

10
OFFMAC

TRANS
6
ELECMAC

INSTR
4 TOBAC METAL PLAS MOTOR
CHEM
REFIN
FOOD
2 MACHIN PAPER
MINER METPR
TEXT FURNIT WOOD
PRINT
0

–2

–4 –2 0 2 4 6 8 10 12 14 16 18 20
Source: own calculations using UNIDO data. EU growth rate

IV.2.2 Sectoral growth in the EU
The indicators presented so far give an overall picture of the place
and growth of EU sectors in the world, but they refer exclusively to
manufacturing. A more complete picture, both in terms of the number
of industries and the years covered, is given in this section.
Growth rates in value added growth in the EU over the period 1995–
2007, are shown in Table IV.3. This table confirms the dynamism of market
services, relative to manufacturing and the total economy. Nevertheless,
there is high variation across all sectors. Among manufacturing industries,
chemicals, electrical and optical equipment, and transport equipment
exhibit growth rates higher than the average of manufacturing and

Ta b l e I V. 3 : Va l u e a d d e d — a v e r a g e a n n u a l g r o w t h r a t e i n t h e E U 1 9 9 5 – 2 0 0 7 ( % )

Code Sector 1995–2007

A_B Agriculture and fishing 0.6
A    Agriculture, hunting and forestry 0.7
B    Fishing –1.7
C_D_E Industry 2.2
C   Mining and quarrying –3.9
CA    Mining and quarrying: energy producing materials –4.7
CB    Mining and quarrying: except energy producing materials –1.0
D   Manufacturing 2.7
DA    Food products; beverages and tobacco 1.1
DB    Textiles and textile products –1.2
DC    Leather and leather products –3.4
DD    Wood and wood products 1.4
DE    Pulp, paper and paper products; publishing and printing 1.5
DF    Coke, refined petroleum products and nuclear fuel 0.4
DG    Chemicals, chemical products and man-made fibres 4.2
>>>
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EU industrial structure 2009 — Performance and competitiveness

Code Sector 1995–2007

DH    Rubber and plastic products 2.9
DI    Other non-metallic mineral products 1.9
DJ    Basic metals and fabricated metal products 2.7
DK    Machinery and equipment n.e.c. 2.5
DL    Electrical and optical equipment 6.5
DM    Transport equipment 3.0
DN    Manufacturing n.e.c. 1.7
E   Electricity, gas and water supply 0.5
F Construction 1.3
G_K Market services 3.3
G    Wholesale and retail trade; repair of motor vehicles 2.6
H    Hotels and restaurants 2.3
I    Transport, storage and communication 4.0
J    Financial intermediation 3.5
K    Real estate, renting and business activities 3.4
L_TO_P Non-market services 1.5
L    Public administration and defence 0.9
M    Education 0.9
N    Health and social work 2.1
O    Other community, social, personal service activities 2.3
P    Activities of households 1.7
Q    Extraterritorial organisations and bodies n.a.
TOTAL 2.5
Note: Growth rates refer to value added in constant prices.
Source: own calculations using Eurostat data.

the total economy. Among service industries, transport, storage and
communication, financial intermediation and real estate and business
activities appear to be particularly dynamic. In contrast with these high-
growth sectors, two manufacturing industries — textiles and leather —
show a decline over the whole period.
Figure IV.2 shows sectoral developments for a larger number of
industries, but only for manufacturing. Some sectors — office
machinery, radio and TV equipment, and motor vehicles exhibit
high growth rates, above 4 %, while four sectors: textiles, tobacco,
leather and footwear, and clothing record a steep decline. Although

F igur e I V . 2 : E U a v e r a g e a n n u a l p r o d u c t i o n g r o w t h r a t e 1 9 9 5 – 2 0 0 8 ( % )

Office machinery
Radio and TV equipment; electronic components
Motor vehicles
Chemicals
Scientific and other instruments
Machinery and equipment n.e.c.
Other transport equipment
Electrical machinery
Fabricated metal products
Rubber and plastics
Food and drink
Pulp, paper and paper products
Basic metals
Wood and wood products
Printing and publishing
Non-metallic mineral products
Mineral oil refining and nuclear fuel
Furniture; other manufacturing
Textiles
Tobacco
Leather and footwear
Clothing
–6 –4 –2 0 2 4 6 8

Source: own calculations using Eurostat data.

Page 88
 Chapter IV — Sectoral growth

Figure IV.2 is based on the index of production in volume terms, it
provides insight into some developments masked by the level of
aggregation in Table IV.3, which refers to value added in constant
prices. For example, in Figure IV.2 transport equipment is broken
down into motor vehicles and other transport equipment; basic
metals and metal products are shown separately; textiles and textile
products is subdivided into textiles and clothing. However, the sector
for which Figure IV.2 provides most detailed information is electrical
and optical equipment, which is broken down into office machinery,
radio and TV equipment, electrical machinery and scientific and other
instruments.
As Figure IV.2 shows, when analysing sectoral developments it is
important to take the effect of aggregation into account. One further
step to avoid this effect of aggregation can be found in the companion
website of this publication, where a table shows growth rates between
1990–2008 for a total of 97 manufacturing industries. As the table
breaks down the upper level of aggregation into further sectoral detail,
it clearly shows the high variation across sectors and sub-sectors. Two
examples are chemicals and electrical and optical equipment. In
chemicals, growth rates range from – 2.6 % in man-made fibres to 5.6 %
in pharmaceuticals. In electrical and optical equipment the growth
rates go from – 4.1 % in watches and clocks to 6.1 % in office machinery.

F I G U R e I V. 3 : e U a v e r a g e a n n u a l p r o d u c t i o n g r o w t h r a t e 1 9 9 5 – 2 0 0 8 ( % )

Reproduction of recorded media

Electronic valves and tubes
Parts and accessories for motor vehicles and their engines
Treatment and coating of metals
Medical and surgical equipment
Forging, pressing, stamping and roll forming of metal
Industrial process control equipment
Bodies for motor vehicles; trailers and semi-trailers
Basic chemicals
Steam generators, except central heating hot water boilers
Agricultural and forestry machinery
Motor vehicles
Instruments for measuring, testing, and navigating
Machinery for the production and use of mechanical power
Electric motors, generators and transformers
Veneer sheets; panels and boards
Electricity distribution and control apparatus
Other general purpose machinery
Machine tools
Telecommunication equipment
Soap and detergents, perfumes and toilet preparations
Processing and preserving of fruit and vegetables
Weapons and ammunition
Plastic products
Pulp, paper and paperboard

Builders’ carpentry and joinery

Publishing
Motorcycles and bicycles
Other textiles
Bricks, tiles and construction products, in baked clay
Pesticides and other agrochemical products
Games and toys
Ceramic tiles and flags
Other transport equipment n.e.c.
Miscellaneous manufacturing n.e.c.
Made-up textile articles, except apparel
Non-refractory ceramic goods; refractory ceramic products
Tanning and dressing of leather
Man-made fibres
Luggage, handbags and the like, saddlery and harness
Knitted and crocheted fabrics
Textile weaving
Musical instruments
Finishing of textiles
Watches and clocks
Knitted and crocheted articles
Other wearing apparel and accessories
Preparation and spinning of textile fibres
Footwear
Dressing and dyeing of fur; articles of fur
–8 –6 –4 –2 0 2 4 6 8 10 12 14
Note: This figure shows the 25 high and low (negative) growth sectors.
Source: own calculations using Eurostat data.

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EU industrial structure 2009 — Performance and competitiveness
A summary view which focuses on high and low (negative) growth
sectors is presented in Figure IV.3. This figure shows the 25 products
at the two tails of the distribution respectively and is a good example
of the value of going into greater sectoral detail to assess variations in
sectoral developments properly.
IV.3 Sectoral competitiveness indicators
Although competitiveness is a multidimensional concept, in this report
it is measured using two types of indicators. The first type measures
relevant aspects of an industry’s competitiveness directly, such as
labour productivity and unit labour costs (ULC); these indicators
are the subject of this section. The second type reveals external
competitiveness by observing the performance of an industry in
international markets. These are analysed in Chapter V.
IV.3.1 Labour productivity, unit labour costs and
competitiveness
This section presents a set of indicators on EU sectoral growth,
productivity, unit labour costs and relative prices. The objective is
to present stylised facts across the main sectors of the economy:
agriculture, industry, construction, market services and non-market
F igur e I V . 4 : I n d e x n u m b e r s o f E U v a l u e a d d e d ( 1 9 9 5 = 1 0 0 )
160
Agriculture, forestry and fishing
150 Construction
Financial intermediation and business services
140 Industry
130
120
110
100
90
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Source: own calculations using Eurostat data.
Page 90
services, and to show the role of labour productivity in sectoral
competitiveness. More precisely, market services are subdivided
into two groups: wholesale and retail trade, repair of motor vehicles,
motorcycles and personal and household goods; hotels and
restaurants; transport, storage and communication (NACE Rev.  1
categories G to I) and financial intermediation; real estate, renting
and business activities (NACE Rev. 1 categories J and K). Non-market
services encompass public administration and defence, compulsory
social security; education; health and social work; other community,
social and personal service activities and private households
with employed persons (NACE Rev.  1 categories L to P). Industry
encompasses mining, manufacturing and electricity, gas and water
supply.
The long-term evolution (1995–2007) of value added in constant (1995)
prices of the six aggregated sectors, and of the economy as a whole,
indexed to 1995 = 100, is shown in Figure IV.4. Market services show
the most dynamic record throughout, with positive growth rates every
year. It is also evident that over the whole period, ‘market services’ is the
only sector whose growth rate is higher than the average. The other
sectors exhibit a stronger cyclical pattern and growth rates are lower
than those of the total economy. Despite the decline in employment,
the domestic supply of industrial goods has been increasing, as a
result of the sustained increase in labour productivity. This favourable
performance (from 1995 to 2007) in productivity of industry relative to
market services is shown in Figure IV.5.
Wholesale and retail trade
Non-market services
TOTAL
 Chapter IV — Sectoral growth

F igur e I V . 5 : E U l a b o u r p r o d u c t i v i t y p e r p e r s o n e m p l o y e d i n d e x ( 1 9 9 5 = 1 0 0 )

150
Industry
140 Wholesale and retail trade
Financial intermediation and business services
130

120

110

100

90

80
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Source: own calculations using Eurostat data.

Clearly, the effects of increased productivity spread over the whole
economy in different ways. For one, there is a transfer of labour to
service activities, whose share in value added is increasing and where
productivity growth has been substantially weaker than in industry.
Sustained productivity growth also has a favourable impact on unit
labour costs in manufacturing, a key element of competitiveness.
This is shown in Figure IV.6. In contrast, and partly as a result of
slower productivity growth, ULC in market services have evolved
more adversely than ULC in industry.

F igur e I V . 6 : E U U L C i n d e x n u m b e r s ( 1 9 9 5 = 1 0 0 )

160
Industry
150 Wholesale and retail trade
Financial intermediation and business services
140

130

120

110

100

90
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Source: own calculations using Eurostat data.

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EU industrial structure 2009 — Performance and competitiveness

The stronger growth in industry’s manufacturing labour productivity
and the weaker one in market services have contributed to changing
relative prices between these two sectors. Figure IV.7 shows the
evolution of prices in market services relative to industry (= 100).
The relative price is the ratio of two price indices, the value added
deflator (2000 = 100) of industry divided by the value added deflator
(2000 = 100) of market services. Between 1995 and 2007 the relative
price of industry has declined relative to the price of market services,
particularly in the case of the aggregate ‘financial intermediation and
business services’.

F I G U R e I V. 7 : e U r e l a t i v e p r i c e s ( M a n u f a c t u r i n g = 1 0 0 )

115
Wholesale and retail trade
Financial intermediation and business services
110

105

100

95

90
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Source: own calculations using Eurostat data.

The relationship between productivity growth and changes over
time in prices is shown in Figure IV.8. The variables underlying this
figure are prices and productivity in the various sectors relative to
manufacturing and the graph shows changes between 1995 and
2007 in relative labour productivity (horizontal axis) and in relative
prices (vertical axis). It is clear that there is a negative relationship,
implying that high rates of productivity growth are negatively related
to changes in prices. The high rate of labour productivity growth
experienced in the industrial sector has resulted in a moderate
evolution of the relative price of industry output via, among other
channels, its impact on ULC. These developments suggest that the
industry sector has been able to provide the economy with relatively
cheap (and high quality) inputs, thus contributing to overall
economic growth and competitiveness.

F I G U R e I V. 8 : l a b o u r p r o d u c t i v i t y g r o w t h v c h a n g e i n r e l a t i v e p r i c e s

1.5
Change in relative prices (1995–2007)

Construction
1.4

1.3 Non-market services

1.2 Financ. interm. and business services

1.1 Wholesale and retail trade

Industry
1.0

0.9 Agriculture, forestry and fishing

0.8
0.60 0.65 0.70 0.75 0.80 0.85 0.90 0.95 1.00 1.05
Change in relative productivity (1995–2007)
Source: own calculations using Eurostat data.

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 Chapter IV — Sectoral growth

IV.3.2 Labour productivity
Labour productivity is analysed in two stages. First, an overall view of
labour productivity growth for all sectors of the economy between
1995–2007 (see Box IV.1) is provided. At this stage a comparison
with the US is provided for most of the sectors. In a second stage,
labour productivity growth is looked at using a more detailed
sectoral classification, but limited to manufacturing, which will be
used as a basis for calculating unit labour costs in the next section.
In this second stage, productivity developments refer to the period
1995–2008.
Table IV.4 presents an overall picture of labour productivity growth in all
sectors of the economy. In this table labour productivity is measured as
value added at constant prices per person employed. With an average
annual growth rate of 3.2 %, manufacturing as a whole exhibits the best
performance over the period 1995–2007. This superior performance is
apparent when compared to market services sectors, among which only
the sector comprising transport, storage and communications shows a
higher growth rate than manufacturing. Nevertheless, there is high
variation across manufacturing sectors. Indeed, growth rates range from
the 6.8 % and 5.2 % of electrical and optical equipment and chemical
industry respectively, to the stagnation of labour productivity in leather
and leather products.

Ta b l e I V. 4 : E U l a b o u r p r o d u c t i v i t y p e r p e r s o n e m p l o y e d a n n u a l g r o w t h 1 9 9 5 – 2 0 0 7 ( % )

Code Sector 1995–2007

A+B Agriculture, forestry and fishing 2.7
A Agriculture and forestry 2.8
B Fishing –0.3
C Mining and quarrying –0.1
CA Mining of energy products 1.1
CB Other mining –0.2
D Manufacturing 3.2
DA Food, drinks and tobacco 1.3
DB + DC Textile, clothing and leather 1.3
DB Textiles and clothing 1.5
DC Leather and footwear 0.0
DD Wood and wood products 2.2
DE Pulp, paper and publishing 2.5
DF Refined petroleum 2.5
DG Chemicals 5.2
DH Rubber and plastics 2.3
DI Non-metallic mineral products 2.9
DJ Basic metals and metal products 2.5
DK Machinery n.e.c. 2.9
DL Electrical and optical equipment 6.8
DM Transport equipment 2.4
DN Other manufacturing 1.9
E Electricity, gas and water supply 2.0
F Construction –0.1
G Wholesale and retail trade 1.3
H Hotels and restaurants –0.2
I Transport and communication 3.3
J Financial intermediation 2.7
K Real estate and business activities –1.0
L Public administration 0.3
M Education –0.2
N Health and social work 0.3
O Other services 0.1
TOTAL 1.4
Source: own calculations using Eurostat data.

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EU industrial structure 2009 — Performance and competitiveness

Box IV.1: Labour productivity: why compare growth rates and not levels

When one compares productivity among sectors in different economies, one has to compare similar outputs divided by similar
inputs. Value added is an output that is often used for productivity comparison as it is a common unit that can be used for different
industries. However, value added is ‘priced’ differently across countries; exchange rates have to be used to get an output calculated
everywhere in the same terms. The appropriate exchange rates are not market exchange rates but purchasing power parity
exchange rates. Those purchasing power parity conversion rates have to be provided at industry level (and not at country level as
for market exchange rates). The sector-specific purchasing power parity exchange rates are sometimes available for manufacturing
goods but hardly ever for services and for non-market sectors. In this publication, the productivity comparison is supposed to
cover a large set of sectors. Due to the lack of data on purchasing parity exchange rates, this comparison of productivity levels
across all sectors is impossible. As a result, growth rate comparisons are used rather than comparisons of levels. In the least
productive countries, higher growth rates can often be interpreted as a catch-up process.

A comparison of labour productivity growth in the EU and the
US over the period 1995–2006 is presented in the form of a scatter
plot in Figure IV.9. The diagonal is the locus of equal annual growth
rates, over 1995–2006, in the EU and the US. Points to the right (left)
of the diagonal represent sectors with a higher (lower) growth rate
in the EU than in the US. Growth in the EU’s labour productivity is
greater than in the US in some manufacturing sectors, as well as in
mining and construction. The manufacturing sectors where the EU’s
performance is superior are wood and wood products, chemicals,
other non-metallic mineral products, basic metals and fabricated
metal products. As for the other sectors, the data give a less positive
view of EU competitiveness. Indeed, in all the other sectors, including
market services, and particularly wholesale and retail trade; repair
of motor vehicles, motorcycles and personal and household goods
and real estate, renting and business activities, the EU’s productivity
performance remains below the growth rates in the US.

F I G U R e I V. 9 : e U v U S l a b o u r p r o d u c t i v i t y g r o w t h 1 9 9 5 – 2 0 0 6 ( % )

8.0
US

7.5
7.0
6.5
6.0 DF A+B

5.5
DE D
5.0
4.5
G I
4.0
DB+DC DM J
3.5 DN DK
3.0 E DG
DH
2.5
2.0
1.5 K DJ
DI
1.0 H DD
0.5
0.0
–0.5
DA
–1.0
–1.5
–2.0 F
C CA
–2.5
CB
–3.0
–3.5

–4.0 –3.5 –3.0 –2.5–2.0 –1.5 –1.0 –0.5 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 8.0
EU
Source: own calculations using Eurostat data.

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 Chapter IV — Sectoral growth

A more detailed picture of labour productivity developments in the EU is
given by using an indicator of labour productivity based on production
(rather than value added) per person employed. Although restricted to
manufacturing, the time coverage is larger, including 2008. Growth rates over
the period 1996–2008 and various sub-periods, including the year 2008 are
presented in Table IV.5. The high variation across sectors, already mentioned
above, is clear in Figure IV.10, where sectors are ranked in descending order.
The more detailed sectoral breakdown used here gives insight into some of
the aggregates used in Table IV.4, such as electrical and optical equipment.
It is clear now that the higher performance of this sector is explained by the
two ICT sectors (radio, television and communication equipment, 5.3 %, and
office machinery and computers, 5.5 %) which appear in the first two places
in the ranking. Another manufacturing sector with high growth in labour
productivity is the chemicals industry. As regards the bottom places in the
ranking, interestingly, the two sectors in the aggregate ‘textiles and textile
products’ exhibit contrasting developments. In textiles labour productivity
grows by 1.9 %, although this is lower than the manufacturing average, while
in clothing it decreases by – 0.2 %.
Table IV.5 also shows a significant deceleration in labour productivity growth in
the present decade relative to the second half of the 1990s. Labour productivity
growth in manufacturing as a whole decreased from 4.7 % in 1996–2000
to 2.3 % and 2.8 % in 2000–05 and 2005–08 respectively. This deceleration
affected all manufacturing sectors as well as mining and electricity, gas and
water supply. In interpreting these figures, and particularly those for 2008,
it is important to mention the cyclical profile of labour productivity, which,
for manufacturing in the EU and the US, is apparent in Figure IV.11. Apart
from the successive accelerations and decelerations in labour productivity
growth, this variable in the EU for 2008 reflects the stagnation and then fall in
manufacturing output in 2008, in the same way as in 2001.

Ta b l e I V. 5 : E U l a b o u r p r o d u c t i v i t y g r o w t h 1 9 9 6 – 2 0 0 8 ( % )

Code Sector 1996–2000 2000–05 2005–08 2008 1996–2008

C Mining and quarrying 7.2 1.7 0.5 –1.7 2.2
D Manufacturing 4.7 2.3 2.8 0.1 2.3
DA15 Manufacture of food
products and beverages 2.6 2.2 0.9 –1.5 1.4
DA16 Manufacture of tobacco products 4.5 –0.6 0.3 –4.5 0.9
DB17 Manufacture of textiles 4.2 0.9 3.7 –0.3 1.9
DB18 Manufacture of wearing
apparel; dressing; dyeing of fur –2.0 –2.1 5.3 3.5 –0.2
DC19 Tanning, dressing of leather;
manufacture of luggage 1.8 –3.7 0.4 –0.8 –0.6
Manufacture of wood and of
products of wood and cork, except
DD20 3.8 1.7 0.8 –5.4 1.5
furniture; manufacture of articles
of straw and plaiting materials
DE21 Manufacture of pulp,
paper and paper products 4.6 2.8 4.2 0.6 2.6
DE22 Publishing, printing,
reproduction of recorded media 2.9 1.5 1.0 0.0 1.3
Manufacture of coke, refined
DF23 petroleum products and nuclear 3.6 3.5 2.5 2.9 2.3
fuel
DG24 Manufacture of chemicals
and chemical products 6.9 4.5 2.5 1.4 3.4
DH25 Manufacture of rubber
and plastic products 2.7 0.6 1.4 –3.2 1.0
DI26 Manufacture of other
non-metallic mineral products 3.9 2.0 1.1 –3.5 1.7
DJ27 Manufacture of basic metals 6.2 3.2 2.8 0.7 2.9
Manufacture of fabricated metal
DJ28 products, except machinery and 3.1 1.1 1.2 –2.5 1.2
equipment
DK29 Manufacture of machinery
and equipment n.e.c. 3.7 2.6 4.0 1.0 2.3
DL30 Manufacture of office
machinery and computers 9.6 4.2 12.2 7.7 5.5
DL31 Manufacture of electrical
machinery and apparatus n.e.c. 4.2 1.3 2.5 –0.5 1.8
Manufacture of radio, television
DL32 and communication equipment 7.8 5.8 10.1 7.6 5.3
and apparatus
Manufacture of medical,
DL33 precision and optical 5.2 2.0 1.5 1.3 2.1
instruments, watches and clocks
DM34 Manufacture of motor vehicles,
trailers and semi-trailers 6.5 2.4 2.2 –2.1 2.6
DM35 Manufacture of other
transport equipment 6.7 2.4 1.0 –1.0 2.4
DN36 Manufacture of furniture;
manufacturing n.e.c. 3.6 –0.3 1.6 –1.9 1.0
DN37 Recycling n.a. –3.1 0.9 –1.8 n.a.
E Electricity, gas and water supply 5.6 4.8 1.5 2.6 2.9
Source: own calculations using Eurostat data.

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EU industrial structure 2009 — Performance and competitiveness

F igur e I V . 1 0 : A v e r a g e a n n u a l g r o w t h i n l a b o u r p r o d u c t i v i t y i n E U
manufacturing by sector 1996–2008 (%)

Office machinery
Radio, TV & communic. eq.
Chemicals
Electricity, gas and water supply
Basic metals
Pulp and paper
Motor vehicles
Other transport eq.
Machinery n.e.c.
Refined petroleum
Manufacturing
Mining and quarrying
Scientific and other instruments
Textiles
Electrical machinery
Non-metallic mineral products
Wood and wood products
Food and drink
Printing and publishing
Metal products
Rubber and plastics
Furniture; other manufacturing
Tobacco
Clothing
Leather and footwear
–1 0 1 2 3 4 5 6
Source: own calculations using Eurostat data.

F igur e I V . 1 1 : L a b o u r p r o d u c t i v i t y g r o w t h i n E U a n d U S   m a n u f a c t u r i n g f r o m
1997 to the first half of 2008

10

–2
EU
–4 US
97 98 99 00 01 02 03 04 05 06 07 08
Source: own calculations using Eurostat data.

IV.3.3 Unit labour costs
Section IV.3.1 discussed the role of ULC in sectoral competitiveness
from an aggregated perspective. In this section ULC developments
are presented across sectors in the EU, providing insight into how
different industries are performing in terms of cost competitiveness.
The purpose of this comparison is to show to what extent some
industries perform particularly well, or badly, taking the whole
economy or specific aggregates (e.g. manufacturing) as a benchmark.
The emphasis is on industries whose output is more tradable, namely
manufacturing sectors. Table IV.6 shows ULC annual growth rates in
manufacturing and mining sectors in the EU until the first half of 2008
and Figure IV.12 ranks sectors according to ULC annual growth rate
over the whole period 1995–200826.
26 A
 n analysis at macroeconomic level, with data for the European Union, the United
States and Japan, is presented regularly in the series of quarterly reports ‘Price
and cost competitiveness’ by the European Commission, Directorate-General
for Economic and Financial Affairs.

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 Chapter IV — Sectoral growth

Sectors with high growth in ULC and, consequently, unfavourable
developments in cost competitiveness include tobacco products,
textiles and textile products, wearing apparel; dressing; dyeing of fur,
and leather and leather products. These four sectors exhibit annual
growth rates in unit labour costs greater than 2 %. At the other extreme,
unit labour costs declined in office machinery and radio and TV
equipment, along with chemicals, and motor vehicles, and, to a lesser
extent, in electrical machinery, paper and paper products, and scientific
and other instruments. As regards developments over time, the
second half of the 1990s was clearly influenced by labour productivity
developments and characterised by positive developments in cost
competitiveness. Manufacturing as a whole shows a decrease (– 1.1 %)
in ULC, and nearly all sectors, with the particular exception of the four
mentioned above (tobacco, textiles, wearing apparel; and leather and
leather products) are also characterised by favourable developments in
ULC. The first half of the 2000s saw more unfavourable developments.
The sectors that were most affected by this change are office
machinery and computers, tanning, dressing of leather; manufacture
of luggage, motor vehicles, trailers and semi-trailers, and furniture;
manufacturing n.e.c. However, some of these sectors still exhibit
favourable developments in ULC. During the period 2005–08 the
situation improved slightly for manufacturing, and more significantly
for some sectors. Wearing apparel, dressing and dyeing of fur, leather
and leather products, and office machinery and computers are those
where the gain in cost competitiveness is most significant.

Ta b l e I V. 6 : E U - 2 7 U LC a n n u a l g r o w t h r a t e i n m i n i n g a n d m a n u f a c t u r i n g s e c t o r s 1 9 9 6 – 2 0 0 8 ( % )

Code Sector 1996–2000 2000–05 2005–08 2008 1996–2008

C Mining and quarrying 0.3 3.4 5.8 9.6 3.4
D Manufacturing –1.1 0.7 0.0 2.6 –0.1
DA15 Food and drink 0.5 0.5 1.3 5.1 0.8
DA16 Tobacco 4.0 7.0 5.1 15.1 6.0
DB17 Textiles 2.1 3.2 1.3 5.4 2.5
DB18 Clothing 5.5 6.4 1.7 3.8 5.1
DC19 Leather and footwear 4.7 9.2 4.3 8.8 6.8
DD20 Wood and wood products –1.5 0.7 2.5 9.2 0.6
DE21 Pulp and paper –0.4 0.1 –1.0 0.5 –0.4
DE22 Printing and publishing –0.4 0.8 0.7 3.5 0.5
DF23 Refined petroleum 0.6 2.7 1.2 0.6 1.8
DG24 Chemicals –2.7 –1.0 –0.5 –0.6 –1.5
DH25 Rubber and plastics –0.8 1.3 –0.1 4.1 0.2
DI26 Non-metallic mineral products –0.7 1.0 1.5 7.4 0.7
DJ27 Basic metals –0.9 0.3 0.7 2.5 0.0
DJ28 Metal products –1.0 0.8 0.8 4.9 0.3
DK29 Machinery n.e.c. 0.3 0.8 –0.8 1.8 0.2
DL30 Office machinery –8.6 –3.0 –8.4 –10.9 –7.0
DL31 Electrical machinery –2.3 1.0 –0.4 2.0 –0.5
DL32 Radio, TV & communic. eq. –3.4 –2.7 –4.8 –3.6 –3.9
DL33 Scientific and other instruments –1.9 0.7 0.4 1.0 –0.2
DM34 Motor vehicles –3.3 0.5 –0.8 1.0 –1.2
DM35 Other transport eq. –1.4 1.5 1.1 3.7 0.5
DN36 Furniture; other manufacturing –1.3 1.8 1.5 5.6 0.8
DN37 Recycling n.a. 5.0 2.2 10.7 n.a.
Source: own calculations using Eurostat data.

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EU industrial structure 2009 — Performance and competitiveness

F igur e I V . 1 2 : A v e r a g e a n n u a l g r o w t h i n u n i t l a b o u r c o s t s i n E U m a n u f a c t u r i n g b y s e c t o r 1 9 9 5 – 2 0 0 8 ( % )

Leather and footwear

Tobacco
Clothing
Textiles
Refined petroleum
Furniture; other manufacturing
Food and drink
Non-metallic mineral products
Wood and wood products
Other transport eq.
Printing and publishing
Metal products
Machinery n.e.c.
Basic metals
Manufacturing
Scientific and other instruments
Pulp and paper
Electrical machinery
Motor vehicles
Chemicals
Radio, TV & communic. eq.
Office machinery
–8 –6 –4 –2 0 2 4 6 8
Source: own calculations using Eurostat data.

IV.4 Factors of production: labour,
capital, energy and technology
The indicators presented so far in this chapter refer to the output of
sectors and to competitiveness as measured by labour productivity
and unit labour costs developments. In this section the attention shifts
to factors of production. The objective is to characterise the production
process of the various sectors. More precisely, this section looks at
labour inputs, human capital, investment, energy and technology.
IV.4.1 Labour
Table IV.7 presents an overall picture of employment developments
across all sectors of the economy over the period 1995–2007 based
on the number of persons employed. While the number of persons
employed by the economy as a whole exhibits an increase of 1 % per
year, the table explicitly shows the shift of employment from primary
sectors, mining and manufacturing towards services industries.
Actually, all sectors from agriculture to electricity, gas and water
supply, with the exception of rubber and plastics, basic metals and
transport equipment, are characterised by negative growth rates
in the number of persons employed. On the contrary, the number
of persons employed in all services activities and construction rises
and supports employment creation in the economy as a whole. It is
worth mentioning the case of real estate and business services, which
presents the highest growth rate (4.5 %) of all sectors.
A more detailed and updated picture is given in Table IV.8. Although
this table refers exclusively to manufacturing the number of
industries is higher and it also shows developments in the number
of hours worked. Moreover, the table shows developments until
2008 (September). These data confirm the developments described
above and also reveal some additional information. For example,
in breaking down the sector manufacturing n.e.c. it highlights the
substantial growth, 4.6 % over 1995–2008, in employment in the
recycling industry. It also reveals positive growth in fabricated metal
products, scientific and other instruments and motor vehicles. As
regards hours worked, this variable is closely correlated with the
number of persons employed. However, it decreases more than
persons employed, indicating a decrease in the number of hours
worked per person. This is clear in Figure IV.13, which, interestingly,
also shows a slight recovery of manufacturing employment in the
last two years.

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 Chapter IV — Sectoral growth

Ta b l e I V. 7 : E U n u m b e r o f p e r s o n s e m p l o y e d — a v e r a g e a n n u a l g r o w t h r a t e 1 9 9 5 – 2 0 0 7 ( % )

Code Sector 1995–2007

A Agriculture, hunting and forestry –2.0
B Fishing –1.4
C Mining and quarrying –3.9
CA Mining and quarrying of energy producing materials –5.8
CB Mining and quarrying except energy producing materials –0.8
D Manufacturing –0.5
DA Manufacture of food products; beverages and tobacco –0.2
DB Manufacture of textiles and textile products –2.7
DC Manufacture of leather and leather products –3.4
DD Manufacture of wood and wood products –0.8
DE Manufacture of pulp, paper and paper products; publishing and printing –0.9
DF Manufacture of coke, refined petroleum products and nuclear fuel –2.0
DG Manufacture of chemicals, chemical products and man-made fibres –1.0
DH Manufacture of rubber and plastic products 0.6
DI Manufacture of other non-metallic mineral products –1.0
DJ Manufacture of basic metals and fabricated metal products 0.2
DK Manufacture of machinery and equipment n.e.c. –0.4
DL Manufacture of electrical and optical equipment –0.3
DM Manufacture of transport equipment 0.6
DN Manufacturing n.e.c. –0.2
E Electricity, gas and water supply –1.5
F Construction 1.5
G Wholesale and retail trade; repair of motor vehicles, motorcycles and personal and household goods 1.3
H Hotels and restaurants 2.5
I Transport, storage and communication 0.7
J Financial intermediation 0.8
K Real estate, renting and business activities 4.5
L Public administration and defence; compulsory social security 0.6
M Education 1.2
N Health and social work 1.8
O Other community, social, personal service activities 2.2
P Activities of households 2.5
Q Extraterritorial organisations and bodies n.a.
TOTAL 1.0
Source: own calculations using Eurostat data.

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EU industrial structure 2009 — Performance and competitiveness

Ta b l e I V. 8 : E U m a n u f a c t u r i n g e m p l o y m e n t a n d h o u r s w o r k e d — a v e r a g e a n n u a l g r o w t h f r o m 1 9 9 5 t o 2 0 0 8
(September) (%)

Employment Hours worked

Code Sector 1995–2008 2000–08 2000–08

D Manufacturing –0.9 –0.9 –1.1
DA15 Food and drink –0.3 –0.3 –0.9
DA16 Tobacco –5.0 –4.8 –5.4
DB17 Textiles –5.0 –5.3 –4.7
DB18 Clothing –4.7 –5.4 –4.9
DC19 Leather and footwear –4.2 –4.0 –4.8
DD20 Wood and wood products –0.6 –0.9 –1.5
DE21 Pulp, paper and paper products –1.8 –2.0 –2.0
DE22 Printing and publishing –0.7 –1.4 –1.4
DF23 Mineral oil refining and nuclear fuel –2.6 –2.1 –1.5
DG24 Chemicals –1.3 –1.0 –1.5
DH25 Rubber and plastics 0.7 0.5 0.2
DI26 Non-metallic mineral products –1.4 –1.3 –1.6
DJ27 Basic metals –2.4 –2.1 –2.1
DJ28 Fabricated metal products 0.8 1.0 0.5
DK29 Machinery and equipment n.e.c. –0.7 –0.2 –0.3
DL30 Office machinery –2.0 –3.5 –3.2
DL31 Electrical machinery 0.0 0.0 –0.2
DL32 Radio and TV equipment; electronic components –1.8 –3.2 –3.0
DL33 Scientific and other instruments 0.3 1.0 0.6
DM34 Motor vehicles 0.6 0.2 0.0
DM35 Other transport equipment –1.0 0.2 –0.1
DN36 Furniture; other manufacturing –0.8 –1.0 –1.7
DN37 Recycling 4.6 5.7 5.0
Source: own calculations using Eurostat data.

F igur e I V . 1 3 : E U m a n u f a c t u r i n g e m p l o y m e n t a n d h o u r s w o r k e d i n d e x f r o m
2000 to 2008 (September) (2000 = 100)

102
Hours worked
100 Employment

98

96

94

92

90
2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: own calculations using Eurostat data.

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IV.4.2 Human capital
Labour inputs, as measured by the number of persons employed
and hours worked, are not homogeneous. As a matter of fact, human
capital appears as an additional factor of production, which helps to
explain differences in economic growth between countries. The stock
of human capital makes the productivity of individuals vary, and is
frequently presented in relation to two components, namely health
and education. The purpose of this section is to present an indicator
of human capital at sectoral level related to the second of these two
components, education, which in modern economies is a crucial
component of the production process.
To the extent that human capital consists of the stock of knowledge,
skills and experience embodied in the labour force, a commonly used
proxy for accumulated knowledge is formal educational attainment.
This has the advantage of being easily available although it is, in any
event, a rough approximation of human capital that does not take
account of the post-schooling accumulation of human capital from
training at the workplace and experience (learning by doing)27. In this
section the indicator used is the distribution of employment in each
sector by educational attainment28.
Figure IV.14 shows the distribution of employment by educational
attainment of the labour force for the EU-25 by sector in 2005. Sectors
are ranked, in descending order, according to the percentage of
employees with high education. The difference across sectors is basically
in the dichotomy of high/low educational attainment. Focusing on high
and low education levels, broadly speaking three groups of sectors can
be identified. First are sectors with a predominance of high-education
27 For a discussion of proxies for human capital in empirical studies, see Greiner,
Semmler, and Gong (2005). On different ways of measuring the stock of human
capital, including a discussion on the limitations of educational attainment as a
proxy for human capital, see OECD (1998).
28 Educational attainment is measured as the percentage of employment that has
attained low, medium and high education, which correspond to ISCED 0-2, 3-4,
and 5-6 categories respectively. The source is the Eurostat labour force survey.
Chapter IV — Sectoral growth
employment. In the first places are service sectors, such as computer
and related activities, financial sectors, and other business activities,
followed by manufacturing activities such as chemicals, radio, TV
and telecommunications equipment, medical, precision and optical
instruments. At the other end of the scale are the sectors characterised
basically by the prevalence of low education: from wearing apparel,
textiles, and wood and wood products, to pulp and paper. Other sectors
— from supporting transport activities to other transport equipment
and printing and publishing — are in an intermediate position, with a
similar share of high and low education. In any case it is important to
bear in mind that medium education is the prevalent (between 50 and
60 %) educational attainment in all sectors, with the single exception
of computer and related activities. In interpreting these figures it has
of course to be borne in mind that the meaningful indicator should be
the flow of services from the human capital stock, which is related to
the utilisation rate of the human capital stock, rather than the capital
stock itself.
Apart from the relevance of human capital when analysing growth
and growth-related issues, the educational level of the labour
force is important for assessing competitiveness, particularly in the
international context. By encouraging the adoption and development
of technology and ideas, human capital makes businesses and sectors
competitive. Labour-intensive sectors characterised by low-education
employment may be particularly sensitive to competition from low-
wage developing countries. Examples of manufacturing sectors that
are in this situation are wearing apparel, textiles, furniture and other
manufacturing, and fabricated metal products, which also exhibit poor
performance in external trade in terms of the revealed comparative
advantage index (see Chapter V). On the other hand chemicals, the
manufacturing sector with the highest component of high-education
employment (33 %), and also characterised as capital-intensive, ranks
highly in revealed comparative advantage. Yet it is worth mentioning
that unit labour costs, and not merely wage differences, is the relevant
indicator for assessing cost competitiveness, and that gains from
trade, for both high- and low-wage countries, are determined by
comparative, rather than absolute, advantage.
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EU industrial structure 2009 — Performance and competitiveness

F igur e I V . 1 4 : E m p l o y m e n t b y e d u c a t i o n a l a t t a i n m e n t ( % )

High Medium Low

Wearing apparel
Textiles
Wood and wood products
Land transport
Hotels and restaurants
Furniture, manufacturing n.e.c.
Sale & repair of motor vehicles
Fabricated metal products
Other non-metallic mineral products
Construction
Food products and beverages
Retail trade
Basic metals
Rubber and plastic products
Pulp and paper
Supporting transport activities
Renting of machinery
Motor vehicles
Electrical machinery and apparatus n.e.c.
Machinery and equipment n.e.c.
Wholesale trade
Post and telecommunications
Other transport equipment
Electricity, gas & water
Printing and publishing
Medical, precision and optical instruments
Radio, TV and communication equipment
Real estate activities
Chemicals and chemical products
Activities auxiliary to financial intermediation
Insurance and pension funding
Financial intermediation
Other business activities
Computer and related activities
0 10 20 30 40 50 60 70
Source: calculated using Eurostat’s labour force survey data.

IV.4.3 Gross fixed capital formation I V . 4 . 3 . 1 I n v e s t m e n t r a t i o

Investment in physical capital is the third factor of production
presented in this section. Capital formation increases production
capacity and, by improving labour productivity, contributes to the
competitiveness of firms and sectors. Furthermore, capital goods
inject technology, innovation and intangibles (e.g. software) into
the production process, and facilitate change and reorganisation. In
addition, investment decisions are forward-looking and, therefore,
closely linked to the medium- and long-term expectations of the sector.
This section presents three indicators related to investment. The first
is an indicator which relates investment to value added, the second
refers to investment growth, and the third is a proxy for capital intensity
based on investment flows.
The investment ratio is defined as the ratio of gross fixed capital
formation (GFCF) to value added. The value of the indicator over the
period 1995–2006 is presented, for 31 industries and an aggregate
of 21 EU countries29, in Table IV.9. The main sectoral aggregates show
a slowdown in investment since 1999, although this trend appears to
have stabilised for the total economy. With a few exceptions, this trend is
common to all the main sectors. Manufacturing and electricity, gas and
water supply exhibit a continuous fall in investment intensity. Among
service activities, wholesale and retail trade and financial intermediation
follow the same path. As regards manufacturing sectors, the picture is
mixed, although, in general, the trend is negative. This is more apparent
in textiles, clothing, refined petroleum, chemicals, and transport
equipment. In two sectors, leather and wood and wood products, the
trend is stationary.

29 BE, CZ, DK, DE, IE, ES, FR, IT, CY, LT, LU, HU, NL, AT, PL, PT, SI, SK, FI, SE and UK.

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 Ta b l e I V. 9 : E U - 2 1 i nv e s t m e n t r a t i o i n 1 9 9 5 – 2 0 0 6

Code Sector 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
A Agriculture and forestry 0.29 0.30 0.31 0.33 0.27 0.27 0.26 0.28 0.29 0.29 0.33 0.38
B Fishing 0.20 0.21 0.21 0.23 0.19 0.18 0.16 0.17 0.16 0.16 0.17 0.19
C Mining and quarrying 0.26 0.26 0.30 0.33 0.26 0.15 0.20 0.23 0.23 0.22 0.22 0.23
D Manufacturing 0.19 0.20 0.20 0.20 0.18 0.18 0.18 0.16 0.16 0.16 0.16 0.15
DA Food, drinks and tobacco 0.23 0.22 0.22 0.23 0.20 0.19 0.18 0.18 0.17 0.18 0.19 0.16
DB Textiles and clothing 0.16 0.15 0.16 0.18 0.15 0.14 0.15 0.13 0.12 0.12 0.12 0.13
DC Leather and footwear 0.11 0.11 0.10 0.12 0.11 0.12 0.11 0.12 0.10 0.11 0.09 0.10
DD Wood and wood products 0.19 0.18 0.19 0.21 0.20 0.21 0.20 0.17 0.16 0.16 0.19 0.17
DE Pulp, paper and publishing 0.19 0.21 0.20 0.21 0.18 0.18 0.17 0.16 0.17 0.16 0.18 0.18
DF Refined petroleum 0.34 0.36 0.41 0.32 0.33 0.24 0.22 0.25 0.27 0.22 0.22 0.28
DG Chemicals 0.20 0.24 0.26 0.27 0.22 0.19 0.18 0.17 0.17 0.15 0.15 0.16
DH Rubber and plastics 0.21 0.20 0.21 0.23 0.19 0.20 0.19 0.17 0.17 0.17 0.18 0.18
DI Non-metallic mineral products 0.23 0.23 0.23 0.24 0.20 0.20 0.21 0.21 0.20 0.20 0.20 0.21
DJ Basic metals and metal products 0.17 0.19 0.19 0.20 0.18 0.17 0.18 0.17 0.15 0.14 0.15 0.15
DK Machinery n.e.c. 0.14 0.14 0.13 0.14 0.13 0.12 0.12 0.12 0.11 0.11 0.11 0.11
DL Electrical and optical equipment 0.16 0.17 0.17 0.18 0.15 0.18 0.20 0.15 0.13 0.13 0.14 0.15
DM Transport equipment 0.27 0.26 0.25 0.23 0.21 0.23 0.24 0.22 0.22 0.21 0.22 0.19
DN Other manufacturing 0.15 0.15 0.16 0.15 0.13 0.14 0.14 0.13 0.12 0.12 0.12 0.13
E Electricity, gas and water supply 0.48 0.45 0.45 0.43 0.38 0.39 0.37 0.35 0.35 0.34 0.35 0.35
F Construction 0.09 0.09 0.09 0.10 0.08 0.09 0.09 0.09 0.09 0.08 0.09 0.09
G Wholesale and retail trade 0.14 0.14 0.14 0.15 0.13 0.13 0.12 0.12 0.12 0.12 0.12 0.11
H Hotels and restaurants 0.16 0.15 0.15 0.16 0.15 0.15 0.13 0.12 0.12 0.12 0.13 0.14
I Transport and communication 0.36 0.35 0.36 0.38 0.34 0.37 0.36 0.34 0.32 0.32 0.35 0.34
J Financial intermediation 0.16 0.16 0.17 0.20 0.15 0.17 0.16 0.13 0.10 0.10 0.11 0.12
K Real estate and business activities 0.54 0.52 0.50 0.50 0.41 0.41 0.39 0.38 0.39 0.40 0.43 0.42
L Public administration 0.32 0.30 0.28 0.29 0.24 0.24 0.24 0.25 0.25 0.25 0.26 0.23
M Education 0.12 0.11 0.11 0.11 0.09 0.09 0.09 0.09 0.09 0.09 0.09 0.08
N Health and social work 0.14 0.13 0.13 0.13 0.11 0.11 0.10 0.10 0.10 0.10 0.11 0.12
O Other services 0.32 0.31 0.31 0.30 0.26 0.27 0.27 0.25 0.25 0.25 0.27 0.26
Total 0.24 0.27 0.26 0.27 0.23 0.23 0.23 0.22 0.22 0.22 0.23 0.23

Note: EU-21 is made of BE, CZ, DK, DE, IE, ES, FR, IT, CY, LT, LU, HU, NL, AT, PL, PT, SI, SK, FI, SE and UK.
Source: own calculation using Eurostat data.

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Chapter IV — Sectoral growth
EU industrial structure 2009 — Performance and competitiveness

I V . 4 . 3 . 2 G F C F g r o w t h The first sector is transport, storage and communication. The second

The second investment indicator is growth in gross fixed capital formation
(GFCF). The results, in the form of a ranking of sectors according to GFCF
growth in 1995–2006, are shown in Figure IV.1530. Although presented at
a relatively aggregated level of sectors, this graph shows some features of
sectoral growth in the last 10 years. Interestingly, most of the sectors with
growth above the average for the economy are service activities.
30 T he GFCF growth rate is calculated for an aggregate of the following 23 EU
countries: BE, CZ, DK, DE, IE, ES, FR, IT, CY, LV, LT, LU, HU, MY, NL, AT, PL, PT, SI, SK,
FI, SE and UK. GFCF data were deflated using the same deflator for all branches,
namely the deflator for GFCF for the economy as a whole. Owing to lack of data,
Spain is excluded in 2005 and Spain and the UK in 2006.
market services sector at the top of the ranking is real estate, renting
and business activities. Hotels and restaurants and wholesale and
retail trade are the two other service sectors included in this group.
Manufacturing as a whole exhibits a growth rate of 0.9 %, below the
2.1 % of the total economy, and the various manufacturing sectors
show a mixed picture. At the bottom of the ranking are textiles and
textiles products, and leather and footwear. At the extreme side of the
distribution, the manufacturing sectors with the highest growth rates
are: manufacture of coke, refined petroleum products and nuclear fuel,
manufacture of electrical and optical equipment, and manufacture of
transport equipment.

F igur e I V . 1 5 : E U G F C F g r o w t h r a t e s b a s e d o n s e l e c t e d c o u n t r i e s , 1 9 9 5 – 2 0 0 6 a n d 1 9 9 5 – 2 0 0 5 ( % )

1995–2006: excl. ES & UK 1995–2005: excl. ES

Transport, storage and communication

Construction
Real estate, renting and business activities
Hotels and restaurants
Manufacture of coke, refined petroleum products and nuclear fuel
Wholesale and retail trade
All NACE branches — Total
Health and social work
Manufacture of electrical and optical equipment
Manufacture of transport equipment
Other community, social, personal service activities
Agriculture, hunting and forestry
Public administration and defence; compulsory social security
Mining and quarrying
Manufacture of wood and wood products
Manufacture of rubber and plastic products
Manufacture of basic metals and fabricated metal products
Education
MANUFACTURING
Manufacture of machinery and equipment n.e.c.
Financial intermediation
Manufacture of pulp, paper and paper products; publishing and printing
Manufacture of food products; beverages and tobacco
Manufacturing n.e.c
Manufacture of other non-metallic mineral products
Manufacture of chemicals, chemical products and man-made fibres
Electricity, gas and water supply
Fishing
Manufacture of leather and leather products
Manufacture of textiles and textile products

–5.0 –4.0 –3.0 –2.0 –1.0 0.0 1.0 2.0 3.0 4.0 5.0
Source: own calculations using Eurostat data.

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 Chapter IV — Sectoral growth

I V. 4 . 3 . 3 C a p i t a l i n t e n s i t y Strictly speaking this is not an indicator of capital stock per person

An indicator that characterises the technology of sectors is capital intensity.
Not only is it useful for descriptive purposes, but also as a determinant of
industry conditions and behaviour. High levels of investment can operate
as a barrier to entry, imply a higher degree of risk, and influence cost
structures and price strategies of firms. Though capital intensity should
be measured as the stock of capital per person employed, a proxy is used
instead in this section, namely the ratio of investment in tangible assets to
the number of persons employed. The calculation of the indicator is based
on data for 2004, 2005 and 2006 and the values presented correspond
to the average of these three years. The data refer to the EU-27 and the
coverage by industry, which goes up to three digits of NACE Rev. 1 and
encompasses a range of sectors from mining and quarrying to market
services. In a few cases missing data were estimated to complete the table
needed for the calculation of the indicator.
employed but of the investment flow per person employed. A drawback
is that investment is highly cyclical and therefore the results must be
interpreted as an approximation, although the cyclical effect is partially
offset by taking average values over three years.
As regards the taxonomy, four groups of sectors have been created using
the quartiles of the distribution of the capital intensity coefficient as break
points. Table IV.10 shows the results of grouping sectors at the level of sub-
sections of NACE Rev. 1.
The two intermediate groups, medium-high and medium-low, consist
of manufacturing sectors, with the exception of wholesale and retail
trade which is nevertheless the closest to the low investment intensity
group. The two other groups are a mixture of activities. Among
high investment intensity there are extractive activities (mining

Ta b l e I V. 1 0 : I nv e s t m e n t i n t e n s i t y ( N AC E R e v. 1 s u b s e c t i o n s ) , a v e r a g e 2 0 0 4 – 0 6

Code Sector Million € / 1 000 persons Group Million € / 1 000 persons

E Electricity, gas and water supply 39.5
DF Refined petroleum 38.0
C Mining and quarrying 25.4
High 13.9
I Transport and communication 13.7
DG Chemicals 13.0
K Real estate and business activities 11.8
DM Transport equipment 10.4
DI Non-metallic mineral products 8.5
DA Food, drinks and tobacco 7.1 Medium-high 7.9
DE Pulp, paper and publishing 6.7
DH Rubber and plastics 6.6
DJ Basic metals and metal products 5.8
DL Electrical and optical equipment 5.5
DD Wood and wood products 4.7 Medium-low 4.5
DK Machinery n.e.c. 4.3
G Wholesale and retail trade 4.1
DN Other manufacturing 3.7
H Hotels and restaurants 3.5
F Construction 3.3 Low 3.3
DB Textiles and clothing 2.3
DC Leather and footwear 2.0
Note: The table excludes agriculture, fishing and non-market services.
Source: own calculations using Eurostat data.

and quarrying), utilities (electricity, gas and water supply), two
manufacturing sectors (coke and refined petroleum, and chemicals).
Three out of the five sectors with the lowest investment intensity are
manufacturing, while the two others are construction and hotels and
restaurants.
IV.4.4 Energy intensity
used as intermediate inputs to be transformed into final products, such
as crude oil used to produce refined oil products in the coke and oil
refining sector.
This indicator is calculated for a range of products from mining to
construction and the results are presented in Table IV.11. Following the
same principle as in the previous sections, sectors have been classified
in four groups, at 2-digit level.

The same approach as for capital intensity was followed to create the
energy intensity taxonomy. Energy intensity is defined as the value
of the purchases of energy products used as fuel in the production
process of the sector relative to the value of production and value
added respectively. More precisely this excludes the energy products
When comparing Table IV.11 and Figure III.13, it is worth noting
that the most energy-intensive industries are a mix of sectors that
represent high, medium and low shares of GDP. For instance, basic
metals and food products are large energy-intensive sectors while the
manufacturing of leather is a small-sized energy intensive one.

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EU industrial structure 2009 — Performance and competitiveness

Ta b l e I V. 1 1 : E n e r g y i n t e n s i t y t a xo n o my ( N AC E R e v. 1 , 2 d i g i t s ) , a v e r a g e 2 0 0 3 – 0 6

Energy/
Code Sector Energy/VA (%) Group Energy/VA (%)
Production (%)
E Electricity, gas and water supply 12.9 46.6
DJ27 Basic metals 5.6 24.8
DE21 Pulp and paper 5.8 20.8
DF23 Refined petroleum 1.5 17.4 High 21.1
DI26 Non-metallic mineral products 6.0 16.8
DG24 Chemicals 3.1 10.5
DB17 Textiles 3.1 10.3
DN37 Recycling 2.3 9.5
DA15 Food and drink 2.1 8.7
DD20 Wood and wood products 2.4 8.0
Medium-high 7.6
DH25 Rubber and plastics 2.4 7.5
C Mining and quarrying 2.3 5.8
DC19 Leather and footwear 1.4 5.4
DB18 Clothing 1.3 4.5
DJ28 Metal products 1.6 4.4
F Construction 1.3 4.0
DN36 Furniture; other manufacturing 1.2 3.7 Medium-low 3.7
DM34 Motor vehicles 0.7 3.5
DK29 Machinery n.e.c. 1.0 2.8
DL31 Electrical machinery 0.9 2.8
DM35 Other transport eq. 0.7 2.5
DL32 Radio, TV & communic. eq. 0.7 2.3
DE22 Printing and publishing 0.8 2.2
Low 2.1
DA16 Tobacco 0.3 1.7
DL33 Scientific and other instruments 0.7 1.7
DL30 Office machinery 0.3 1.6

Note: Agriculture, fishing and services are excluded. The sectors highlighted in the tables are outliers and extreme values in the distribution.
Source: own calculations using Eurostat data.

IV.4.5 Technology

The EU, where about 1.8 % of GDP was spent on R&D in 2006, is lagging
behind the US, which spent about 2.6 % of GDP in 2006. The EU has set
a goal for R&D investment to reach 3 % of GDP by 2010, of which two
thirds of expenditure should come from the private sector31. However,
the R&D intensity and the innovation patterns in Europe vary from
sector to sector. A cross-sectoral approach shows that some activities
are considerably more R&D intensive. A comparison is also made to
identify whether European sectors measure up to those in the US.
Box IV.2 clarifies the limits and advantages of the choices made in this
chapter as regards indicators.

31 F or more background on the European Commission policy, see European

Commission (2007b)

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 Chapter IV — Sectoral growth

Box IV.2: Using indicators to reflect innovation effort in different sectors

In this publication, the approach is specifically sectoral and therefore uses only the indicators linked to EU policies that will provide
a cross-sector view of innovation inputs and outputs. As a consequence, the indicators chosen are R&D expenditure and number
of patents. They are the most commonly used, but present certain biases that are discussed later in this box. They tend to estimate
manufacturing better than services research activities.

In brief, innovation corresponds to four different categories of progress:

— Product innovation
— Process innovation
— Market innovation
— Organisational innovation.

There are different types of indicators that can be used to capture innovation. Some will typically quantify inputs while others
will measure results of innovation. The various types of indicators are each better suited to measure certain types of innovation
(product, process, market, and organisation).

Inputs innovation indicators

Research and Development (R&D) is one among many activities that may be carried out in an innovation process. R&D comprises
basic research, applied research and experimental development. The indicators are usually either R&D expenditure or R&D
personnel. In a knowledge-driven economy, R&D expenditure is not the only sign of innovation. Other types of measures can
represent inputs that are supposed to lead to progress. Expenditures on software, training, organisation, etc., also quantify the
innovation effort.

Innovations in service activities are not well captured by the R&D indicator. Services innovations often involve software applications
and research in social sciences that are not properly accounted for in R&D expenditure surveys. Indeed, R&D expenditure surveys32
focus more on technological R&D than on social science R&D33. As this publication focuses on R&D expenditure, it assists the
measurement and understanding of innovation in manufacturing rather than services.

Besides, countries follow different practices in their national surveys when it comes to allocating R&D expenditures of large, multi-
sector enterprises to the different economic sectors. Similar R&D expenditure can be categorised in different industries across
countries.

Outputs innovation indicators

There are different ways to mark the outcome of innovation, for example by submitting a patent, creating a new trademark or
publishing an article.

— Patents statistics are relevant to the extent that innovations can benefit from patents. The first drawback of this indicator is
that certain types of innovation cannot be patented. For example, the patenting of software innovations is not the same in the
EU and in the US. Therefore industry comparison between EU and extra-EU countries is not always straightforward. Secondly,
the quality of patents is not assessed. Many companies may apply for patents for strategic reasons, without bringing actual
innovations onto the market or into production.

— Trademark data, as the results of innovation, are a better proxy for organisational and marketing innovations.

— The number of publications in a research domain can be a good proxy to represent idea creation. Nonetheless, there are
difficulties in comparing this type of output across sectors.

32 To understand the methodology behind R&D surveys, see OECD (2002).

33 For more information on innovation in services see Miles (2007). For an alternative source of sectoral company-based survey see the ‘2008 EU industrial
R&D investment’ European Commission (2008).

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EU industrial structure 2009 — Performance and competitiveness

On the whole, there are certain innovations, such as organisational ones, that will be very difficult to assess ex post
from a qualitative and quantitative point of view.

The link between input and output

Eventually, research and development efforts will lead to an increase of the stock of knowledge. This knowledge
will turn into new applications and new products. An output to input ratio provides a concrete measure of R&D
performance.

I V. 4 . 5 . 1 R & D Owing to the lack of R&D in services and the financial crisis, it
is uncertain whether the 2  % of GDP target (percentage of R&D
The R&D intensity gap between the EU and the US (2006) comes expenditure for the business enterprise sector) can be achieved.
mainly from the business enterprise sector (only 1.17 % of GDP in Indeed, R&D departments are often hit hard by budgetary constraints.
the EU against 1.83 % of GDP in the US). The R&D intensity in the Moreover, the real economy sectors that prove to be most sensitive to
government sector is equivalent in the EU and the US (0.65 % and the crisis may be the ones with the highest R&D intensity.
0.66 % respectively).
To carry out the EU R&D expenditure analyses, an aggregate was
R&D expenditure as a % of GDP: Government versus business sector formed (an EU sample of 10 countries) representing 80 % of total
R&D expenditure in the EU. The different graphs focus on the gross
% of GDP EU-27 US
domestic expenditure on R&D (GERD) financed by industry. As a result,
Government sector 0.65 0.66
they do not reflect the sectoral R&D effort by governments.
Business sector 1.17 1.83
Private-non-profit 0.02 0.12 Certain sectors, because of their small size, may contribute to a lesser
extent to the overall innovation effort. Nonetheless, they may still be
The business R&D gap between the EU and the US takes place above all very R&D intensive compared to the output generated in the sector.
in the services sector as R&D intensity amounted to only 0.16 % of GDP One illustration is the office accounting and machinery sector, which
in the EU in 2006 compared to 0.65 % in the US. But as explained in represents 2.4 % of total business R&D expenditure in the EU in 2003
Box IV.2, the gap may also be attributable to the differences in surveys. but has one of the highest R&D intensities, amounting to 30 % of value
The EU business R&D intensity gap with the US is probably much more added generated in the sector.
balanced between the manufacturing and services sectors than the
below figures tend to show34. In order to estimate and compare the intensity of innovation efforts in
different sectors, R&D expenditures have been divided by value added
R&D expenditure as a % of GDP: Manufacturing versus service sector generated in the sector. Figure IV.16 shows that there are two sectors
where the US significantly outperforms the EU: medical precision and
% of GDP EU-27 US
optical instruments, and office accounting and computing machinery.
Manufacturing 1.01 1.18
Conversely, there are hardly any sectors where the EU R&D intensity is
sector
higher than in the US. The two large EU sectors that are slightly ahead
Services sector 0.16 0.65 of the US are motor vehicle trailers and chemicals. When comparing
sectors among themselves, services sectors clearly lag behind as far
In absolute terms, overall R&D expenditure in manufacturing as R&D expenditure is concerned. One of the reasons why services lag
represents more than 80 % of total R&D in the EU35. Compared to the behind is the nature of innovation in services, which is not necessarily
large share of services in employment and value added in the EU captured by R&D expenditure statistics (Box IV.2). In certain sectors, as
(about 75 % and 80 % respectively), the share of R&D expenditure in shown in Figure IV.17, an increase in EU R&D expenditure over time
services is extremely low. As explained in Box IV.2, this result may be may be a sign of catch-up. In radio and television equipment, and
due to the fact that there is actually less innovation effort in service in office accounting and computing machinery, the R&D intensity
sectors, but it may also be explained by the fact that the R&D indicator has increased from 1995 to 2003. In other R&D-intensive sectors, the
does not measure services innovations well. ratios of expenditure as a proportion of value added have decreased,
namely in other transport equipment and electrical machinery and
34 For more background, see OECD (2004) and OECD (2005). apparatus.
35 For the original publication see Eurostat (2007a).

Page 108
 Chapter IV — Sectoral growth

F igur e I V . 1 6 : E U a n d U S R & D e x p e n d i t u r e a s a s h a r e o f v a l u e a d d e d g e n e r a t e d i n t h e s e c t o r i n 2 0 0 3 ( % )

Radio, TV & communic. eq. EU

US
Office machinery

Other transport eq.

Motor vehicles

Scientific and other instruments

Chemicals

TOTAL MANUFACTURING

Machinery n.e.c.

Electrical machinery

Rubber and plastics

Computer and related activities

Basic metals

Refined petroleum

TOTAL

Non-metallic mineral products

Food, drinks and tobacco

Furniture; other manufacturing

Metal products

Textiles and clothing

Pulp, paper and publishing

ELECTRICITY GAS AND WATER SUPPLY

Other business activities

Wood and wood products

TOTAL SERVICES

CONSTRUCTION

Wholesale and retail trade

Financial intermediation

Transport and communication

0 10 20 30 40 50 60
Note: The EU is represented by 10 countries that represent 80 % of total EU R&D expenditure: BE, CZ, DK, DE, IE, ES, FR, IT, NL and FI. Figures are given for 2003 in order to have
a large sample of countries: there were no complete data sets from 2004.
Data converted into euro using Eurostat exchange rates — Annual data (Economy and Finance).
Sectors missing for lack of data:
— Transport and storage, financial intermediation are missing only for the EU,
— Other business activities and furniture; manufacturing n.e.c. for the US,
— Recycling, hotels and restaurants, post and telecommunications, real estate, renting, research and development, community social and personal services for the US
and for the EU
Source: calculated using OECD data.

Page 109
EU industrial structure 2009 — Performance and competitiveness

F igur e I V . 1 7 : G r o w t h i n E U - 1 0 R & D e x p e n d i t u r e a s % o f v a l u e a d d e d 1 9 9 5 a n d 2 0 0 3

2003
1995

Radio, TV & communic. eq.

Office machinery

Other transport eq.

Motor vehicles

Scientific and other instruments

Chemicals

TOTAL MANUFACTURING

Machinery n.e.c.

Electrical machinery

Rubber and plastics

Computer and related activities

Basic metals

Refined petroleum

TOTAL

Non-metallic mineral products

Food, drinks and tobacco

Furniture; other manufacturing

Metal products

Textiles and clothing

Pulp, paper and publishing

ELECTRICITY GAS AND WATER SUPPLY

Other business activities

Wood and wood products

TOTAL SERVICES

CONSTRUCTION

Wholesale and retail trade; repairs

0 5 10 15 20 25 30 35
Note: The EU is represented by 10 countries: BE, CZ, DK, DE, IE, ES, FR, IT, NL and FI.
Data converted into euro using Eurostat exchange rates — Annual data (Economy and Finance).
Sectors missing for lack of data: Recycling, hotels and restaurants, transport and storage, post and telecommunications, financial intermediation, real estate renting
and business activities, research and development, community social and personal services.
ISIC 1-digit and 2-digit sectors are represented.
Source: calculated using OECD data.

Page 110

I V . 4 . 5 . 2 P a t e n t s
Patent statistics are used to calculate indicators for the output side of
knowledge production and, despite the drawbacks of this indicator36,
the information is of interest in various respects. Various aspects make
patents particularly useful as a proxy for technology and technological
developments. Patent statistics refer to the output of the research
process undertaken by firms and sectors. They provide information
on a large number of sectors and technologies and they permit good
coverage of developments over time, which is particularly interesting.
As these data are available for a large number of countries, they also
allow us to calculate the relative performance of the EU, or any other
country or region relative to the world.
Two indicators based on the number of patents are used in this section.
The first indicator, named PAT1, is used to make comparisons among
sectors within the EU. It compares the ratio of patents to employment
in a sector, relative to the same ratio for total manufacturing. It is
defined as follows:
where:
PATi,EU: patents filed by EU sector ‘i’
PAT T,EU: patents filed by EU ‘all sectors’
Li,EU: employment in EU sector ‘i’
LT,EU: total employment in the EU
36 G
 riliches (1990) discusses a number of issues related to patents, including the
advantages and drawbacks. See also Pavitt (1985), Silverman (2002) and Griliches
(1984).
Chapter IV — Sectoral growth
Values greater (lower) than 1 indicate that the sector is more (less)
patent-intensive than the whole economy (and therefore than all other
sectors).
The second indicator, PAT2, compares the number of patents in a given
sector in the EU relative to total patents in the EU with the number of
patents in the same sector in the world again relative to total patents
in the world, and is, therefore, an indicator of the EU’s sectors relative
performance in patenting. It is defined by the following ratio:
where:
PATi,EU : number of patents filed by EU sector ‘i’
PAT T,EU : number of patents filed by EU ‘all sectors’
PATi,W : number of patents filed by world sector ‘i’
PAT T,W : number of patents filed by world ‘all sectors’
Values greater than 1 indicate that the sector has a ‘patent’
specialisation relative to the reference area (here the world).
Figure IV.18 shows EU sectors ranked in descending order according to
the value of PAT1. The indicator is calculated using data from both the
European Patent Office (EPO) and the US Patent and Trademark Office
(USPO). The ranking is based on the data from EPO. As PAT1 reflects
the number of patents in a sector relative to employment, it measures
innovation intensity across sectors. As was the case with R&D, this
varies substantially across sectors: from the highest values in two ICT
sectors (office machinery and telecommunications equipment) to
the near-negligible value for clothing, wood and wood products, and
printing and publishing.
Page 111
EU industrial structure 2009 — Performance and competitiveness

F I G U R E I V. 1 8 : E U - 2 7 PAT 1 ( a v e r a g e 2 0 0 4 – 0 5 )

Office machinery
Telecommunication equipment USPO 2001–02
EPO 2004–05
Watches and clocks
Pharmaceuticals, medicinal chemicals and botanical prod.
Basic chemicals
Radio and TV receivers
Electronic valves and tubes
Optical instruments, photographic equipment
Soap and det., cleaning and pol. prep., perfumes and toilet prep.
Other chemical products
Industrial process control equipment
Mineral oil refining and nuclear fuel
Lighting equipment and electric lamps
Pesticides and other agrochemical products
Medical and surgical equipment
Domestic appliances n.e.c.
Man-made fibres
Other special purpose machinery
Motor vehicles
Agricultural and forestry machinery
Other transport equipment
Machine tools
Instruments for measuring, testing and navigating
Accumulators and batteries
Machinery for the prod. and use of mech. Power
Tobacco
Other general purpose machinery
Electricity distr. and control app. + ins. Wire and cable
Basic metals
Paints, varn. and similar coat., printing ink and mastics
Weapons and ammunition
Rubber and plastics
Pulp, paper and paper products
Non-metallic mineral products
Furniture; other manufacturing
Electric motors, generators and transformers
Fabricated metal products
Electrical equipment n.e.c.
Food and drink
Textiles
Leather and footwear
Printing and publishing
Wood and wood products
Clothing

0 5 10 15 20 25 30
Note: Ratio of patents to employment in a sector, relative to the same ratio for total manufacturing.
Source: calculated using Eurostat data.

From the point of view of analysing competitiveness and performance, the competitiveness in the patenting process in the country under analysis.
second indicator, PAT2, is more interesting: by comparing the performance This indicator is used in this section to analyse, first, the diversity within the
of sectors in a country or region with the performance of the same sectors EU, and, second, the performance of the EU and Member States relative to
in a reference area (EU or World), this indicator measures specialisation or the world. The results for this indicator, using both EPO and USPO data,

Page 112
 Chapter IV — Sectoral growth

are shown in Figure IV.19 in which sectors are ranked according to PAT2,
calculated using data from the European Patent Office (EPO). Although
the two rankings are significantly correlated, there are differences in the
value of the indicator in some sectors: the most significant are agricultural
and forestry machinery; furniture and other manufacturing; wood and
wood products — for which the propensity to patent in the EU is higher
than in the US — and pesticides and other agrochemical products; and
pharmaceuticals, medicinal chemicals and botanical products — with a
higher propensity to patent in the US than in the EU.
The most interesting information from Figure IV.19 is that on the
position of EU sectors relative to the world, and their competitiveness

F igur e I V . 1 9 : E U - 2 7 P A T 2 ( a v e r a g e 2 0 0 2 – 2 0 0 5 )

PAT2 (USPO) PAT2 (EPO)

Agricultural and forestry machinery

Wood and wood products
Fabricated metal products
Machine tools
Leather and footwear
Motor vehicles
Rubber and plastics
Machinery for the prod. and use of mech. Power
Clothing
Other special purpose machinery
Domestic appliances n.e.c.
Other general purpose machinery
Weapons and ammunition
Furniture; other manufacturing
Tobacco
Other transport equipment
Electric motors, generators and transformers
Basic metals
Paints, varn. and similar coat., printing ink and mastics
Industrial process control equipment
Non-metallic mineral products
Pulp, paper and paper products
Textiles
Electricity distr.and control app. + ins. Wire and cable
Food and drink
Mineral oil refining and nuclear fuel
Lighting equipment and electric lamps
Other chemical products
Man-made fibres
Basic chemicals
Soap and det., cleaning and pol. prep., perfumes and toilet prep.
Pesticides and other agrochemical products
Instruments for measuring, testing, and navigating
Printing and publishing
Pharmaceuticals, medicinal chemicals and botanical prod.
Electrical equipment n.e.c.
Electronic valves and tubes
Optical instruments, photographic equipment
Telecommunication equipment
Office machinery
Medical and surgical equipment
Radio and TV receivers
Watches and clocks
Accumulators and batteries
0 0.5 1 1.5 2 2.5
Note: Ratio of the number of patents in a given sector in the EU to the total number of patents in all sectors in the EU, relative to the same ratio in the world.
Source: calculated using Eurostat data.

Page 113
EU industrial structure 2009 — Performance and competitiveness

F igur e I V . 2 0 : E U s e c t o r s b y P A T 2 i n 2 0 0 4 – 0 5 — C o m p a r i s o n w i t h t h e U S

US (2004–05)
2.2

2.0

1.8

1.6

1.4

1.2

1.0

0.8

0.6

0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0 2.2 2.4 2.6
EU-27 (2004–05)
Source: calculated using Eurostat data.

F igur e I V . 2 1 : E U s e c t o r s b y P A T 2 i n 2 0 0 4 – 0 5 — C o m p a r i s o n w i t h J a p a n

2.0
Japan (2004–05)

1.8

1.6

1.4

1.2

1.0

0.8

0.6

0.4

0.4
0.2 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0 2.2 2.4 2.6
0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0 2.2 2.4 2.6
EU-27 (2004–05)
Source: calculated using Eurostat data.

Page 114
 Chapter IV — Sectoral growth

in the process of producing inventions. Interestingly, the graph shows
the weakness of the EU in the most R&D-intensive sectors (as defined
in Section IV.4.5.1 on R&D expenditure). For example, the value of
the index is below 1 in ICT sectors, scientific and other instruments,
and pharmaceuticals. However, these results need to be interpreted
cautiously, as they are based exclusively on data from the European
Patent Office (EPO) and can be affected by the country bias, caused by
certain sectors’ propensity to patent more in the US than in the EU37. A
revised version of this report will present results using data from both
EPO and the US Patent and Trademark Office (USPO). Nevertheless,
the differences between the results are examined, for 1999–2002, in
the previous edition of this report38, which confirms that, for some
sectors, the value of the indicator is significantly different when USPO
data are used. In particular, when using USPO data as opposed to EPO
data, it is substantially higher, and greater than 1, in the following
sectors: mineral oil refining and nuclear fuel, chemicals (excluding
pharmaceuticals) and pharmaceuticals.
Finally, it is worth mentioning the contrasting specialisation patterns
between the EU, the US and Japan. Figure IV.20 and Figure IV.21, based
on PAT2, show the technological specialisation profile of the EU relative
to the US and Japan.
IV.5 Demand-side drivers: a sectoral
picture
IV.5.1 Private consumption
In an economic slowdown, one may wish to know which sectors are most
likely to be affected by reduced consumption. Consumers’ spending
fluctuates over time for different reasons: because preferences change,
because people are more constrained financially and because buyers are
sensitive to price changes. While consumption patterns are extremely stable
for certain goods and services, they appear less so for others. Looking at final
consumption is crucial, as it represented 57.4 %39 of EU GDP in 2007.
Over the last 30 years (Figure IV.22), services have overtaken goods as far as
private consumption is concerned. The gap between the share of services
and goods consumption in 1977 was 15 points (in constant terms) and it
doubled to 30 points in 2004. In spite of the increase of relative prices in
services, this trend can be explained by changes in preferences and by
income elasticity of demand. Indeed, the previous publication EU industrial
structure 2007 — Challenges and opportunities (IV.3 Private consumption)
indicated that values for income elasticity of demand are much higher in
services sectors than in goods.

37 However, other sectors (such as wood and wood products, metal products, and
leather and footwear) seem to be subject to a home bias in patenting; in other
words, they tend to patent more in the EU than abroad. For such sectors, using
EPO data overstates their degree of specialisation.
38 EU industrial structure 2007 — Challenges and opportunities, European Commission,
Directorate-General for Enterprise and Industry, 2007.
39 When GDP is measured from the expenditure side, it is the sum of private
consumption expenditure, government consumption expenditure, fixed
investment and net exports (exports minus imports). In the context of this
equation, private consumption represents household and non-profit institutions
serving households’ (NPISH) final consumption expenditure.

F I G U R e I V. 2 2 : S h a r e s o f g o o d s a n d s e r v i c e s i n p r i v a t e c o n s u m p t i o n i n c o n s t a n t ( K ) c u r r e n t (C ) p r i c e s i n s i x
eU countries from 1977 to 2004 (%)

80

70

60
Services (C)
50 Services (K)
Goods (K)
Goods (C)
40

30

20

10

0
77

78

79

80

81

82

83

84

85

86

87

88

89

90

91

92

93

94

95

96

97

98

99

00

01

02

03

04
19

19

19

19

19

19

19

19

19

19

19

19

19

19

19

19

19

19

19

19

19

19

19

20

20

20

20

20

Note: The six EU countries represented are DK, FR, IT, AT, FI and UK.
Goods sectors include food and non-alcoholic beverages, alcoholic beverages, tobacco and narcotics, clothing and footwear, furnishings, household equipment
and routine maintenance of the house. Services sectors include health, transport, communications, recreation and culture, education, restaurants and hotels,
miscellaneous goods and services, housing, water, electricity, gas and other fuels.
Source: calculated using Eurostat data.

Page 115
EU industrial structure 2009 — Performance and competitiveness

As shown in Figure IV.23, where private consumption in the six
countries is broken down into large categories over a long period of
time (1977–2004), food and non-alcoholic beverages have fallen to a
much lower share of total consumption (from 21 % to 12 %) while the
share of housing and utilities in total private consumption has risen
from 16 % to 21 %. Income elasticity and price evolutions in these two
main categories of consumption largely explain the changes in trends.
A housing boom has indeed been observed in many countries, as
explained in Section IV.5.2 Investment demand. Overall, the categories
for which the share in total consumption has diminished are necessities
rather than luxuries. They are related to food and clothing or to the
furnishing, maintenance and equipment of houses.

F I G U R e I V. 2 3 : P r i v a t e c o n s u m p t i o n s h a r e s i n s i x e U c o u n t r i e s i n 1 9 7 7 a n d 2 0 0 4 ( % )

1977
2004
25

20

15

10

0
r

th

ns

n
to co ver ho nd

ot s,

ue r,

us t

ltu on

te s

ic s
or
ea

ho n

io

ho nt

rv u
r f te
rc ge

al

io
s

ls

re

ls

es
e me

se neo
cc oli ges c

sp

cu ti
be alco d a

at
ic

d ra
a li

he wa

He

at
na ra

d ea
ot

uc
an

an tau
th ip
o

ic

nd lla
d ve

an ecr
fo

ot g,
n- Fo

Ed
of qu

Tr

un
an e

s a ce
in
d

Re
R
o cb

ce d e

m
an

an us

s
od Mi
m
an ol
as o
d
no

ng

Co
,g H

en eh
ba h

hi

nt s
ot

ai ou

go
Al

Cl

m h
ty

e s,
i

in ng
ic
tr

ut hi
ec

ro is
el

d rn
an Fu

Note: The six EU Member States represented are DK, FR, IT, AT, FI and UK.
Source: calculated using Eurostat data.

Page 116
 Chapter IV — Sectoral growth

Figure IV.24 and Figure IV.25 provide a more detailed and more recent
overview of the consumption breakdown in EU-27 in 2006 and of changes
in the overall EU-15 and EU-25 over the time period 1995–2007. The ‘basic
needs’40 category ranks highest in the consumption breakdown, with food,
40 Basic needs are the goods and services that are essential to achieve a certain
minimum standard of living.
housing, clothing and transport representing in total more than 50 % of
total consumption. But as EU standards of living are constantly improving,
consumption is growing fastest in less essential categories of goods and
services. The average annual growth rate in constant prices has increased
by almost 10 % in media equipment (audio-visual, photographic and
information processing equipment). The other sectors that show very high
growth (above 4 %) are the financial sector and recreational goods.

F I G U R e I V. 2 4 : e U - 2 7 S e c t o r a l s h a r e f o r p r i v a t e c o n s u m p t i o n i n 2 0 0 6 ( i n % o f t o t a l c o n s u m p t i o n )

Food
Imputed rentals for housing
Catering services
Operation of personal transport equipment
Clothing
Purchase of vehicles
Actual rentals for housing
Electricity, gas and other fuels
Recreational and cultural services
Insurance
Communications
Financial services n.e.c.
Transport services
Personal care
Furniture and furnishings, carpets and other floor coverings
Tobacco
Other recreational items and equipment, gardens and pets
Audio-visual, photographic and information processing equipment
Goods and services for routine household maintenance
Alcoholic beverages
Accommodation services
Water supply and miscellaneous services relating to the dwelling
Newspapers, books and stationery
Medical products, appliances and equipment
Outpatient services
Maintenance and repair of the dwelling
Other services n.e.c.
Social protection
Non-alcoholic beverages
Footwear including repair
Education
Personal effects n.e.c.
Household appliances
Hospital services
Package holidays
Glassware, tableware and household utensils
Household textiles
Tools and equipment for house and garden
Other major durables for recreation and culture
0 2 4 6 8 10 12
Note: Communication and education sectors could not be broken down into 3-digit subsectors as data were not available.
Source: calculated using Eurostat data.

Page 117
EU industrial structure 2009 — Performance and competitiveness

F I G U R e I V. 2 5 : P r i v a t e c o n s u m p t i o n i n e U - 1 5 a n d i n e U - 2 7 — av e r a g e a n n u a l g r o w t h r a t e i n c o n s t a n t p r i c e s
1995–2007 (%)

EU-27 EU-15

Audio-visual, photographic and information processing equipment

Financial services n.e.c.
Other major durables for recreation and culture
Other recreational items and equipment, gardens and pets
Tools and equipment for house and garden
Purchase of vehicles
Medical products, appliances and equipment
Recreational and cultural services
Outpatient services
Social protection
Package holidays
Household appliances
Imputed rentals for housing
Personal care
Maintenance and repair of the dwelling
Goods and services for routine household maintenance
Hospital services
Non-alcoholic beverages
Catering services
Transport services
Accommodation services
Water supply and miscellaneous services relating to the dwelling
Other services n.e.c.
Actual rentals for housing
Clothing
Household textiles
Furniture and furnishings, carpets and other floor coverings
Glassware, tableware and household utensils
Operation of personal transport equipment
Personal effects n.e.c.
Insurance
Footwear including repair
Food
Newspapers, books and stationery
Alcoholic beverages
Electricity, gas and other fuels
Tobacco
–2 0 2 4 6 8 10 12
Note: These sectors are not included for lack of data: narcotics, postal services, telephone and telefax equipment and services, pre-primary and primary education,
secondary education, post-secondary non-tertiary education, tertiary education, and education not definable by level.
Source: calculated using Eurostat data.

One may wonder whether consumption of goods and services that grew
fastest during the time period analysed in Figure IV.25 (1995–2007) can
continue to grow at similar rates in a crisis, when consumption contracts.
Expectations are that consumers will meet their most basic needs first
and cut down on less essential types of consumption. Figure IV.26 tries to
identify the sectors that are most sensitive to business cycles by using a
coefficient of variation indicator.
The coefficient of variation is applied to the year-on-year consumption
growth rate. It indicates whether year-on-year consumption growth rates
in different sectors varied substantially over the time period 1995–2007.
The coefficient of variation is a statistical measure of the spread of a
sample (that has been normalised). When it is high, it means that year-
on-year growth rates have varied a lot. For instance, the average year-
on-year growth rate of consumption of audio-visual, photographic and
information processing equipment was 13 % from 1997 to 2000 while it
was only 6 % from 2001 to 2003. It means that this type of good is prone
to very pro-cyclical consumption patterns.
The categories of consumption that appear to be more sensitive
to business cycles are financial services, package holidays, hospital
services (those not financed by the State), audio-visual, photographic
and information processing equipment, tobacco, purchase of vehicles.
The previous publication EU industrial structure 2007 — Challenges and
opportunities (see Section IV.3, Private consumption) indicated by means of
elasticity measurements that a number of these are luxury types of goods,
namely package holidays, hospital services, audio-visual, photographic
and information processing equipment, tobacco. Conversely, the
categories of consumption that appear to be least sensitive to economic
cycles are the ones related to food and housing (rental costs, goods and
services for household maintenance, household textiles). They are by
nature more ‘incompressible’ since they meet basic needs.

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 Chapter IV — Sectoral growth

F I G U R e I V. 2 6 : e U - 2 7 c o n s u m p t i o n c h a n g e s o v e r t i m e — Co e f f i c i e n t o f v a r i a t i o n o f y e a r - o n - y e a r g r o w t h r a t e
of final consumption in 1997–2007

Financial services n.e.c.

Package holidays
Hospital services
Audio-visual, photographic and information processing equipment
Tobacco
Purchase of vehicles
Electricity, gas and other fuels
Outpatient services
Other major durables for recreation and culture
Insurance
Maintenance and repair of the dwelling
Water supply and miscellaneous services relating to the dwelling
Accommodation services
Alcoholic beverages
Recreational and cultural services
Glassware, tableware and household utensils
Furniture and furnishings, carpets and other floor coverings
Transport services
Tools and equipment for house and garden
Personal effects n.e.c.
Personal care
Medical products, appliances and equipment
Other services n.e.c.
Non-alcoholic beverages
Household appliances
Social protection
Catering services
Footwear including repair
Newspapers, books and stationery
Food
Operation of personal transport equipment
Clothing
Other recreational items and equipment, gardens and pets
Household textiles
TOTAL
Goods and services for routine household maintenance
Imputed rentals for housing
Actual rentals for housing
0 0.5 1 1.5 2 2.5 3
Note: Coefficient of variation is defined as the ratio of the standard deviation to the mean.
Standard deviation is defined as the positive square root of the variance.
Source: calculated using Eurostat data.

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EU industrial structure 2009 — Performance and competitiveness

IV.5.2 Investment demand
The ‘Integrated guidelines for growth and jobs’ (2005–08) highlight
the importance of investments and their role as ‘growth-enhancers’.
The indicator gross fixed capital formation (GFCF) is a measure of the
net new investment by enterprises, government and households in
the domestic economy in fixed capital assets, during an accounting
period. GFCF is not a measure of total investment; indeed financial
assets are not included. For that reason, this indicator gives a good
insight into the investment growth in the real economy. It represents a
list of six product categories: metal products and machinery, transport
equipment, construction work related to housing, construction work
related to construction other than housing, other products.
Some assets have an impact on the amount and quality of production
facilities in an economy. This is the case for metal products and
machinery, for construction other than housing and for transport
equipment investments. Others, namely housing construction work,
increase consumer welfare but do not add substantially to the productive
stock of assets of the private sector. The overall EU picture (Figure IV.27)
in 2007 shows that most of the investments that have taken place
benefit the production facilities of the EU. The three categories, metal
products and machinery, construction other than housing and transport
equipment investments represent in total 65 % of total investment.

F igur e I V . 2 7 : E U - 2 7 i n v e s t m e n t b r e a k d o w n i n 2 0 0 7 ( i n % o f t o t a l c u r r e n t p r i c e s )

Other products
8%
Metal products
and machinery
26 %

29 %
Construction work:
other constructions

10 %
Transport
equipment

27 %
Construction work: housing
Note: The graph intentionally does not include products of agriculture, forestry, fisheries and aquaculture.
Source: calculated using Eurostat data.

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 Chapter IV — Sectoral growth

Figure IV.28 shows the evolution by type of asset. It shows that in for EU-27) and other products (5.5 % for EU-15 and 5.6 % for EU-27). The
the EU, investment growth in 1995–2007 was greatest in transport average annual growth rate was also substantial in the metal products
equipment (average annual growth rate of 5.3 % for EU-15 and 5.6 % and machinery sector (4.5 % for EU-15 and 4.6 % for EU-27).

F I G U R e I V. 2 8 : I nv e s t m e n t a v e r a g e a n n u a l g r o w t h r a t e i n t h e e U - 2 7 1 9 9 5 – 2 0 0 7 ( % )

EU-27 EU-15

Transport equipment
Other products
Metal products and machinery
Total
Construction work: other constructions
Construction work: housing
0 1 2 3 4 5 6

Note: Calculated from data expressed in constant terms (reference year 2000).
The graph intentionally does not include products of agriculture, forestry, fisheries and aquaculture.
Source: calculated using Eurostat data.

EU investment growth has been concentrated in very few countries.
Investment in housing did not grow greatly in 1995–2007 (1.9 % in EU-
15 and 2.1 % in EU-27), but the picture is much more nuanced when
one looks at different countries. Figure IV.29 shows the contribution
to investment growth of the five EU countries that invested most
in absolute terms. For instance, Greece, Spain, France and the UK
accounted for 92 % of housing construction work investment in the
EU in 1995–2006. It does not appear on the graph, but over the time
period 1995–2000, 76 % of investment increase in housing construction
work came from Greece and Spain exclusively. In 1995–2006 those
two countries were responsible for 46 % of the increase in housing
construction in the EU.

F I G U R e I V. 2 9 : To p f i v e c o u n t r i e s — c o n t r i b u t i o n t o i n v e s t m e n t g r o w t h 1 9 9 5 – 2 0 0 6 ( % )

100

80

60

40

20

0
ne ts
l

s
in :

io :
ta

us rk

ct rk
en

ct
hi uc
ry

ns
To

ho wo

ru o

u
m
ac d

st n w

od
m ro

ip

pr
d lp

qu

tio

on tio

er
an eta

te

uc

r c uc

th
or

tr

he tr
M

O
ns

ot ons
sp

Co
an

C
Tr

Note: Calculated from data expressed in constant terms (reference year 2000). The bars add together the contribution to increase in investment from the five countries
with the highest contribution.
Source: calculated using Eurostat data.

Page 121
EU industrial structure 2009 — Performance and competitiveness

The breakdown by country shows that there are large discrepancies in
investment growth among EU countries (Table IV.12). While the average
annual growth rate between 1995 and 2007 is 3.6 % in the EU-27; it is at
least three times higher in all Baltic countries and in Bulgaria.
The higher average annual growth rate in housing construction in
several countries (such as Slovakia 10.6 %, Poland 8.5 %, Ireland 8 %,
Spain 7.7 %, and Lithuania 6.9 %) can be interpreted as a sign of a
real estate boom or an indication of catching up (especially in new
Member States). The considerable investments that took place were
initially driven by excess demand. As the stock of housing has increased
significantly, there may be a risk of an over-abundant housing offer.

Ta b l e I V. 1 2 : G r o w t h i n i nv e s t m e n t l e v e l s , a v e r a g e a n n u a l g r o w t h r a t e 1 9 9 5 – 2 0 0 7 ( % )

Metal products and Transport Construction work: Construction work: Other

Total
machinery equipment housing other constructions products
Austria 1.9 % 1.9 % 4.6 % –1.1 % 2.0 % 9.5 %
Belgium 3.5 % n.a. n.a. n.a. n.a. n.a.
Bulgaria 11.0 % n.a. n.a. n.a. n.a. n.a.
Cyprus 4.7 % 6.8 % 4.6 % 4.2 % 4.0 % –7.4 %
Czech Republic 2.9 % 3.8 % 13.6 % 5.0 % –1.1 % 3.1 %
Denmark 4.5 % 4.8 % 2.0 % 6.6 % 1.2 % 10.9 %
Estonia 12.1 % n.a. n.a. n.a. n.a. n.a.
Finland 5.4 % 5.3 % 3.4 % 5.9 % 5.3 % 6.5 %
France 3.7 % 3.7 % 6.8 % 2.6 % 2.7 % 8.4 %
Germany 1.2 % n.a. n.a. –1.2 % –2.0 % 6.8 %
Greece n.a. n.a. n.a. n.a. n.a. n.a.
Hungary 5.9 % n.a. n.a. n.a. n.a. n.a.
Ireland 8.6 % 7.0 % 9.7 % 8.0 % 10.1 % 9.3 %
Italy 2.5 % 2.4 % 3.5 % 1.9 % 2.6 % 3.1 %
Latvia 17.5 % n.a. n.a. n.a. n.a. n.a.
Lithuania 12.6 % 16.5 % 19.7 % 6.9 % 9.8 % 18.7 %
Luxembourg 6.2 % 7.4 % 6.2 % 1.1 % 6.3 % 13.3 %
Malta n.a. n.a. n.a. n.a. n.a. n.a.
Netherlands 3.4 % 6.3 % 3.1 % 2.3 % 1.5 % 5.6 %
Poland 7.4 % 8.3 % 12.7 % 8.5 % 5.1 % 19.4 %
Portugal 2.6 % n.a. n.a. n.a. n.a. n.a.
Romania n.a. n.a. n.a. n.a. n.a. n.a.
Slovakia 5.9 % 4.2 % 8.0 % 10.6 % 4.7 % 17.1 %
Slovenia 7.3 % 9.4 % 9.9 % 5.1 % 5.8 % 8.1 %
Spain 6.2 % 6.9 % 8.9 % 7.7 % 3.7 % 6.7 %
Sweden 4.7 % 5.6 % 9.9 % 7.4 % 0.4 % 5.6 %
United Kingdom 4.9 % 7.0 % 2.4 % 2.9 % 4.0 % 4.3 %

EU-15 3.4 % 4.6 % 5.3 % 2.0 % 2.2 % 5.4 %

EU-25 3.5 % 4.8 % 5.6 % 2.1 % 2.4 % 5.5 %
EU-27 3.6 % 4.8 % 5.8 % 2.2 % 2.4 % 5.5 %

Note: Investment is displayed using a gross fixed capital formation indicator calculated from data expressed in constant terms (reference year 2000).
Source: calculated using Eurostat data.

Page 122

Chapter V
International
competitiveness of
EU industry
V.1 Introduction
The present chapter analyses the competitiveness of the EU economy as
shown by the performance of EU industry in external trade. Trade flows
are used to calculate indicators for the degree of competitiveness and
other aspects of external trade. The importance of the analysis of external
trade is twofold. First, while other international economic activities (e.g.
foreign direct investment) are important, exports account on average
for 17  % of total manufacturing production, and this percentage is
substantially higher for some industries. This underscores the importance
of external markets for domestic production. Second, performance in
external trade provides insight into various factors determining trade
patterns, in particular the competitiveness of EU industries. However, this
chapter is not limited to an analysis of trade in goods. In fact, it covers
trade in both goods and services and also contains a section on foreign
direct investment (FDI), which is important for understanding the effect
of internationalisation on European industries.
The chapter is organised as follows. Section V.2 presents an overall
picture of world trade in goods and services and discusses the
openness of EU industries. Section V.3 is devoted to an analysis of
competitiveness from various angles. First, the competitiveness of EU
industries is analysed using three indicators, namely: share in world
markets, relative trade balance and revealed comparative advantage.
EU trade is analysed relative to the rest of the world and various trade
partners. Second, intra-industry trade is examined to understand the
nature (inter-industry v intra-industry) of EU trade. Third, EU trade
is analysed according to a broad categorisation of goods in terms
of their use in the economy. Particular attention is paid to trade in
intermediate goods. Fourth, the role of labour skills and technology in
international trade is analysed by grouping sectors into four different
levels of labour skills and technology. Finally, foreign direct investment
by sector is analysed in Section V.4.
Chapter V — International competitiveness of EU industry
V.2 EU industries in the global market
The purpose of this section is to provide a general framework for the
analysis of EU competitiveness in external markets. Two topics are
covered here. First, a world trade matrix is presented to show the place
of the EU and other regions in the multilateral network of external trade.
The second topic is the openness of EU industries to external markets.
V.2.1 The structure and direction of world trade
A matrix for trade in goods, with the world divided into nine
geographical regions, shows the structure of world trade. As regards
services, no data are available on multilateral trade flows and the
information presented is limited to the origin of exports and imports,
shown in graphical format.
V. 2 . 1 . 1 G o o d s
Table V.1 presents a matrix of world trade in manufactured goods in
2005. The matrix shows the structure of world trade among the various
regions of the world. The EU-27 is a major player in world trade in
manufactured goods: exports originating in EU-27 countries, including
intra-EU-27 trade, account for 44.4 % of total world exports. Of total
world trade, 30.7 % is between the EU-27 countries, which shows the
importance of the EU single market. Asia and North America are the
two other main players39. Together, the EU-27, North America and
39 The regions in the matrix are as follows. Other western Europe: Norway,
Switzerland. Central and eastern Europe: Belarus, Kazakhstan, Russian Federation,
Ukraine, Turkey. North America: Canada, the United States. Latin America:
Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru,
Uruguay, Venezuela, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua,
Cuba, Dominican Republic, Panama. Middle East: Iran, Israel, Jordan, Kuwait,
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EU industrial structure 2009 — Performance and competitiveness

Asia account for 88 % of total world trade flows. The main destination of­­ Asia (21.7 %). The non-EU European regions are the second largest market
EU-27 exports outside of Europe (Table V.2) is North America (29.6 %) and (25.7 %) for EU-27 exports. Similar patterns can be found in imports
(Table V.3). EU-27 imports come mainly from Asia (45.8 %), followed by
North America (20.6 %), while imports from the rest of Europe as a whole
Lebanon, Oman, Qatar, Saudi Arabia, United Arab Emirates. Asia: China, Hong
Kong, India, Indonesia, Japan, South Korea, Malaysia, Pakistan, Philippines, account for a slightly smaller share (22.2 %) of the total.
Singapore, Thailand, Vietnam. Oceania: Australia, New Zealand. Africa: Algeria,
Angola, Benin, Burkina Faso, Burundi, Cameroon, Central African Republic, Côte
d’Ivoire, Democratic Republic of the Congo, Egypt, Ethiopia, Gabon, Guinea,
Guinea-Bissau, Kenya, Libya, Mali, Morocco, Mozambique, Niger, Nigeria, Rwanda,
Senegal, South Africa, Togo, Tunisia, Uganda, Tanzania, Zimbabwe.

TA B L E V. 1 : M a n u f a c t u r e d p r o d u c t s — Wo r l d t r a d e m a t r i x i n 2 0 0 5 ( % )

Central
Other
and North Latin Middle
EU-27 western Asia China India Oceania Africa Total
eastern America America East
Europe
Europe
EU-27 30.7 1.7 1.8 4.0 0.8 1.0 3.0 1.1 0.2 0.4 0.9 44.4
Other western
1.3 0.0 0.1 0.2 0.0 0.0 0.2 0.1 0.0 0.0 0.0 2.0
Europe
Central and
1.3 0.1 0.5 0.1 0.0 0.1 0.3 0.1 0.0 0.0 0.1 2.5
eastern Europe
North America 2.4 0.2 0.1 5.3 2.1 0.3 2.5 0.7 0.1 0.2 0.1 13.3
Latin America 0.5 0.0 0.1 2.7 0.9 0.0 0.3 0.1 0.0 0.0 0.1 4.7
Middle East 0.2 0.0 0.0 0.2 0.0 0.2 0.4 0.1 0.1 0.0 0.1 1.3
Asia 5.3 0.2 0.6 6.6 0.9 0.9 14.7 6.7 0.4 0.7 0.4 30.3
China 2.4 0.1 0.3 2.8 0.3 0.3 5.9 0.1 0.2 0.2 12.5
India 0.3 0.0 0.0 0.2 0.0 0.2 0.3 0.1 0.0 0.1 1.1
Oceania 0.1 0.0 0.0 0.1 0.0 0.0 0.4 0.1 0.0 0.1 0.0 0.8
Africa 0.4 0.0 0.0 0.1 0.0 0.0 0.1 0.0 0.0 0.0 0.1 0.9
Total 42.3 2.2 3.2 19.4 4.9 2.8 21.9 9.0 1.0 1.5 1.8 100.0
Note: The matrix is calculated from export data. It refers exclusively to manufactured products, so does not include crude oil and other products from mining and quarrying. The
values in each cell are percentage shares in total world trade. The main diagonal in the matrix (shaded cells) represents intra-region trade (e.g. exports from EU countries to EU
countries). The matrix shows two countries separately, China (China and Hong Kong; intra-China trade set to zero) and India, which are also included in Asia. For the countries
included in the regions, see footnote 40.
Source: own calculations using the COMTRADE database.

TA B L E V. 2 : M a n u f a c t u r e d p r o d u c t s — Wo r l d t r a d e m a t r i x , e x p o r t d e s t i n a t i o n i n 2 0 0 6 ( % )

Central
Other
and North Latin Middle
EU-27 western Asia China India Oceania Africa Total
eastern America America East
Europe
Europe
EU-27 0.0 12.4 13.3 29.6 6.0 7.6 21.7 7.7 1.6 2.6 6.7 100
Other western 65.5 0.0 2.9 12.2 2.4 2.5 12.5 4.4 0.8 1.0 1.0 100
Europe
Central and 63.0 5.0 0.0 6.9 1.7 3.1 13.5 6.4 1.9 0.2 3.5 100
eastern Europe
North America 29.9 2.1 1.4 0.0 26.8 4.3 30.9 9.3 1.2 2.9 1.6 100
Latin America 14.5 0.8 1.7 70.8 0.0 1.3 8.9 3.6 0.6 0.4 1.7 100
Middle East 21.6 2.2 3.1 22.8 2.1 0.0 39.9 8.3 10.2 1.3 7.1 100
Asia 34.1 1.0 3.7 42.4 5.7 6.0 0.0 43.1 2.5 4.4 2.6 100
China 19.0 0.6 2.5 22.6 2.7 2.3 47.4 0.0 1.1 1.6 1.3 100
India 26.1 0.7 2.3 21.2 3.4 15.1 25.0 8.4 0.0 1.1 5.1 100
Oceania 16.0 0.6 0.8 18.1 2.1 4.7 55.5 10.4 5.4 0.0 2.3 100
Africa 53.4 3.3 2.6 13.4 3.0 3.9 18.1 2.5 3.3 2.3 0.0 100

Note: Based on data in Table V.1 (net of intra-region trade). For the countries included in the regions, see the beginning of this section.
Source: own calculations using the COMTRADE database.

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 Chapter V — International competitiveness of EU industry

TA B L E V. 3 : M a n u f a c t u r e d p r o d u c t s — Wo r l d t r a d e m a t r i x , i m p o r t o r i g i n i n 2 0 0 6 ( % )

Central
Other
and North Latin Middle
EU-27 western Asia China India Oceania Africa
eastern America America East
Europe
Europe
EU-27 0.0 77.2 67.4 28.6 20.5 40.0 41.1 11.7 23.6 26.5 54.1
Other western 11.2 0.0 2.1 1.7 1.2 1.9 3.4 1.0 1.7 1.4 1.2
Europe
Central and 11.0 4.6 0.0 1.0 0.9 4.7 3.8 1.4 4.0 0.3 4.2
eastern Europe
North America 20.6 7.5 4.2 0.0 53.6 13.3 34.2 8.2 10.0 17.2 7.7
Latin America 4.7 1.4 2.4 18.9 0.0 1.9 4.6 1.5 2.5 1.1 3.7
Middle East 2.0 1.0 1.2 1.7 0.5 0.0 5.8 1.0 11.2 1.0 4.3
Asia 45.8 6.9 21.7 46.6 22.4 35.8 0.0 74.3 40.4 51.1 24.0
China 20.5 3.2 11.7 20.0 8.3 10.9 82.1 0.0 14.9 15.1 9.7
India 2.4 0.3 0.9 1.6 0.9 6.2 3.7 1.0 0.0 0.9 3.2
Oceania 0.9 0.2 0.2 0.8 0.3 1.2 5.1 0.8 3.8 0.0 0.9
Africa 3.8 1.2 0.8 0.8 0.6 1.2 2.0 0.2 2.8 1.4 0.0
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Note: Based on data in Table V.1 (net of intra-region trade). For the countries included in the regions, see the beginning of this section.
Source: own calculations using the COMTRADE database.

V. 2 . 1 . 2 S e r v i c e s

When intra-EU trade is included (Figure V.1 and Figure V.2), the EU
accounts for almost half of international trade in services in terms of
both exports (48 %) and imports (45 %). When EU and North American
imports and exports of services are corrected for intra-trade, they
appear to be on equal footing with Asia as far as exports are concerned,
as all regions have a market share of around a fourth. Asia seems to be
slightly more important from an import perspective, as it accounts for
30 % of total trade. World trade in services was estimated based on
data available in 64 countries40.

40 The regions in the matrix are as follows. Other western Europe: Iceland, Norway,
Switzerland. Central and eastern Europe: Albania, Azerbaijan, Belarus, Croatia,
Kazakhstan, Moldova, Russian Federation, Turkey, Ukraine. North America: Barbados,
Canada, El Salvador, Guatemala, Jamaica, the Netherlands Antilles, Panama, the
United States. Latin America: Argentina, Bolivia, Brazil, Chile, Colombia, Mexico,
Venezuela. Middle East: Israel, Kuwait. Asia: Bangladesh, Cambodia, China, India,
Indonesia, Japan, Kyrgyzstan, Malaysia, Pakistan, Philippines, Republic of Korea,
Singapore, Thailand. Oceania: Australia, Fiji, New Zealand, Solomon Islands. Africa:
Benin, Botswana, Cameroon, Cape Verde, Côte d’Ivoire, Egypt, Ethiopia, Libya,
Madagascar, Mali, Mauritius, Mozambique, Niger, South Africa, Sudan, Swaziland,
Togo, Tunisia, Tanzania.

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EU industrial structure 2009 — Performance and competitiveness

F I G U R E V. 1 : S e r v i c e s — Wo r l d t r a d e m a t r i x , e x p o r t o r i g i n i n c l u d i n g a n d e x c l u d i n g i n t r a - E U t r a d e a n d i n t r a -
North America trade in 2005 (in % of total world trade in services)

Including intra-trade Excluding intra-trade

Africa

Oceania

India

China

Asia (excluding India and China)

Middle East

Latin America

North America

Central and eastern Europe

Other western Europe

EU-27

0 10 20 30 40 50

Note: Trade between North America and the EU is estimated for the EU-25 and not the EU-27. The only regions corrected for intra-trade are the EU-27 and North America.
Source: UN Service Trade Statistics database, IMF Balance of Payments Statistics (BOPS) database, Eurostat.

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 Chapter V — International competitiveness of EU industry

F I G U R E V. 2 : S e r v i c e s — Wo r l d t r a d e m a t r i x , i m p o r t o r i g i n i n c l u d i n g a n d e x c l u d i n g i n t r a - E U t r a d e a n d i n t r a -
North America trade in 2005 (in % of total world trade services)

Including intra-trade Excluding intra-trade

Africa

Oceania

India

China

Asia (excluding India and China)

Middle East

Latin America

North America

Central and eastern Europe

Other western Europe

EU-27

0 10 20 30 40 50
Note: Trade between North America and the EU is estimated for the EU-25 and not the EU-27. The only regions corrected for intra-trade are the EU-27 and North
America.
Source: calculated from UN Service Trade Statistics database, IMF BOPS database, Eurostat.

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EU industrial structure 2009 — Performance and competitiveness

V.2.2 Openness of EU industries example, is leading to greater exposure of EU industries to world

The process of globalisation and the development of the single
market in the EU are increasing the openness of EU industries to the
rest of the EU and the world. The elimination of barriers to trade and
harmonisation of the conditions under which businesses operate
enlarge the opportunities for firms to market their products in the
EU single market, which, along with geographical proximity, should
increase the openness of the EU Member States. At the same time,
the vigorous growth in world trade and the increasing role of some
countries in international markets, China being the most characteristic
competitors and markets. This section is devoted to the presentation
and discussion of indicators measuring the openness of EU industries
to international trade.
V. 2 . 2 . 1 G o o d s
The two indicators used to measure openness in manufacturing
sectors are presented in Box V.1. They measure for the EU as a whole,
respectively, the share of production exported and the share of
apparent consumption met by imports.

Box V.1: Openness indicators

Openness relative to the rest of the world is a driver of sectoral growth, and is measured in this section using two indicators. The
first indicator measures exports relative to production and is calculated as follows:

Exports EU
i
Openness1iEU =
Pr oduction EU
i

The second indicator refers to import penetration in the domestic market.

Imports EU
i
Openness 2 iEU =
Apparent consumption EU
i

These two indicators are calculated at the 2-digit level of the CPA (Classification of Products by Activity)41. The period covered is
1999–2007 and the indicators are calculated for the EU-27 as a whole relative to the rest of the world.

41 The indicators are based on time series of production value estimated from production and price indices and production value in absolute figures from
SBS statistics.

The results are presented in Table V.4 for sectors defined at the 2-digit
level of the CPA and refer to the period between 1999 and 2007. The
table shows the proportion of EU production exported (X/P) within
the EU (trade flows among EU countries) and to the rest of the world.
Furthermore, the table shows exports within the EU (intra-EU trade)
as a proportion (X EU-27/X Total) of total EU exports (intra- and extra-
EU). The same approach is used for imports, although in this case
the reference variables are apparent consumption (M/AC) and total
imports (M EU-27/ Total M).
Interestingly, this has taken place in a context of globalisation, whose
effects are also apparent. The openness of the EU to the rest of the
world has also increased in parallel with the openness of EU countries
to the single market. Member States currently export an increasing
share of their manufacturing production to the rest of the world
(13.7 %, up from 11.8 % in 1999). As regards imports from non-EU
countries, the share in apparent consumption also increased in this
period. More precisely, the share of imports in apparent consumption
rose from 11.3 % in 1999 to 11.9 % in 2007.

Besides the high variation in openness across manufacturing sectors,
the data show both the increasing importance of the internal market for
EU manufacturing industries and the dynamism of external markets in
recent years. Indeed, intra-EU trade accounts for an increasing share of
production and apparent consumption within the EU. For manufacturing
as a whole, intra-EU exports accounted for 26.1 % of production in 1999
and 29.0 % in 2007. As regards apparent consumption in the EU, 24.9 %
was met by intra-EU trade, goods produced in the EU and exported
within the EU itself in 1999, while in 2007 this percentage increased to
29.0 %. This trend is also confirmed at sectoral level.
In general, all manufacturing sectors exhibit similar trends as regards
both intra-EU and extra-EU trade flows. However, particular mention
must be made of the clothing (DB18) sector as regards imports. Here,
the share of imports from the EU in apparent consumption increased
from 33.4 % to 39.2 %, but the share from the rest of the world
increased from 31.5 % to 45.5 %. This is an example of how, although
the integration process in the EU has intensified, the rest of the world is
playing an increasingly important role in the openness of the EU.

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 Chapter V — International competitiveness of EU industry

TA B L E V. 4 : O p e n n e s s o f E U i n d u s t r i e s i n 1 9 9 9 a n d 2 0 0 7 ( % )

X/P X/P M/AC M/AC

EU-27 Extra EU-27 X EU-27 / X Total EU-27 Extra EU-27 M EU-27/M Total
Sector 1999 2007 1999 2007 1999 2007 1999 2007 1999 2007 1999 2007
D 26.1 29.0 11.8 13.7 68.8 68.0 24.9 29.0 11.3 11.9 68.9 70.8
DA 13.9 20.1 4.9 6.3 74.0 76.2 13.7 20.0 4.1 5.2 76.9 79.4
DB17 46.5 45.5 16.0 21.0 74.4 68.4 40.4 36.2 20.0 30.4 66.9 54.4
DB18 46.9 63.7 14.1 21.6 76.9 74.7 33.4 39.2 31.5 45.5 51.4 46.3
DC19 44.9 63.1 20.8 29.6 68.3 68.1 38.3 47.5 25.4 41.5 60.2 53.4
DD20 16.4 14.2 4.8 4.8 77.2 74.8 14.7 13.1 6.6 5.2 69.0 71.8
DE21 33.7 25.7 9.6 8.8 77.8 74.5 33.7 27.0 7.5 6.5 81.8 80.6
DE22 4.9 5.2 2.2 2.2 68.4 70.3 4.5 4.5 1.3 1.4 77.2 76.0
DF23 9.4 21.3 3.9 13.6 70.6 61.0 8.3 20.3 4.4 13.9 65.5 59.3
DG24 32.8 53.8 17.4 27.9 65.4 65.9 36.4 62.7 12.1 19.2 75.0 76.6
DH25 23.0 29.0 6.2 8.4 78.7 77.5 21.7 27.8 6.0 7.6 78.4 78.4
DI26 13.7 16.4 6.6 7.6 67.6 68.4 13.3 15.6 2.9 5.3 82.1 74.7
DJ27 30.0 47.1 9.9 15.2 75.2 75.6 28.5 42.5 13.3 23.3 68.1 64.6
DJ28 11.7 15.6 4.7 6.0 71.4 72.1 10.7 14.2 3.1 4.7 77.4 75.2
DK29 29.1 25.9 19.5 20.8 59.9 55.4 29.1 28.4 11.3 9.4 72.0 75.0
DL30 145.7 34.6 40.0 11.0 78.4 75.9 81.9 28.1 65.1 28.9 55.7 49.3
DL31 27.5 23.4 13.6 14.3 67.0 62.1 25.0 23.5 12.6 9.0 66.5 72.3
DL32 60.9 11.7 30.2 5.3 66.9 68.8 48.2 9.9 36.5 10.2 56.9 49.2
DL33 30.1 32.9 24.4 30.8 55.3 51.6 26.8 33.3 26.2 27.9 50.5 54.5
DM34 35.3 44.3 10.2 16.2 77.6 73.2 37.6 49.1 6.1 8.1 86.0 85.9
DM35 28.6 12.9 32.7 11.5 46.6 52.9 22.9 11.2 32.8 11.3 41.1 49.8
DN36 24.6 33.1 14.8 17.4 62.4 65.6 21.3 27.2 16.0 22.3 57.1 54.9
Note: X = exports; M = imports; P = production; AC = apparent consumption.
Source: own calculations using Eurostat data.

V. 2 . 2 . 2 S e r v i c e s countries are less open than the average and their inclusion would
bring the ratio closer to that in Table V.4.
A less detailed view of the openness of services industries can be
obtained from data in input-output tables. Although this is a static TA B L E V. 5 : E x p o r t s t o E U a n d n o n - E U c o u n t r i e s / o u t p u t ( % )
picture limited to only 11 EU countries, the information suffices to
measure openness in services and to compare it to manufacturing. Manufacturing Services
Table V.5 shows the ratio of exports to the EU and to the rest of Extra EU-27 EU-27 Extra EU-27 EU-27
the world for manufacturing and market services. Although the AT 24.0 38.0 3.8 5.8
information refers to different years, this table shows that, in all the BE 20.9 64.4 5.6 13.2
countries considered, the share of service exports in output is much DK 25.8 43.8 8.2 14.6
lower than in manufacturing. Exports to the rest of the EU range from FI 24.1 30.2 2.8 3.1
3.1 % in Finland to 14.6 % in Denmark, while the share of exports to EL 11.9 12.4 8.1 8.2
the rest of the world is highest at 8.2 % in Denmark, 8.1 % in Greece NL 23.7 70.9 8.1 12.2
and the Netherlands and much lower in bigger countries such as PL 8.7 20.8 3.2 7.7
Germany (3.7 %) and Spain (2.7 %). The purpose of Table V.5 is to show
PT 6.5 33.4 1.4 3.2
openness in services relative to manufacturing. It has to be noted that
SI 22.7 48.4 3.2 7.7
these figures, for manufacturing, are not fully comparable to those
ES 8.8 20.5 2.7 4.9
presented in Table V.4: besides the different source used, the data do
DE 20.1 34.3 3.7 4.2
not correspond to the same year. Moreover, large EU countries, such
as France, Italy and the UK, are not included in Table V.5. These large Source: own calculations using Eurostat input-output tables.

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EU industrial structure 2009 — Performance and competitiveness
V.3 External trade and competitiveness
of EU industries
This section discusses the EU’s performance in external trade using
three indicators: the share of the EU in the world market, the relative
trade balance (RTB), and an index of revealed comparative advantage
(RCA)42. These indicators are used to describe EU competitiveness in
external trade in goods. For services, only the revealed comparative
advantage (RCA) is presented. The indices are calculated from trade
flows, and are assumed to reveal the strongest sectors in each of the
countries and regions for which they are calculated, giving insights
into their comparative advantage. They are applied to various sectoral
classifications to clarify the nature of the comparative advantage in
each case. In this section the indicators are presented for a breakdown
of manufacturing into 22 groups of products. By way of comparison,
Section IV.5 analyses trade in manufacturing for products grouped into
technology and labour skill categories.
V.3.1 Indicators of competitiveness
V. 3 . 1 . 1 T h e E U ’s m a i n t r a d e p a r t n e r s
To provide a general framework for interpreting the indicator
discussed in this section, the shares of the main trade partners in EU
manufacturing exports and imports are presented here (Table V.6
and Table V.7). The trade partners considered are grouped into four
categories by level of income. The US and Japan are then considered
separately. Finally, the BRIC group is presented both as an aggregate
42 Balassa (1965) originally built this index.
Page 132
and in terms of its separate members, Brazil, Russia India and China.
The shares are presented in two separate tables and refer to the
average of two periods, namely 1999–2000 and 2007–0843. The sectors
considered are manufacturing industries at the 2-digit level in the
Classification of Products by Activity (CPA). The countries grouped by
level of income are a sample of countries (see Section V.3.2.1) and their
share is calculated relative to EU trade with the rest of the world, which
explains why the shares do not add up to 100. The countries selected
accounted for 96 % of EU exports and imports in 2007–08.
These tables show high variation across sectors for a given trade
partner and very sizable changes over time in some specific sectors. In
other words, the structure of trade has changed substantially during
the years analysed, reflecting, in turn, changes in the competitiveness
of the EU and its various trade partners. It is worth underlining that the
tables refer only to manufactured goods, so do not include agriculture
and mining (including energy) products. This has a significant effect
on the shares of some trade partners, as in the case of Russia and the
oil-producing countries.
For manufacturing as a whole, there has been a shift in the
geographical origin and destination of the trade in goods. The share
of high-income countries is decreasing in both total manufacturing
exports and imports, while that of upper-medium and low-medium
countries is rising. This shift is much larger for imports, where the
impact of trade with China is evident. In fact, imports from China,
included in the low-medium income group, have increased from 9 %
to 20 %. The share of both the US and Japan has dropped while that of
the BRICs has increased substantially, particularly as regards imports.
43 2008 covers only trade over January to September.
 TA B L E V. 6 : S h a r e o f t r a d e p a r t n e r s i n E U e x p o r t s o f m a n u f a c t u r e d g o o d s 1 9 9 9 – 2 0 0 0 a n d 2 0 0 7 – 0 8 ( % )

High Upper-medium Low-medium Low US Japan BRICs Russia Brazil India China
Sector 99–00 07–08 99–00 07–08 99–00 07–08 99–00 07–08 99–00 07–08 99–00 07–08 99–00 07–08 99–00 07–08 99–00 07–08 99–00 07–08 99–00 07–08
Food and drink 47.8 46.1 19.1 22.0 18.3 21.6 6.2 5.6 20.5 19.7 8.7 6.4 11.0 15.0 6.6 9.6 1.1 1.1 0.3 0.3 1.0 2.4
Textiles 41.1 40.9 17.4 19.1 43.8 41.1 3.4 5.1 17.9 18.7 5.1 2.7 11.9 17.0 3.2 5.9 0.9 0.9 0.7 2.1 2.1 4.0
Clothing 53.1 40.4 14.4 26.4 19.3 18.8 3.0 2.9 20.6 11.4 11.0 6.9 10.2 22.5 4.9 16.1 0.5 0.3 0.2 0.2 0.4 1.3
Leather and footwear 65.6 48.9 10.4 17.6 18.8 23.6 2.1 2.7 29.8 17.1 12.0 9.6 16.5 24.8 3.4 9.6 0.3 0.3 1.0 1.0 1.7 3.6
Wood and wood products 54.7 52.6 12.4 15.4 21.8 25.9 1.1 1.7 15.8 14.4 14.2 13.9 11.3 7.0 2.9 3.9 0.3 0.2 0.3 0.5 4.5 2.1
Pulp, paper and paper
41.7 26.4 20.1 25.5 25.6 36.8 4.9 6.6 16.5 9.7 2.6 1.8 13.8 26.4 5.0 10.0 1.7 1.5 1.7 3.2 2.8 10.7
products
Printing and publishing 46.5 38.2 16.4 20.9 12.3 15.4 4.5 5.4 21.3 14.6 4.9 2.9 7.4 14.1 3.3 8.9 1.5 1.3 0.7 1.5 0.6 1.2
Mineral oil refining and
37.0 39.1 11.9 14.3 18.4 14.8 5.8 8.3 25.5 28.9 1.8 1.3 2.9 2.4 0.8 1.0 1.2 0.9 0.4 0.2 0.3 0.2
nuclear fuel
Chemicals 52.0 47.4 15.5 18.9 20.1 23.2 4.1 3.7 29.3 28.5 6.8 4.4 9.7 14.7 2.4 6.0 2.4 2.2 1.2 1.3 1.9 3.8
Rubber and plastics 47.1 34.5 19.5 27.5 23.1 34.6 3.2 3.3 23.1 14.5 3.3 2.1 11.0 20.6 4.3 12.3 2.6 2.2 0.7 1.1 1.5 3.9
Non-metallic mineral
57.2 45.3 15.2 22.8 17.3 25.8 3.3 4.0 30.8 20.7 4.5 2.7 9.5 17.1 2.8 9.2 1.5 1.4 0.8 1.5 1.6 2.9
products
Basic metals 47.2 36.6 15.2 16.8 21.8 33.8 5.7 5.9 24.5 17.7 3.8 2.6 12.7 21.5 2.1 2.4 1.6 1.6 3.5 4.3 3.3 11.6
Fabricated metal products 45.1 37.4 17.3 24.5 24.8 31.1 4.4 5.0 21.1 14.5 2.9 2.3 12.4 18.5 3.0 9.7 2.2 1.8 1.1 1.6 4.8 4.7
Machinery and equipment
47.4 35.2 18.2 26.2 26.0 34.0 4.6 6.4 25.7 15.4 3.3 2.0 14.3 26.2 3.0 11.2 3.0 2.4 1.7 3.1 5.0 8.8
n.e.c.
Office machinery 57.9 46.5 14.6 27.0 15.1 24.3 2.3 5.8 31.9 19.4 7.6 1.6 9.2 17.4 3.8 11.0 0.8 0.5 0.5 1.0 1.8 2.7
Electrical machinery 46.9 38.6 16.1 20.8 25.9 34.7 4.8 5.6 23.3 16.2 3.2 2.3 14.4 24.4 1.8 6.6 2.8 2.2 1.6 2.7 4.9 10.7
Radio and TV equipment;
40.5 39.4 19.6 20.3 26.9 32.1 2.3 4.7 17.3 16.8 3.8 2.5 15.8 24.1 1.6 3.1 1.6 1.1 0.8 2.7 7.2 9.9
electronic components
Scientific and other
60.9 56.9 11.6 15.2 15.4 18.9 3.2 4.0 34.2 32.5 8.2 7.4 10.6 16.4 1.9 5.4 2.0 1.6 1.6 2.2 2.5 5.1
instruments
Motor vehicles 60.5 47.8 17.4 25.7 19.0 29.3 2.5 2.7 38.7 26.3 8.2 4.6 6.4 17.8 1.6 10.6 2.4 1.2 0.4 0.5 1.2 5.0
Other transport equipment 62.8 45.7 8.7 17.7 13.6 19.3 4.6 4.9 40.2 12.4 1.4 1.0 7.7 9.1 0.5 2.4 2.4 0.7 0.8 0.6 2.5 4.6
Furniture; other
64.0 52.2 11.1 17.0 9.4 16.4 1.6 3.2 35.4 20.2 6.1 3.6 9.4 18.4 2.6 7.4 0.8 0.4 0.4 1.7 1.0 2.5
manufacturing
TOTAL MANUFACTURING 51.8 43.2 15.7 21.2 21.0 26.7 3.9 4.7 28.0 21.8 5.4 3.7 11.0 17.7 2.6 7.6 2.0 1.6 1.1 1.6 2.9 5.2
Note: The first four columns refer to countries grouped by income level.
Source: own calculations using Eurostat data.

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Chapter V — International competitiveness of EU industry
Page 134
TA B L E V. 7 : S h a r e o f t r a d e p a r t n e r s i n E U i m p o r t s o f m a n u f a c t u r e d g o o d s 1 9 9 9 – 2 0 0 0 a n d 2 0 0 7 – 0 8 ( % )

High Upper-medium Low-medium Low US Japan BRICs Russia Brazil India China
Sector 99–00 07–08 99–00 07–08 99–00 07–08 99–00 07–08 99–00 07–08 99–00 07–08 99–00 07–08 99–00 07–08 99–00 07–08 99–00 07–08 99–00 07–08
Food and drink 28.9 18.3 22.5 24.5 38.8 42.4 9.0 9.3 10.6 5.8 0.3 0.2 18.6 22.5 2.2 1.0 10.0 13.2 2.0 2.9 4.2 5.4
Textiles 22.3 34.5 18.5 13.9 46.7 43.9 19.8 15.8 5.9 23.7 2.8 1.0 25.9 32.6 0.6 0.2 0.5 1.1 9.2 6.1 12.7 23.1
Clothing 13.6 3.5 17.3 15.9 68.6 76.7 17.7 19.9 1.2 0.7 0.2 0.1 37.1 49.9 0.5 0.1 0.1 0.1 6.4 7.8 22.6 40.4
Leather and footwear 11.2 4.7 5.1 4.6 63.9 68.1 23.1 21.4 2.8 1.2 0.3 0.1 48.6 62.5 0.3 0.7 4.8 4.8 6.6 7.6 33.8 47.9
Wood and wood products 28.5 18.9 20.6 29.3 38.3 41.0 10.9 7.4 16.5 9.8 0.1 0.1 25.5 45.1 8.8 19.0 7.6 7.1 0.5 0.6 8.4 18.1
Pulp, paper and paper
59.2 44.6 12.7 16.7 16.5 30.5 0.2 0.4 25.0 21.9 2.1 0.5 14.0 29.3 5.1 5.0 7.1 16.4 0.1 0.3 1.5 7.1
products
Printing and publishing 62.4 45.2 3.3 5.2 14.9 32.6 1.5 2.4 43.4 27.8 3.9 1.9 18.7 39.3 0.5 0.9 0.5 0.4 0.8 1.7 10.5 27.9
Mineral oil refining and
27.6 31.4 48.2 47.1 24.8 19.9 1.7 4.1 6.4 7.1 0.3 0.8 34.0 40.4 32.0 36.0 0.3 0.4 0.1 2.8 1.6 1.0
nuclear fuel
Chemicals 56.7 47.3 8.5 11.3 10.4 14.0 1.7 2.7 36.5 29.5 10.0 6.1 8.9 14.9 2.6 4.8 0.9 1.3 1.6 2.5 3.8 6.3
EU industrial structure 2009 — Performance and competitiveness

Rubber and plastics 48.9 34.8 9.2 15.1 28.5 44.3 1.4 3.6 23.3 13.4 12.6 9.7 19.7 29.7 0.3 0.9 0.7 1.2 1.0 2.7 16.7 24.3
Non-metallic mineral
41.4 24.3 16.1 13.7 40.5 60.7 5.2 6.4 20.7 11.9 9.9 4.9 21.9 47.4 1.4 1.1 1.7 1.5 2.8 4.2 15.7 40.3
products
Basic metals 31.0 26.1 34.9 34.2 30.3 34.9 3.7 4.7 11.0 6.9 2.2 1.3 22.4 27.6 16.4 14.7 2.8 3.3 0.7 1.6 2.1 7.6
Fabricated metal products 39.8 25.0 6.6 9.5 28.3 50.3 3.3 4.8 20.5 10.6 6.5 4.7 25.0 44.0 0.8 0.7 0.6 0.8 2.9 3.8 19.5 38.0
Machinery and equipment
64.3 44.8 4.9 7.8 13.6 37.9 0.7 1.4 34.3 18.2 19.8 16.0 9.7 29.8 0.7 0.6 0.9 1.1 0.5 1.3 7.3 26.3
n.e.c.
Office machinery 49.5 14.4 8.9 1.9 18.2 76.3 0.1 0.3 23.5 7.4 15.8 3.3 12.9 75.8 0.0 0.0 0.1 0.0 0.0 0.3 10.2 74.0
Electrical machinery 53.9 32.1 6.1 8.5 27.3 47.5 1.0 2.8 24.5 13.3 19.9 9.8 20.5 38.3 0.3 0.5 0.3 0.8 0.8 2.4 16.7 32.7
Radio and TV equipment;
57.0 30.9 8.6 7.5 15.3 49.5 0.3 1.4 24.4 8.6 18.1 14.5 10.6 45.5 0.1 0.2 0.2 0.3 0.1 1.3 8.0 41.0
electronic components
Scientific and other
69.4 58.3 2.9 4.3 10.1 14.6 0.5 0.8 45.1 38.3 14.0 10.5 10.0 14.0 0.1 0.1 0.2 0.3 0.3 0.4 6.9 11.6
instruments
Motor vehicles 79.9 61.1 10.0 26.0 12.5 30.8 0.8 1.3 17.7 16.0 46.9 29.3 4.6 7.1 0.4 0.2 3.0 2.8 0.6 1.3 0.6 2.7
Other transport equipment 78.2 52.8 4.7 5.7 7.7 27.9 1.2 5.3 58.2 7.9 6.7 16.6 4.9 17.9 0.3 0.7 2.0 0.1 0.4 0.4 1.8 15.9
Furniture; other
33.4 20.4 7.1 7.4 45.6 59.6 6.8 8.5 12.5 7.5 8.4 3.5 41.4 58.6 1.2 1.4 1.0 0.9 5.1 6.0 30.4 46.9
manufacturing
TOTAL MANUFACTURING 50.5 33.5 11.9 17.8 23.7 38.4 3.8 6.0 25.2 14.3 12.1 6.7 16.6 31.9 2.7 5.9 1.7 2.4 1.6 2.9 9.1 19.9

Note: The first four columns refer to countries grouped by income level.
Source: own calculation using Eurostat data.

V. 3 . 1 . 2 T h e s h a r e o f E U i n d u s t r y a n d i t s m a i n
competitors in global markets
The first competitiveness indicator used is the share of EU industry
in world markets (see Box V.2). Exports market shares provide insight
with regards to the position relative to international competitors. Gains
or loss of market share indicates whether a country is gaining or not
competitiveness in a specific sector. This share is presented in Table V.8,
where the shares of the EU and a few selected countries44 are presented
for 1996 and 2006.
44 The market share approach favours large countries therefore it is more relevant
to compare the EU as a whole with China, Brazil, India, Japan, Russia and the US.
The initial size of an economy may matter in its ability to seek foreign markets.
Larger countries may benefit from more resources as far as capital, labour or
other factors of production are concerned. Large countries may also benefit from
economies of scale as they have larger domestic markets.
Box V.2: Share in world markets
The share of sector ‘i’ in world markets is defined as:
Share of sector ‘i’ = EU exports to world market in sector ‘i’/ Total world exports in sector ‘i’
where, ‘world’ is defined as the EU-27 and the US, Japan and a selected group of countries.
For the EU the share is calculated including and excluding intra-EU trade.
Chapter V — International competitiveness of EU industry
The top products in the EU performance ranking in 2006 were
machinery and equipment n.e.c., non-metallic mineral products,
chemicals, printing and publishing, and tobacco. In these products, the
EU led relative to the other countries in the table. The US’s shares were
lower than the EU’s, its strengths being in printing and publishing,
other transport equipment, scientific and other instruments, pulp,
paper and paper products, and tobacco. Japan was strong in motor
vehicles, machinery, scientific instruments, and rubber and plastics. As
regards China, besides its leadership in textiles, clothing and leather
and footwear, it is worth mentioning the gains in metal products and
office machinery. These were the five top products in China, although
it also saw large increases in shares in other products, such as furniture
and other manufacturing, wood and wood products, rubber and
plastics and radio and TV equipment.
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EU industrial structure 2009 — Performance and competitiveness

TA B L E V. 8 : S h a r e o f E U a n d m a i n t r a d e p a r t n e r s i n w o r l d m a r k e t s b y s e c t o r i n 1 9 9 6 a n d 2 0 0 6 ( % )

EU EU* US Japan China India Brazil Russia

1996 2006 1996 2006 1996 2006 1996 2006 1996 2006 1996 2006 1996 2006 1996 2006
Food and drink 25.7 22.4 54.9 53.1 16.1 13.1 1.0 0.9 5.2 7.8 2.6 2.7 5.2 8.2 0.7 1.0
Tobacco 20.2 30.4 44.3 68.9 38.6 18.1 1.8 3.0 6.3 3.9 0.2 1.3 3.8 1.7 0.1 3.2
Textiles 17.8 13.2 44.3 35.0 7.3 7.1 5.8 3.5 14.7 37.7 4.8 5.3 0.9 0.8 0.3 0.2
Clothing 14.3 11.3 38.3 33.4 7.3 2.4 0.4 0.2 23.6 45.0 4.3 5.2 0.3 0.2 0.2 0.1
Leather and footwear 21.7 18.4 42.3 41.2 3.7 3.4 0.6 0.3 18.2 39.6 2.2 3.2 4.2 4.7 0.2 0.3
Wood and wood products 13.2 18.5 40.6 46.2 13.9 8.4 0.3 0.1 5.0 15.7 0.1 0.2 2.1 4.8 2.4 5.1
Pulp, paper and paper
22.7 26.9 55.2 57.6 23.6 19.7 3.4 3.2 1.2 5.0 0.1 0.4 3.0 4.1 1.8 2.4
products
Printing and publishing 30.4 30.4 56.6 58.4 34.0 23.8 2.9 2.5 2.0 7.9 1.1 1.6 0.2 0.6 2.4 1.4
Mineral oil refining and
23.1 20.9 43.0 39.6 4.2 8.4 2.5 1.6 2.4 3.1 0.7 5.7 0.5 1.1 11.1 14.0
nuclear fuel
Chemicals 30.1 30.7 54.1 55.3 21.3 18.1 11.4 8.4 2.9 6.1 0.9 2.0 1.0 1.0 1.5 1.7
Rubber and plastics 21.5 20.5 55.3 52.1 20.2 16.2 13.1 11.2 5.8 16.3 0.9 1.3 1.2 1.3 0.5 0.7
Non-metallic mineral
37.0 28.9 62.4 54.4 12.3 10.8 13.2 9.3 7.9 21.4 0.9 2.0 1.6 2.7 0.8 1.2
products
Basic metals 19.1 15.9 44.6 41.8 11.9 10.5 11.1 9.6 3.0 10.4 0.7 2.4 3.6 3.2 8.7 7.8
Fabricated metal products 29.1 24.9 58.0 53.8 18.3 13.1 10.0 6.2 7.6 22.9 1.1 2.2 0.9 0.9 0.8 0.9
Machinery and
35.2 33.1 54.1 52.3 21.3 17.4 19.0 14.5 1.9 10.7 0.2 0.7 0.9 1.2 0.4 0.5
equipment n.e.c.
Office machinery 12.2 9.0 36.8 28.9 29.3 12.3 22.4 6.0 4.3 33.6 0.2 0.1 0.1 0.1 0.0 0.0
Electrical machinery 22.2 20.2 44.6 42.0 18.1 13.8 17.7 11.2 5.2 17.1 0.3 0.8 0.6 0.8 0.4 0.4
Radio and TV equipment;
13.2 10.0 26.4 26.7 19.0 11.5 19.6 10.5 3.5 20.5 0.1 0.1 0.2 0.5 0.1 0.1
electronic components
Scientific and other
22.6 24.0 39.3 39.3 25.7 21.5 17.9 12.5 3.6 10.1 0.1 0.3 0.2 0.2 0.4 0.4
instruments
Motor vehicles 21.7 24.2 52.5 54.2 19.8 16.1 26.4 22.9 0.6 3.5 0.2 0.6 1.3 2.3 0.3 0.4
Other transport
31.0 26.9 41.8 40.8 32.1 31.7 12.7 9.3 1.7 6.5 0.2 0.6 0.6 1.5 0.3 1.3
equipment
Furniture; other
24.0 17.0 43.7 36.0 12.6 13.3 4.4 2.7 8.9 22.3 5.4 8.0 0.5 0.6 0.1 0.2
manufacturing
Note: EU* includes intra-EU trade.
Source: own calculations using COMTRADE data.

V. 3 . 1 . 3 S e c t o r a l t r a d e b a l a n c e The value of RTB over the period 1999–2007 is presented in Table

The second indicator of sectoral competitiveness, the relative trade
balance (RTB), measures the trade balance relative to total trade in the
sector (see Box V.3). This indicator is calculated for the EU relative to
the rest of the world. It is used to rank EU sectors according to their
competitiveness vis-à-vis the rest of the world and to measure gains
and losses in competitiveness over time.
A negative trade balance is not necessarily a bad sign. Imports can
contribute to the country’s economy and may stimulate production in
other sectors. Besides, trade balances are dependent upon domestic
and foreign demand. This means that this indicator does not exclusively
reflect external competitive strength; it also indicates a difference
between domestic and international demand.
V.9. Top products in the EU in 2007 were motor vehicles, machinery
and equipment n.e.c., printing and publishing, pulp, paper and paper
products, and tobacco. These are products where the EU exhibits a
high RTB over the whole period, with the exception of pulp, paper and
paper products, where the RTB increased steadily to make this one of
the five top products in 2006 and 2007. Also worth noting is the steady
drop in non-metallic mineral products, which was among the five top
products until 2006. As regards sectors with negative performance, the
ones that stand out are textiles, clothing, leather and footwear, office
machinery, and radio and TV equipment. Furthermore, while clothing
had stable negative values, the performance of textiles, leather and
footwear and radio and TV equipment worsened over time. The same
applies to furniture and other manufacturing.

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 Chapter V — International competitiveness of EU industry

Box V.3: Relative trade balance (RTB) indicator

The RTB indicator for product ‘i’ is defined as follows:

(X i −M i )
RTBi =
(X i +Mi )

where X = value of exports and M = value of imports

This indicator is based on EU-25 trade with the rest of the world. The source of the data is the UN database COMTRADE.

TA B L E V. 9 : E U R T B i n d i c a t o r i n m a n u f a c t u r i n g s e c t o r s f r o m 1 9 9 9 t o 2 0 0 7

Sector 1999 2000 2001 2002 2003 2004 2005 2006 2007
Food and drink 0.04 0.05 0.04 0.05 0.05 0.04 0.03 0.02 0.01
Tobacco 0.58 0.55 0.52 0.62 0.63 0.60 0.62 0.63 0.66
Textiles –0.15 –0.14 –0.13 –0.13 –0.15 –0.17 –0.21 –0.25 –0.26
Clothing –0.51 –0.51 –0.49 –0.49 –0.52 –0.54 –0.55 –0.56 –0.55
Leather and footwear –0.17 –0.15 –0.17 –0.19 –0.23 –0.24 –0.29 –0.30 –0.31
Wood and wood products –0.17 –0.13 –0.08 0.00 –0.02 –0.02 –0.03 –0.04 –0.02
Pulp, paper and paper
0.12 0.09 0.12 0.19 0.23 0.26 0.24 0.29 0.25
products
Printing and publishing 0.24 0.23 0.27 0.27 0.29 0.29 0.27 0.26 0.21
Mineral oil refining and
–0.01 –0.01 –0.04 –0.03 0.00 0.01 –0.02 –0.01 0.02
nuclear fuel
Chemicals 0.21 0.22 0.23 0.26 0.25 0.23 0.23 0.22 0.19
Rubber and plastics 0.02 0.03 0.04 0.08 0.08 0.10 0.08 0.08 0.05
Non-metallic mineral
0.38 0.36 0.35 0.37 0.35 0.31 0.27 0.26 0.19
products
Basic metals –0.14 –0.15 –0.13 –0.09 –0.08 –0.10 –0.05 –0.15 –0.20
Fabricated metal products 0.15 0.11 0.12 0.15 0.14 0.14 0.12 0.12 0.10
Machinery and equipment
0.30 0.29 0.32 0.36 0.36 0.37 0.36 0.38 0.30
n.e.c.
Office machinery –0.50 –0.47 –0.45 –0.46 –0.49 –0.52 –0.48 –0.51 –0.46
Electrical machinery 0.01 –0.04 0.03 0.05 0.04 0.03 0.05 0.08 0.11
Radio and TV equipment;
–0.16 –0.18 –0.21 –0.19 –0.24 –0.25 –0.21 –0.28 –0.31
electronic components
Scientific and other
–0.08 –0.07 –0.06 0.01 0.03 0.07 0.06 0.04 0.02
instruments
Motor vehicles 0.24 0.34 0.38 0.39 0.38 0.36 0.36 0.34 0.34
Other transport
0.00 0.03 0.12 0.10 0.05 0.02 0.04 0.05 0.15
equipment
Furniture; other
–0.04 –0.04 –0.02 –0.02 –0.07 –0.10 –0.13 –0.13 –0.11
manufacturing
Source: own calculations using COMTRADE data.

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EU industrial structure 2009 — Performance and competitiveness

V. 3 . 1 . 4 R e v e a l e d c o m p a r a t i v e a d v a n t a g e

V. 3 . 1 . 4 . 1 G o o d s

The third indicator of competitiveness is an index of revealed

comparative advantage (RCA), which compares the share of a given
sector’s exports in the EU’s total manufacturing exports with the share
of the same sector’s exports in the total manufacturing exports of a
group of reference countries (see Box V.4). Values higher (lower) than 1
mean that a given industry performs better (worse) than the reference
group, and are interpreted as a sign of comparative advantage.
The RCA indicator is thus used to rank EU products by comparative
advantage.

Box V.4: Revealed comparative advantage (RCA) indicator

The RCA indicator for product ‘i’ is defined as follows:

X EU, i
∑X EU, i
RCAi = i
X W, i
∑ i
XW, i

where: X = value of exports; the reference group (W) is the EU-25 plus 38 other countries (see list below); the source used is the
UN COMTRADE database. In the calculation of RCA, XEU stands for exports to the rest of the world (excluding intra-EU trade) and
XW measures exports to the rest of the world by the countries in the reference group. The latter consists of the EU-25 plus the
following countries: Algeria, Argentina, Australia, Bangladesh, Brazil, Canada, Chile, China, Colombia, Costa Rica, Croatia, Egypt,
Hong Kong, India, Indonesia, Israel, Japan, Kazakhstan, South Korea, Malaysia, Mexico, Morocco, New Zealand, Norway, other Asian
countries n.e.s., Pakistan, Peru, Philippines, Romania, South Africa, Singapore, Sri Lanka, Switzerland, Thailand, Tunisia, Turkey,
United States, Venezuela.

V. 3 . 1 . 4 . 1 . 1 E U r e v e a l e d c o m p a r a t i v e a d v a n t a g e i n
goods

The 22 product groups are ranked according to the value of the RCA
index in Figure V.3. The RCA values are for 2006. The following seven
are the top products in the EU-27, with an RCA above 1.2: machinery
and equipment n.e.c.; chemicals; tobacco; printing and publishing;
non-metallic mineral products; other transport equipment; and pulp
and paper products. At the bottom of the graph six products have
an index lower than 0.8: office machinery; electronic components,
telecommunications equipment, and radio and television receivers;
clothing; textiles; basic metals; and other manufacturing (including
furniture). In any event, in interpreting these results the following
issues are important: first, the level of sectoral aggregation, which may
mask differing performance in various categories of goods within the
same group of products. This is particularly relevant where there are
a variety of brands and quality levels for the same type of goods. A
second aspect has to do with country heterogeneity within the EU,
as the performance of the EU as a whole is explained in some cases
by the performance of a few EU countries. Finally, the weight of each
sector in the export structure of the EU should be borne in mind to
arrive at a balanced assessment of the EU’s sectoral performance in
external trade.

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 Chapter V — International competitiveness of EU industry

F i g u r e V. 3 : E U R C A i n d e x r a n k i n g i n 2 0 0 6

Machinery and equipment n.e.c.

Chemicals
Tobacco
Printing and publishing
Non-metallic mineral products
Other transport equipment
Pulp, paper and paper products
Fabricated metal products
Motor vehicles
Scientific and other instruments
Food and drink
Mineral oil refining and nuclear fuel
Rubber and plastics
Electrical machinery
Wood and wood products
Leather and footwear
Furniture; other manufacturing
Basic metals
Textiles
Clothing
Radio and TV equipment;
electronic components
Office machinery
0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8
Source: own calculations using COMTRADE data.

V. 3 . 1 . 4 . 1 . 2 R e v e a l e d c o m p a r a t i v e a d v a n t a g e o f transport equipment, scientific and other instruments, and printing

other countries in goods: US, Japan, China and
India
The profile of trade specialisation (RCA index) in the EU is compared
to that of the US, Japan, China and India in Figure V.4 to Figure V.8.
The ‘radius 1’ circle is highlighted to facilitate identification of those
sectors with a comparative advantage, which are located outside the
circle. The different specialisation profile is clear from the graphs. Other
and publishing are the three sectors with the highest RCA index in
the US. Japan has a high RCA in capital equipment, particularly motor
vehicles and machinery n.e.c. As regards China and India, the trade
specialisation profile is strongly oriented towards textiles, clothing
and leather, although China also has a high RCA in sectors such as
office machinery and computers, and India in furniture and other
manufacturing and oil refining.

F I G U R E V. 4 : E U - 2 7 t r a d e i n m a n u f a c t u r e d p r o d u c t s — R C A i n d e x i n 2 0 0 6

Food products
and beverages
Furniture; manufacturing n.e.c. 1.6 Tobacco products
Other transport equipment 1.4 Textiles
Wearing apparel; dressing
Motor vehicles, trailers 1.2
and dyeing of fur
and semi-trailers 1.0
Medical, precision and optical 0.8 Tanning and dressing of leather;
instruments, watches and clocks manufacture of luggage, handbags,
0.6
saddlery, harness and footwear
0.4
Radio, television and Wood and products of wood
communication equipment 0.2 and cork, except furniture;
and apparatus articles of straw and plaiting
materials
Electrical machinery
and apparatus n.e.c. Pulp, paper and paper products

Office machinery Publishing, printing and

and computers reproduction of recorded media
Machinery and Coke, refined petroleum products
equipment n.e.c. and nuclear fuel
Fabricated metal products, Chemicals and chemical products
except machinery and equipment
Basic metals Rubber and plastic products
Other non-metallic
mineral products

Source: own calculations using COMTRADE data.

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EU industrial structure 2009 — Performance and competitiveness

F I G U R E V. 5 : U S t r a d e i n m a n u f a c t u r e d p r o d u c t s — R C A i n d e x i n 2 0 0 6

Food products
and beverages
Furniture; manufacturing n.e.c. 2.5 Tobacco products
Other transport equipment Textiles
2.0 Wearing apparel; dressing
Motor vehicles, trailers and dyeing of fur
and semi-trailers 1.5
Medical, precision and optical Tanning and dressing of leather;
instruments, watches and clocks 1.0 manufacture of luggage, handbags,
saddlery, harness and footwear
Radio, television and 0.5 Wood and products of wood
communication equipment and cork, except furniture;
and apparatus articles of straw and plaiting
materials
Electrical machinery
and apparatus n.e.c. Pulp, paper and paper products

Office machinery Publishing, printing and

and computers reproduction of recorded media
Machinery and Coke, refined petroleum products
equipment n.e.c. and nuclear fuel
Fabricated metal products, Chemicals and chemical products
except machinery and equipment
Basic metals Rubber and plastic products
Other non-metallic
mineral products

Source: own calculations using COMTRADE data.

F I G U R E V. 6 : J a p a n ’s t r a d e i n m a n u f a c t u r e d p r o d u c t s — R C A i n d e x i n 2 0 0 6

Food products
and beverages
Furniture; manufacturing n.e.c. 2.5 Tobacco products
Other transport equipment Textiles
2.0 Wearing apparel; dressing
Motor vehicles, trailers and dyeing of fur
and semi-trailers 1.5
Medical, precision and optical Tanning and dressing of leather;
instruments, watches and clocks 1.0 manufacture of luggage, handbags,
saddlery, harness and footwear
Radio, television and 0.5 Wood and products of wood
communication equipment and cork, except furniture;
and apparatus articles of straw and plaiting
materials
Electrical machinery
and apparatus n.e.c. Pulp, paper and paper products

Office machinery Publishing, printing and

and computers reproduction of recorded media
Machinery and Coke, refined petroleum products
equipment n.e.c. and nuclear fuel
Fabricated metal products, Chemicals and chemical products
except machinery and equipment
Basic metals Rubber and plastic products
Other non-metallic
mineral products

Source: own calculations using COMTRADE data.

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 Chapter V — International competitiveness of EU industry

F I G U R E V. 7 : C h i n a ’s t r a d e i n m a n u f a c t u r e d p r o d u c t s — R C A i n d e x i n 2 0 0 6

Food products
and beverages
Furniture; manufacturing n.e.c. 3.5 Tobacco products
Other transport equipment Textiles
3.0
Wearing apparel; dressing
Motor vehicles, trailers 2.5 and dyeing of fur
and semi-trailers
2.0
Medical, precision and optical Tanning and dressing of leather;
instruments, watches and clocks 1.5 manufacture of luggage, handbags,
saddlery, harness and footwear
1.0
Radio, television and Wood and products of wood
communication equipment 0.5
and cork, except furniture;
and apparatus articles of straw and plaiting
materials
Electrical machinery
and apparatus n.e.c. Pulp, paper and paper products

Office machinery Publishing, printing and

and computers reproduction of recorded media
Machinery and Coke, refined petroleum products
equipment n.e.c. and nuclear fuel
Fabricated metal products, Chemicals and chemical products
except machinery and equipment
Basic metals Rubber and plastic products
Other non-metallic
mineral products

Source: own calculations using COMTRADE data.

F I G U R E V. 8 : I n d i a ’s t r a d e i n m a n u f a c t u r e d p r o d u c t s — R C A i n d e x i n 2 0 0 6

Food products
and beverages
Furniture; manufacturing n.e.c. 5.0 Tobacco products
4.5 Textiles
Other transport equipment
4.0 Wearing apparel; dressing
Motor vehicles, trailers 3.5 and dyeing of fur
and semi-trailers 3.0
Medical, precision and optical 2.5 Tanning and dressing of leather;
instruments, watches and clocks 2.0 manufacture of luggage, handbags,
1.5 saddlery, harness and footwear
Radio, television and 1.0
Wood and products of wood
communication equipment 0.5
and cork, except furniture;
and apparatus articles of straw and plaiting
materials
Electrical machinery
and apparatus n.e.c. Pulp, paper and paper products

Office machinery Publishing, printing and

and computers reproduction of recorded media
Machinery and Coke, refined petroleum products
equipment n.e.c. and nuclear fuel
Fabricated metal products, Chemicals and chemical products
except machinery and equipment
Basic metals Rubber and plastic products
Other non-metallic
mineral products

Source: own calculations using COMTRADE data.

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EU industrial structure 2009 — Performance and competitiveness

V. 3 . 1 . 4 . 2 S e r v i c e s
More jobs are generated in services than in any other sector of the
European economy. Therefore, it is crucial to open services markets not
only to create employment but also to foster competition and increase
productivity (European Commission (2005b)).
World services exports represented about EUR 2 500 billion in
2005. In  absolute terms, this amount is small compared to the
EUR 10 000 billion in the manufacturing sector in 2005. Services trade
in 92 countries, accounting for 97 % of total services trade, was used
to estimate total world trade for all services and total world trade by
type of service.
Box V.5 clarifies what is meant by trade in services. Not all 11 types
of services were retained in the analysis. Among the market services
taken into account, only ‘other business services’ was not well captured
by the 92 country sample. Box V.6 clarifies why revealed comparative
advantages for services differ from revealed comparative advantages
in goods. It should also be noted that the service ‘Royalties and licence
fees’ is not included in this report as it is not related to a special service
activity.

Box V.5: Trade in services: definition, sectoral breakdown and measurement45

International trade in services involves transactions between residents and non-residents of an economy. Services are less tradable
than goods. As they are immediately consumed, they cannot be resold. For many services, the consumer and provider of the
service have to be located at the same place.

From a sectoral perspective, the main components of services activities are generally broken down into three categories grouping
together 11 types of services sectors:

1 Transportation
2 Travel
3 Other services, including: communication services, construction services, insurance services, financial services, computer
and information services, royalties and licence fees, other business services, personal, cultural and recreational services and
government services.

There are four modes for the supply of services.

— Mode 1 is cross-border supply, where only the service crosses the border. The change of country can for example be via
electronic communication (Internet, telephone, facsimile, etc.). The sectors characterised by cross-border supply are: most of
transportation, communication services, financial and insurance services, royalties and licence fees. Parts of certain sectors can
involve cross-border supply: part of computer and information services, part of other business services, and part of personal,
cultural and recreational services.

— Mode 2 is consumption abroad. This is the case principally for tourism or business travel, when individuals go to hotels and
restaurants. Part of transportation can also be counted as consumption abroad (supporting and auxiliary services for carriers
in foreign ports).

— Mode 3 is commercial presence. A foreign company will, for example, open branches or subsidiaries in the destination country.
Some construction services involve commercial presence.

— Mode 4 is the presence of natural persons. An individual who is self-employed (e.g. a consultant or a health worker) or an
employee (e.g. a construction worker) moves temporarily to the country of the consumer to supply services. This form of trade
is found in the following sectors: part of the computer and information services sector, part of ‘other business services’, part of
the personal, cultural and recreational services sector and part of the construction services sector.

In this report, there is a gap between the conceptual classification of trade in services and the data that were used from the
balance of payments statistics. Data on trade in services are more deficient than data on trade in goods statistics. There are

45 For more background, see European Commission, United Nations, International Monetary Fund, Organisation for Economic Cooperation and Development,
United Nations Conference on Trade and Development, World Trade Organisation (2002) and WTO (2007).

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 Chapter V — International competitiveness of EU industry

practical difficulties that arise when capturing trade in services. It is complicated to separate goods and services in the balance of
payments. As a result, the latter may be under-recorded. Moreover, certain transactions falling under the four modes of supply are
not accounted for in the balance of payments estimates of services trade. Cross-border trade (Mode 1) is in fact the mode of supply
best covered by the balance of payments statistics. Consumption abroad (Mode 2) is generally well covered as it is represented
by expenditures in tourism and business travel. Trade through commercial presence (Mode 3) is accounted for through company
surveys (foreign affiliates trade in services surveys), which are a different type of statistics. The balance of payments takes into
account residency rather than nationality. A service is therefore considered as traded if it takes place between residents and non-
residents. In the case of trade through commercial presence (Mode 3), there are only residents of the country who are involved.
Presence of natural persons (Mode 4) is also badly covered.

V. 3 . 1 . 4 . 2 . 1 E U r e v e a l e d c o m p a r a t i v e a d v a n t a g e i n had also a strong trade specialisation in financial services during the

services same time period.

In terms of trade in services, the EU is a well-diversified economy
(Figure V.9). The EU has a relative comparative advantage in almost all
the sectors analysed except travel. When comparing services sectors,
the strongest advantage during 2004–06 seemed to be in the financial
services sector. When comparing across countries, however, the US
Certain EU countries stand out with an extremely high revealed
comparative advantage (Table V.10). Such is the case for Ireland, which
has very strong comparative advantages in insurance services and
computer and information services. In the latter area, India does very
well too (Figure V.11). Luxembourg is very strong in financial services.

F I G U R E V. 9 : E U - 2 7 t r a d e i n s e r v i c e s — R C A i n d e x i n 2 0 0 6

Transportation
2.0

Personal, cultural,
and recreational services 1.5 Travel

1.0

0.5
Other business services Communications
services
0.0

Computer and
information services Construction services

Financial services Insurance services

Source: calculated using UN Service Trade Statistics database and IMF BOPS data.

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EU industrial structure 2009 — Performance and competitiveness

TA B L E V. 1 0 : R C A i n s e r v i c e s a c t i v i t i e s i n 2 0 0 6 : E U c o u n t r i e s , U S , J a p a n a n d B R I C c o u n t r i e s

Computer Personal,
Other
Communication Construction Insurance Financial and cultural, and
Transportation Travel business
services services services services information recreational
services
services services
Austria 1.0 1.5 1.4 0.9 0.9 0.3 0.6 1.2 0.5
Belgium 1.1 0.7 1.6 1.6 0.6 0.9 1.1 1.2 0.8
Denmark 2.7 0.4 0.7 0.3 0.2 0.1 0.5 N.A. N.A.
Finland 0.7 0.6 1.4 0.7 0.2 0.1 1.9 1.8 0.0
France 0.9 1.6 1.5 1.5 0.3 0.2 0.4 0.9 1.3
Germany 1.0 0.8 1.2 2.0 0.8 0.7 1.2 1.2 0.4
Greece 2.1 1.7 0.5 0.4 0.3 0.0 0.1 0.2 0.4
Ireland 0.2 0.3 0.4 0.0 6.4 1.7 6.7 1.1 N.A.
Italy 0.7 1.6 1.6 1.1 0.7 0.3 0.2 1.3 0.8
Luxembourg 0.2 0.3 1.3 0.3 1.6 9.8 1.0 0.3 0.6
Netherlands 1.1 0.6 2.3 1.2 0.2 0.2 1.1 1.6 1.0
Portugal 1.0 2.0 1.8 1.4 0.3 0.2 0.2 0.7 1.2
Spain 0.7 2.0 0.6 0.9 0.3 0.5 0.8 0.8 1.0
Sweden 0.8 0.8 1.5 0.6 0.8 0.5 1.6 1.5 0.5
United
0.6 0.6 1.6 0.2 1.1 3.4 1.2 1.2 1.4
Kingdom
Bulgaria 1.2 2.2 1.5 1.6 0.3 0.1 0.2 0.4 1.0
Cyprus 1.0 1.4 0.6 1.2 0.6 0.7 0.6 1.0 0.6
Czech Republic 1.2 1.6 1.6 0.7 0.0 0.4 1.5 0.8 0.8
Estonia 1.7 1.2 1.1 1.1 0.1 0.3 0.6 0.7 0.2
Hungary 0.8 1.3 1.4 0.8 0.0 0.2 0.8 1.1 7.0
Latvia 2.3 0.8 1.5 0.4 0.2 1.0 0.6 0.5 0.2
Lithuania 2.3 1.2 1.2 0.4 N.A. 0.1 0.1 0.5 0.4
Malta 0.6 1.2 1.0 N.A. 0.6 0.6 0.4 0.8 18.0
Poland 1.4 1.5 0.9 2.6 0.2 0.2 0.4 0.8 0.6
Romania 1.1 0.8 7.5 1.6 0.1 0.2 1.5 1.0 1.0
Slovakia 2.9 2.3 4.4 1.3 0.2 0.6 1.3 1.4 4.8
Slovenia 1.3 1.7 1.3 1.3 0.2 0.1 0.6 0.7 0.8
eu-27 1.1 0.7 1.0 1.2 1.3 1.4 1.1 1.1 0.8
us 0.7 1.1 0.8 0.6 0.9 1.3 0.4 0.9 1.6
Japan 1.4 0.3 0.2 3.3 0.5 0.8 0.2 1.1 0.1
China 1.0 1.5 0.4 1.3 0.2 0.0 0.7 1.3 0.1
India 0.4 0.5 1.4 0.2 0.6 0.4 8.6 1.3 0.3
Russian
1.4 1.0 1.2 4.3 0.5 0.3 0.5 0.9 0.7
Federation
Brazil 0.8 0.9 0.5 0.1 0.7 0.6 0.1 1.8 0.4
Note: In a world excluding intra-EU trade.
Source: own calculations using IMF BOPS data.

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 Chapter V — International competitiveness of EU industry

V. 3 . 1 . 4 . 2 . 2 R e v e a l e d c o m p a r a t i v e a d v a n t a g e o f Emerging economies such as Brazil (Figure V.10), China (Figure V.11),

other countries in services: US, Japan and BRICs
Extra-EU country data from Table V.10 are represented graphically
in this section. Among the developed countries, the United States
(Figure V.15) also appears to be as diversified as the EU. Two sectors
emerge as slightly more important: financial services and personal and
cultural services. Japan (Figure V.13) appears to be highly specialised in
construction services. It has in fact the highest RCA in the world (with
regard to the 92 countries analysed).
India (Figure V.12) and Russia (Figure V.14) have quite specific
specialisation patterns in services. As one could expect, India is
highly specialised in computer and information services as well as in
communication services. As far as information and communication
services are concerned, China differs radically from India. While China
has strong comparative advantages in manufacturing radios, televisions
and telecommunication equipment, it does not have any advantage in
the services related to those manufacturing goods. China has its highest
RCA in travel, other business services and construction. Brazil has high
RCA indexes in other business services and in travel while Russia has
high RCA value in construction services and transportation

F I G U R E V. 1 0 : B r a z i l ’s t r a d e i n s e r v i c e s — R C A i n d e x i n 2 0 0 6

Transportation
2.0

Personal, cultural,
and recreational services 1.5 Travel

1.0

0.5
Other business services Communications
services
0.0

Computer and
information services Construction services

Financial services Insurance services

Source: calculated from UN Service Trade Statistics database and IMF BOPS data.
Brazil trade in services - RCA (Average 2004-2006)

F I G U R E V. 1 1 : C h i n a ’s t r a d e i n s e r v i c e s — R C A i n d e x i n 2 0 0 6

Transportation
2.0

Personal, cultural,
and recreational services 1.5 Travel

1.0

0.5
Other business services Communications
services
0.0

Computer and
information services Construction services

Financial services Insurance services

Source: calculated from UN Service Trade Statistics database and IMF BOPS data.

China trade in services - RCA (Average 2004-2006)

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EU industrial structure 2009 — Performance and competitiveness

F I G U R E V. 1 2 : I n d i a t r a d e i n s e r v i c e s — R C A i n d e x i n 2 0 0 6

Transportation
10.0
9.0
Personal, cultural, 8.0
and recreational services 7.0 Travel
6.0
5.0
4.0
3.0
Other business services 2.0
1.0 Communications
services
0.0

Computer and
information services Construction services

Financial services Insurance services

Source: calculated from UN Service Trade Statistics database and IMF BOPS data.

F I G U R E V. 1 3 : J a p a n t r a d e i n s e r v i c e s — R C A i n d e x i n 2 0 0 6

Transportation
4.0

Personal, cultural,
and recreational services 3.0 Travel

2.0

1.0
Other business services Communications
services
0.0

Computer and
information services Construction services

Financial services Insurance services

Source: calculated from UN Service Trade Statistics database and IMF BOPS data.

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 Chapter V — International competitiveness of EU industry

F I G U R E V. 1 4 : R u s s i a ’s t r a d e i n s e r v i c e s — R C A i n d e x i n 2 0 0 6

Transportation
5.0
Personal, cultural, 4.0
and recreational services Travel
3.0

2.0

Other business services 1.0

Communications
services
0.0

Computer and
information services Construction services

Financial services Insurance services

Source: calculated from UN Service Trade Statistics database and IMF BOPS data.

F I G U R E V. 1 5 : U S t r a d e i n s e r v i c e s — R C A i n d e x i n 2 0 0 6

Transportation
2.0

Personal, cultural,
and recreational services 1.5 Travel

1.0

0.5
Other business services Communications
services
0.0

Computer and
information services Construction services

Financial services Insurance services

Source: calculated from UN Service Trade Statistics database and IMF BOPS data.

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EU industrial structure 2009 — Performance and competitiveness

Box V.6: Differing interpretation of RCA in manufacturing and services46

The RCA measured for services trade cannot be compared directly with the RCA measured for goods trade.

I. Unlike manufacturing goods, services are not only supplied through cross–border trade. There are other modes of supply, such
as the movement of the consumer to the producer, commercial presence abroad or the movement of natural persons.

II. Domestic policies rather than trade policies are more likely to have an impact on trade in services.

III. Services, if supplied via factor movements, are traded between residents and non–residents in the same country and not
between countries.

46 For more information, see Langhammer (2004).

V.3.2 Intra-industry trade

In the previous section, trade was analysed for broad categories of
products. Part of international trade consists in countries exchanging
the products of different industries (inter-industry trade) reflecting
different factor endowments (labour and capital) and technology.
Different countries thus exchange different goods: for example,
chemicals for textiles or motor cars for food. In Section V.2.1, the
international trade network was presented in terms of trade flows
between geographical regions. However, the per capita income of
countries plays an important role in determining trade patterns, and in
fact a large proportion of trade is between similar countries that have
comparable levels of development and exchange similar products
(intra-industry trade, or IIT). Intra-industry trade is explained by factors
such as economies of scale and demand for differentiated products,
rather than by comparative advantage. If trade is predominantly inter-
industry, then the reallocation of resources between industries in the
event of an international demand shock is more costly than when
trade is predominantly intra-industry and resources would need to be
reallocated within industries.
V. 3 . 2 . 1 Wo r l d t r a d e m a t r i x b y i n c o m e l e v e l o f t r a d e
partners
are included, this share rises to 70 %. The differences in technology and
factor endowments lead countries to specialise in activities where they
have a comparative advantage, and such differences explain inter-
industry trade (e.g. cars for clothing). While trade between different
types of countries (e.g. high and upper-medium income countries on
the one hand and low and low-medium income countries on the other)
can be expected to involve, to a large extent, the exchange of different
goods, the intense exchange of goods between high-income countries
suggests a different pattern of trade. However, IIT also involves trade
between high-income and lower-income countries as well as between
the lower-income countries themselves.
Some remarks are necessary when intra-EU trade are excluded from
the data. While the largest share of EU-27 trade (both exports and
imports) is with high income countries, low-medium income countries
account for a significant proportion in terms of EU-27 trade origin and
destination. Table V.12 and Table V.13 show that 57.0 % of extra-EU
exports go to other high-income countries, and 51.7 % of imports
originate from these. However, 26.9 % of extra-EU exports go to low-
medium income countries, and 33.9 % of imports originate from these
countries too.

Of total world trade, 60 % is among the group composed of the EU-27 and
other high-income countries (Table V.11)47. If upper-medium countries

47 The classification used is from the World Bank. The country groups are as follows.
High non-EU-27: Australia, Canada, Hong Kong, Israel, Japan, Kuwait, New Zealand,
Norway, Qatar, Singapore, United Arab Emirates, South Korea, Switzerland, United
States. Upper-medium: Argentina, Chile, Costa Rica, Gabon, Lebanon, Libya,
Malaysia, Mexico, Oman, Panama, Russian Federation, Saudi Arabia, Uruguay,
Venezuela. Low-medium: Algeria, Belarus, Bolivia, Brazil, Bulgaria, China, Colombia,
Cuba, Dominican Republic, Ecuador, Egypt, El Salvador, Guatemala, Honduras,
Iran, Jordan, Kazakhstan, Morocco, Paraguay, Peru, Philippines, Romania, South
Africa, Thailand, Tunisia, Turkey, Ukraine. Low: Angola, Benin, Burkina Faso, Burundi,
Cameroon, Central African Republic, Côte d’Ivoire, Democratic Republic of the
Congo, Ethiopia, Guinea, Guinea-Bissau, India, Indonesia, Kenya, Mali, Mozambique,
Nicaragua, Niger, Nigeria, Pakistan, Rwanda, Senegal, Togo, Uganda, Tanzania,
Vietnam, Zimbabwe.

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 Chapter V — International competitiveness of EU industry

TA B L E V. 1 1 : Wo r l d t r a d e m a t r i x — I n c o m e l e v e l i n 2 0 0 5 ( % )

EU-27 High non-EU-27 Upper medium Low medium Low Total

EU-27 32.1 8.2 1.8 3.9 0.5 46.5
High non-EU-27 6.1 13.3 3.3 5.7 1.1 29.6
Upper medium 1.1 3.8 0.2 1.1 0.2 6.4
Low medium 4.0 7.6 1.4 1.6 0.7 15.2
Low 0.6 1.1 0.1 0.3 0.1 2.3
Total 43.9 34.0 6.9 12.5 2.7 100.0
Note: See the beginning of this section for the country groupings.
Source: calculated from the COMTRADE database.

TA B L E V. 1 2 : Wo r l d t r a d e m a t r i x — I n c o m e l e v e l : d e s t i n a t i o n o f e x p o r t s i n 2 0 0 5 ( % )

EU-27 High non-EU-27 Upper medium Low medium Low Total

EU-27 57.0 12.6 26.9 3.5 100.0
High non-EU-27 37.7 20.2 35.1 7.0 100.0
Upper medium 18.3 60.8 17.6 3.4 100.0
Low medium 29.5 55.6 10.1 4.8 100.0
Low 25.9 52.2 6.7 15.2 100.0
Note: See the beginning of this section for the country groupings.
Source: calculated from the COMTRADE database.

TA B L E V. 1 3 : Wo r l d t r a d e m a t r i x — I n c o m e l e v e l : o r i g i n o f i m p o r t s i n 2 0 0 5 ( % )

EU-27 High non-EU-27 Upper medium Low medium Low

EU-27 39.8 27.5 35.3 20.3
High non-EU-27 51.7 49.5 51.8 45.3
Upper medium 9.6 18.1 9.9 8.3
Low medium 33.9 36.6 20.8 26.1
Low 4.8 5.5 2.2 3.0
Total 100.0 100.0 100.0 100.0 100.0
Note: See the beginning of this section for the country groupings.
Source: calculated from the COMTRADE database.

V. 3 . 2 . 2 I n t r a - i n d u s t r y t r a d e

The most widely used measure of intra-industry trade (IIT) is the Grubel-
Lloyd (GL) index (see Box V.7). The values of the index range from 0
(no IIT) to 1 (all trade is intra-industry). The GL index for EU-27 trade
in manufactured products with four groups of countries, classified by
level of income, is presented in Figure V.16. As expected, the value of
the Grubel-Lloyd index increases with the level of income of the trade
partner: 0.29 for trade with low-income countries, 0.44 for trade with
low-medium income countries, 0.40 for trade with upper-medium
income countries, and 0.65 for trade with high-income countries. In
other words, trade with industrialised countries has a large component
of intra-industry trade, and trade with lower-income countries has a
large component of inter-industry trade.

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EU industrial structure 2009 — Performance and competitiveness

Box V.7: Intra-industry trade (IIT)

The GL index for product ‘i’ (where X and M stand for exports and imports, respectively) is defined as follows:

X i −M i
GLi = 1 −
X i +M i

The GL index can be defined across products as follows:

∑ (X i −M i )
GL = 1 − i

∑(X
i
i +Mi)

High non-EU: Andorra, Aruba, Australia, Bahamas, Bahrain, Bermuda, Brunei, Canada, Cayman Islands, Greenland, Guam, Hong
Kong, Iceland, Israel, Japan, Kuwait, Liechtenstein, Macao, New Zealand, Norway, qatar, San Marino, Saudi Arabia, South Korea,
United Arab Emirates, United States, Virgin Islands.

Upper-medium: Argentina, Barbados, Belize, Botswana, Chile, Costa Rica, Croatia, Equatorial Guinea, Gabon, Grenada, Lebanon,
Libya, Malaysia, Mauritius, Mayotte, Mexico, Oman, Panama, Russian Federation, Seychelles, South Africa, Saint Kitts and Nevis,
Saint Lucia, Saint Vincent and the Grenadines, Trinidad and Tobago, Turkey, Uruguay, Venezuela.

Low-medium: Albania, Algeria, Angola, Armenia, Azerbaijan, Belarus, Bolivia, Bosnia and Herzegovina, Brazil, Bulgaria, Cape Verde,
China, Colombia, Cuba, Djibouti, Dominican Republic, Ecuador, Egypt, El Salvador, Fiji, Gaza and Jericho, Georgia, Guatemala,
Honduras, Indonesia, Iran, Iraq, Jamaica, Jordan, Kazakhstan, Kiribati, Maldives, Marshall Islands, Montenegro, Morocco, Namibia,
Paraguay, Peru, Philippines, Romania, Serbia, Sri Lanka, Suriname, Swaziland, Syria, Thailand, Tonga, Tunisia, Turkmenistan, Ukraine,
Vanuatu.

Low: Afghanistan, Bangladesh, Benin, Bhutan, Burkina Faso, Burundi, Cambodia, Cameroon, Central African Republic, Chad,
Comoros, Eritrea, Côte d’Ivoire, Democratic Republic of the Congo, Ethiopia, Ghana, Guinea, Guinea-Bissau, Haiti, India, Kenya,
Kyrgyzstan, Lao, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Moldova, Mongolia, Mozambique, Nepal, Nicaragua, Niger,
Nigeria, North Korea, Pakistan, Papua New Guinea, Rwanda, Senegal, Sierra Leone, Solomon Islands, Somalia, Sudan, Tajikistan,
Tanzania, Togo, Uganda, Uzbekistan, Vietnam, Zimbabwe.

F I G U R E V. 1 6 : G r u b e l - L l o y d i n d e x b y i n c o m e l e v e l o f E U - 2 7 t r a d e p a r t n e r s i n 2 0 0 7

0.70

0.60

0.50
Grubel-Lloyd index

0.40

0.30

0.20

0.10

0.00
High Medium-high Medium-low Low
Trade partners country groups
Note: See Box V.7 for the country groupings.
Source: calculated from Eurostat’s COMEXT database.

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 Chapter V — International competitiveness of EU industry

A more aggregated view of EU-27 trade with the four groups of
countries is obtained by dividing the Grubel-Lloyd index into four
quartiles and distributing total EU trade (exports + imports vis-à-vis
the different trade partners) over these intervals (see Figure V.17). This
is shown, in percentages, in Figure V.18 (vis-à-vis country groups) and
Figure V.19 (vis-à-vis the US and China). With high-income countries,
EU-27 trade is mostly IIT. With upper-medium and low-medium income
countries trade is more balanced in terms of IIT and inter-industry
trade. Trade with low-income countries is basically inter-industry. Some
qualifications are in order here. First, the level of product aggregation
affects the value of the GL (VII.2) index: the greater the number of
products considered, the lower, on average, the value of the index.
In this case, the number of products used ranges between 1 121, for
low income countries, and 1 242, for medium-low income countries.
Also to be taken into account is the fact that, although the calculation
does not include trade in oil, medium-high income countries include
a number of oil-producing countries, which in terms of trade in
manufactured goods do not follow the ‘classical’ pattern.

F I G U R E V. 1 7 : To t a l E U - 2 7 t r a d e b y i n c o m e l e v e l o f t r a d e p a r t n e r s — G r u b e l - L l o y d i n d e x d i v i d e d i n t o f o u r
intervals in 2007

GL > 0.75 0.25 < GL < 0.5

0.5 < GL < 0.75 GL < 0.25
60.0
Grubel-Lloyd index

50.0

40.0

30.0

20.0

10.0

0.0
High Medium-high Medium-low Low
Trade partners country groups
Source: own calculations using COMTRADE data.

F I G U R E V. 1 8 : To t a l E U - 2 7 t r a d e w i t h t h e U S a n d C h i n a — G r u b e l - L l o y d i n d e x d i v i d e d i n t o f o u r i n t e r v a l s i n 2 0 0 7

GL > 0.75 0.25 < GL < 0.5

0.5 < GL < 0.75 GL < 0.25
80.0
Grubel-Lloyd index

70.0

60.0

50.0

40.0

30.0

20.0

10.0

0.0
US China

Source: own calculations using COMTRADE data.

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EU industrial structure 2009 — Performance and competitiveness
V.3.3 Trade in intermediate goods
The aim of this section is to present information on the role of
international trade in the supply of intermediate inputs to EU
industries. To place this in a broader context, EU trade is analysed in
terms of groups of goods as defined in the Broad Economic Category
classification (BEC): consumer goods, capital goods, industrial
supplies, fuels, transport equipment, and other (not allocated).
This section is organised as follows: To set the general picture,
the geographic origin of goods used in EU countries is presented,
for both intermediate and final uses. As this does not discriminate
between imports from the EU and from the rest of the world, trade
figures are then used to determine the EU and non-EU origin of goods
imported into each country. Although the focus is on intermediate
inputs, as a competitiveness factor for EU industry, the section also
provides indicators for final consumption goods and, what is even
more important for competitiveness, investment goods.
As regards the data used, the section is based on two main sources:
firstly, input-output tables to analyse the geographic origin of
intermediate inputs; secondly, trade flows from international trade
statistics, broken down using the BEC classification.
The first set of results is summarised in Table V.14. This table
presents a breakdown of private consumption and capital goods by
geographical origin, namely domestic and imported. Furthermore, the
table also shows intermediate inputs, both domestic and imported,
as a percentage of total production value. This gives a first measure
of the importance of internationalisation for EU industries. As
regards intermediate inputs, the data in the table refer to the total
of intermediate inputs used by all industries together. It is worth
mentioning that, although this is not shown in the table, this percentage
varies substantially across industries. The share of imported goods in
production value varies across countries depending upon the type
of goods, the size of the country and the degree of industrialisation.
The countries that depend most on external intermediate inputs are
Belgium, Estonia, Ireland, Hungary and Slovakia. In all these countries,
imported inputs account for more than 20 % of production value and,
in the case of Ireland, for more than 30 %. Furthermore, in Ireland the
share of intermediate inputs from other countries is even higher than
for inputs of domestic origin.
As regards capital goods, the supply from other countries is even
more important than for intermediate inputs. Here, the table
presents the share of imported goods relative to total demand for
capital goods. In general, the percentages are high, but in some
countries more than 30 % of the capital goods used in the economy
are imported from other countries. This is the case with Estonia,
Hungary, Poland, Romania and Sweden.
As regards private consumption, the share of imported goods in
total private consumption is much lower than the percentages
mentioned above. The three countries with the highest percentages
are Ireland (25.9 %), Slovenia (23.7 %) and Slovakia (22.4 %), but in
most of the countries presented in the table the percentages are
lower than 15 %.
Page 152
However, as indicated, Table V.14 does not break down imports
into those from the rest of EU and those from the rest of the world.
Given the importance of the single market for European firms it is
interesting to look at this breakdown in more detail.
Table V.15 shows, for six categories of goods considered in the BEC
classification, the percentage of goods imported from outside the
EU in each country’s total imports and exports. For completeness of
information, this is also done for exports, even though this discussion
focuses on imports. The figures in this table enable a breakdown of the
imports presented in Table V.15. Although the correspondence with the
previous table, as regards categories of goods, is approximate, some
clear conclusions can be drawn. The focus is here on capital goods and
intermediate inputs, for which international trade is most important.
For the EU as a whole, the product with the highest share of imports
of non-EU origin is, as expected, fuels: 68 % in 2007. The second group
of products for which the share of imports from non-EU countries
(37.4 %) is higher than the average, is capital goods. Nevertheless,
these figures must be interpreted in terms of the importance of
imports in the total use of goods in the economy, which is shown in
Table V.15. For example, in France 12 % of total private consumption
goes on goods and services imported from other countries. Breaking
down this percentage further by EU origin and extra-EU origin shows
that only 28.2 % of this 12 % comes from outside the EU.
However, openness is more relevant for intermediate inputs and,
particularly, for capital goods. In addition, the shares of such goods
imported from non-EU countries are relatively high. Nevertheless,
two aspects are worth mentioning in this respect. First, it is clear
that the EU single market plays an important role in the supply of
intermediate inputs and capital goods to European firms, as total
imports from other EU countries account for nearly 70 % of industrial
supplies and for 63 % of capital goods imported into EU countries. As
regards transport equipment, the share stands even higher at 80 %.
There is, however, a high variation across EU countries. For some,
imports of certain types of goods from non-EU countries can reach
substantially higher levels than those mentioned so far. Two examples
worth mentioning are Germany and the UK, where non-EU imports
are particularly high for capital goods. Forty-five per cent of imports
of capital goods into Germany are from non-EU countries. The UK
imports an even higher percentage of capital goods, 47 %, and a similar
percentage, 45 %, of industrial supplies. Other similar examples, in
smaller countries, may be mentioned (e.g. Ireland), but in general the
share of EU imports is higher in many other EU countries.
To conclude, the main message of the data presented here is the
important role of international trade, whether intra- or extra-EU, in
supplying goods and services to meet demand by businesses and
households in the EU. This role has increased with time, as noted
in Section V.2.2 on the openness of the economy. The increasing
openness of the EU, not only within the single market but also
to global markets, provides EU firms with access to a variety of
intermediate and capital goods, which are important for the
competitiveness of EU industry.
 Chapter V — International competitiveness of EU industry

TA B L E V. 1 4 : Pe r c e n t a g e o f p r i v a t e c o n s u m p t i o n , i nve s t m e n t a n d i n t e r m e d i a t e i n p u t s i n E U c o u n t r i e s i n 2 0 0 7 ( % )

Private consumption GFCF Intermediate inputs/production

Country Domestic Imported Total Domestic Imported Total Domestic Imported Total
AT 84.9 15.1 100.0 73.7 26.3 100.0 34.1 14.2 48.3
BE 83.0 17.0 100.0 71.3 28.7 100.0 38.0 20.2 58.2
DE 89.5 10.5 100.0 84.3 15.7 100.0 38.2 10.5 48.7
DK 81.5 18.5 100.0 79.5 20.5 100.0 33.2 13.5 46.8
EE 79.5 20.5 100.0 62.6 37.4 100.0 34.7 24.6 59.3
ES 89.7 10.3 100.0 81.0 19.0 100.0 40.5 11.1 51.5
FI 88.2 11.8 100.0 83.7 16.3 100.0 38.5 13.5 52.0
FR 88.0 12.0 100.0 87.6 12.4 100.0 40.1 8.7 48.8
HU 88.3 11.7 100.0 67.2 32.8 100.0 32.9 26.9 59.9
IE 74.1 25.9 100.0 73.1 26.9 100.0 24.5 30.9 55.4
IT 92.5 7.5 100.0 86.0 14.0 100.0 43.3 9.3 52.6
LT 93.9 16.0 109.9 77.2 26.3 103.5 31.0 17.0 47.4
NL 86.6 13.4 100.0 77.8 22.2 100.0 37.2 14.7 51.8
PL 87.5 12.5 100.0 68.6 31.4 100.0 43.6 9.7 53.3
PT 84.1 15.9 100.0 75.8 24.2 100.0 40.0 12.2 52.3
RO 90.4 9.6 100.0 61.9 38.1 100.0 37.0 13.8 50.8
SE 87.6 12.4 100.0 68.1 31.9 100.0 36.8 13.6 50.3
SI 76.3 23.7 100.0 69.1 30.9 100.0 34.3 20.0 54.3
SK 77.6 22.4 100.0 69.7 30.3 100.0 39.3 22.4 61.7
UK 90.4 9.6 100.0 74.5 25.5 100.0 42.8 8.7 51.5
Source: own calculations using Eurostat input-output tables.

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 TA B L E V. 1 5 : S h a r e o f g o o d s , b y t y p e o f g o o d s , i m p o r t e d f r o m e x t r a - E U c o u n t r i e s i n 1 9 9 9 a n d 2 0 0 7 ( % )

Import Export Import Export

Page 154
Country Goods 1999 2007 1999 2007 Country Goods 1999 2007 1999 2007
EU-27 Consumer goods 31.6 31.9 27.5 27.6 Finland Consumer goods 20.7 16.6 37.1 52.9
Capital goods 38.4 37.4 36.9 40.5 Capital goods 27.1 33.7 43.0 55.1
Industrial supplies 30.3 31.0 29.7 29.0 Industrial supplies 32.0 35.7 27.8 32.8
Fuels 67.8 68.4 27.1 30.0 Fuels 69.5 79.8 19.8 31.3
Transport equipment 22.0 19.9 26.8 28.7 Transport equipment 30.6 16.7 37.8 48.6
Other (not allocated) 29.4 26.4 31.0 34.0 Other (not allocated) 4.5 4.2 18.4 13.6
Total 33.8 35.7 30.9 31.9 Total 30.8 35.9 34.6 43.2
France Consumer goods 27.6 28.2 33.2 34.6 Austria Consumer goods 14.3 17.7 20.6 26.9
Capital goods 35.8 28.2 45.3 48.6 Capital goods 18.6 22.4 29.9 34.2
Industrial supplies 24.1 22.8 27.5 27.2 Industrial supplies 15.1 18.0 22.8 25.7
Fuels 73.5 68.6 33.9 29.0 Fuels 47.0 43.6 10.9 5.9
Transport equipment 22.3 20.2 23.8 24.5 Transport equipment 18.6 12.3 19.4 22.6
Other (not allocated) 61.7 64.9 73.5 73.6 Other (not allocated) 32.5 12.5 78.3 24.7
EU industrial structure 2009 — Performance and competitiveness

Total 31.4 31.2 34.7 35.2 Total 17.8 20.7 23.7 27.4
Netherlands Consumer goods 39.3 44.3 16.1 17.5 Malta Consumer goods 23.2 17.1 27.8 39.0
Capital goods 55.4 64.2 22.0 27.2 Capital goods 40.7 34.3 62.6 59.8
Industrial supplies 36.1 42.3 18.4 19.9 Industrial supplies 22.5 29.9 13.9 47.2
Fuels 68.9 62.8 9.0 20.7 Fuels 48.1 1.1 98.1 26.7
Transport equipment 23.5 28.4 24.7 31.9 Transport equipment 42.8 40.2 35.7 12.2
Other (not allocated) 8.4 9.4 10.7 17.9 Other (not allocated) 19.0 2.9 0.9 0.0
Total 42.7 49.9 18.0 21.9 Total 33.9 26.3 50.9 50.7
Germany Consumer goods 33.0 34.7 30.1 25.7 Latvia Consumer goods 15.9 15.5 17.4 30.9
Capital goods 43.3 45.3 38.8 43.6 Capital goods 17.2 12.4 39.3 54.5
Industrial supplies 28.8 25.7 32.9 31.4 Industrial supplies 23.7 29.5 20.6 19.9
Fuels 63.4 62.7 32.3 26.1 Fuels 70.0 57.2 46.2 31.4
Transport equipment 25.7 21.8 35.3 36.2 Transport equipment 15.9 9.6 51.3 16.5
Other (not allocated) 12.7 17.9 22.5 27.1 Other (not allocated) 52.8 2.7 59.7 5.0
Total 34.0 35.4 34.5 35.3 Total 24.2 22.6 22.3 27.5
Italy Consumer goods 30.6 35.5 35.3 38.4 Lithuania Consumer goods 24.1 16.5 19.8 27.7
Capital goods 26.1 28.5 41.5 47.9 Capital goods 34.1 15.9 41.8 53.9
Industrial supplies 34.3 40.2 33.7 34.6 Industrial supplies 28.6 23.4 22.2 28.3
>>>
 Import Export Import Export

Country Goods 1999 2007 1999 2007 Country Goods 1999 2007 1999 2007
Fuels 90.5 92.9 57.9 54.9 Fuels 91.9 95.7 36.1 32.6
Transport equipment 18.1 17.9 24.0 31.9 Transport equipment 31.2 19.7 31.4 61.5
Other (not allocated) 84.9 21.7 56.4 36.0 Other (not allocated) 82.3 28.0 88.1 28.0
Total 34.3 43.0 36.0 39.9 Total 39.7 31.7 26.2 35.2
United Kingdom Consumer goods 42.2 44.9 37.8 39.0 Poland Consumer goods 28.9 19.3 18.3 19.8
Capital goods 52.8 47.0 40.1 47.6 Capital goods 26.8 21.0 25.0 31.7
Industrial supplies 44.1 45.2 40.8 40.9 Industrial supplies 20.0 19.6 18.5 20.7
Fuels 69.7 76.6 30.5 27.4 Fuels 74.4 73.0 13.1 11.1
Transport equipment 26.9 24.0 36.9 46.7 Transport equipment 23.9 16.4 8.2 14.1
Other (not allocated) 93.0 46.4 86.9 53.7 Other (not allocated) 58.2 90.3 35.5 69.1
Total 45.2 45.3 39.2 41.8 Total 27.8 26.7 18.4 21.1
Ireland Consumer goods 16.9 20.9 27.4 27.6 Czech Republic Consumer goods 24.0 16.4 16.5 13.6
Capital goods 51.8 45.8 33.5 39.3 Capital goods 24.0 23.4 15.6 19.4
Industrial supplies 29.3 26.1 37.3 41.6 Industrial supplies 18.0 11.6 11.2 13.3
Fuels 30.6 22.6 40.0 53.1 Fuels 64.1 63.1 4.6 2.3
Transport equipment 36.2 23.0 29.5 41.4 Transport equipment 13.1 7.7 8.4 11.5
Other (not allocated) 17.3 13.0 21.0 24.1 Other (not allocated) 33.3 26.5 46.1 29.8
Total 37.2 30.0 32.7 36.5 Total 23.5 19.9 12.5 14.7
Denmark Consumer goods 33.2 32.7 29.3 29.4 Slovakia Consumer goods 18.1 13.5 10.6 8.1
Capital goods 22.1 20.4 33.7 40.2 Capital goods 20.0 32.5 13.3 17.0
Industrial supplies 20.0 22.4 26.7 27.1 Industrial supplies 17.0 14.1 11.5 10.9
Fuels 60.1 65.6 12.7 11.0 Fuels 80.2 75.8 1.4 1.2
Transport equipment 24.4 19.0 26.4 28.6 Transport equipment 7.4 12.9 7.1 19.3
Other (not allocated) 42.4 61.0 36.0 26.8 Other (not allocated) 88.0 2.8 64.4 24.8
Total 26.5 27.0 29.1 29.7 Total 25.5 25.8 10.6 13.3
Greece Consumer goods 19.7 24.2 20.7 23.2 Hungary Consumer goods 30.7 15.1 16.8 22.3
Capital goods 35.2 40.0 42.1 39.4 Capital goods 30.3 44.7 20.3 29.9
Industrial supplies 24.3 38.5 39.5 31.8 Industrial supplies 22.0 15.8 17.5 16.0
Fuels 86.2 95.3 71.2 75.6 Fuels 71.5 76.5 11.7 40.9
Transport equipment 28.6 26.1 33.7 31.9 Transport equipment 12.3 11.8 5.2 12.0
Other (not allocated) 33.1 7.5 16.8 64.6 Other (not allocated) 84.7 2.4 25.0 4.0
Total 30.0 42.2 33.5 35.0 Total 28.3 30.5 15.5 21.0
>>>

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Chapter V — International competitiveness of EU industry
 TA B L E V. 1 5 : S h a r e o f g o o d s , b y t y p e o f g o o d s , i m p o r t e d f r o m e x t r a - E U c o u n t r i e s i n 1 9 9 9 a n d 2 0 0 7 ( % ) ( c o n t . )

Import Export Import Export

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Country Goods 1999 2007 1999 2007 Country Goods 1999 2007 1999 2007
Portugal Consumer goods 27.6 28.2 33.2 34.6 Romania Consumer goods 22.7 22.6 7.0 8.8
Capital goods 35.8 28.2 45.3 48.6 Capital goods 27.5 17.3 24.6 27.2
Industrial supplies 24.1 22.8 27.5 27.2 Industrial supplies 21.5 25.8 46.1 36.4
Fuels 73.5 68.6 33.9 29.0 Fuels 87.0 90.5 65.0 64.7
Transport equipment 22.3 20.2 23.8 24.5 Transport equipment 35.8 18.5 22.7 25.0
Other (not allocated) 61.7 64.9 73.5 73.6 Other (not allocated) 100.0 8.8 99.6 15.9
Total 31.4 31.2 34.7 35.2 Total 31.0 28.9 27.1 28.1
Spain Consumer goods 34.8 35.0 24.8 22.9 Bulgaria Consumer goods 24.0 21.7 28.9 20.0
Capital goods 23.8 23.9 35.3 40.0 Capital goods 25.0 19.0 39.1 34.0
Industrial supplies 29.9 35.7 32.5 29.4 Industrial supplies 34.2 43.3 41.7 39.6
Fuels 88.1 84.1 47.7 71.3 Fuels 68.0 85.9 63.7 72.2
Transport equipment 13.1 15.5 12.4 16.3 Transport equipment 27.8 18.2 76.8 28.8
Other (not allocated) 66.1 45.5 61.3 76.8 Other (not allocated) 98.2 35.1 86.6 82.7
EU industrial structure 2009 — Performance and competitiveness

Total 30.1 37.0 26.4 29.2 Total 45.1 41.5 42.8 39.2
Belgium Consumer goods 27.7 23.5 11.6 20.3 Slovenia Consumer goods 23.0 21.3 35.0 45.0
Capital goods 26.5 31.5 19.4 24.5 Capital goods 23.8 22.2 27.5 34.9
Industrial supplies 33.2 34.6 28.6 27.0 Industrial supplies 20.5 25.3 25.2 28.6
Fuels 22.0 26.8 24.4 27.2 Fuels 46.5 33.6 57.9 38.3
Transport equipment 16.4 21.3 13.6 15.2 Transport equipment 16.2 35.8 11.3 13.6
Other (not allocated) 50.6 17.1 43.8 42.6 Other (not allocated) 76.8 14.8 58.2 79.7
Total 27.7 29.1 21.3 23.7 Total 22.6 26.3 26.3 30.7
Luxembourg Consumer goods 9.1 6.0 4.7 5.4 Cyprus Consumer goods 30.1 18.8 35.2 35.4
Capital goods 42.2 64.4 14.3 11.8 Capital goods 39.9 26.2 54.1 18.8
Industrial supplies 6.1 9.1 14.1 14.1 Industrial supplies 30.4 32.7 44.8 35.4
Fuels 0.0 0.0 3.2 0.2 Fuels 85.3 60.4 98.3 25.7
Transport equipment 9.0 7.7 12.0 2.6 Transport equipment 55.3 24.4 18.7 7.1
Other (not allocated) 2.8 0.6 1.3 17.9 Other (not allocated) 99.1 78.9 84.2 60.5
Total 17.6 26.5 12.3 11.5 Total 41.2 31.1 41.6 28.2
Sweden Consumer goods 31.7 31.1 38.2 38.2 Estonia Consumer goods 21.3 10.7 15.2 26.2
Capital goods 29.8 25.6 48.4 49.7 Capital goods 25.7 15.5 5.9 21.1
Industrial supplies 25.5 27.2 29.5 31.1 Industrial supplies 24.9 24.0 15.5 29.2
Fuels 63.6 49.6 19.9 31.1 Fuels 59.8 55.2 25.4 69.0
Transport equipment 22.8 20.1 35.6 35.1 Transport equipment 32.4 9.3 39.9 10.8
Other (not allocated) 4.2 71.1 23.0 48.1 Other (not allocated) 87.2 1.1 44.2 2.4
Total 28.7 29.2 37.4 38.7 Total 26.8 21.4 14.2 29.8
Source: own calculations using Eurostat data.
 Chapter V — International competitiveness of EU industry

V.3.4 The role of labour qualification and V. 3 . 4 . 1 Tr a d e b y s k i l l c o n t e n t o f g o o d s

technology in EU sectoral trade
V. 3 . 4 . 1 . 1 M a r k e t s h a r e s
By looking at trade patterns in terms of skill and technology intensities,
one can identify which countries are trading the most sophisticated The EU, even when the single market is excluded, is the prime player in
products. The geographic coverage of the following analysis comprises high-skilled and high-intermediary skilled activities. However, China’s
the EU, the US, Japan and BRIC countries. The findings are that, overall, trade in high-skilled activities quadrupled from 1996 to 2006.
the EU is more specialised in higher-skilled and higher technology-
intensive activities than the US and Japan. China has emerged as a
contender.

TA B L E V. 1 6 : S h a r e s i n w o r l d t r a d e b y s k i l l c a t e g o r i e s i n 1 9 9 6 a n d 2 0 0 6

EU EU* US Japan China India Brazil Russia

Skills 1996 2006 1996 2006 1996 2006 1996 2006 1996 2006 1996 2006 1996 2006 1996 2006
High 19.9 18.3 40.9 39.7 20.4 13.4 15.7 7.7 3.3 15.5 0.5 1.5 0.5 0.7 1.5 2.6
High-intermediate 27.0 25.4 40.5 40.1 29.0 26.5 15.2 10.9 2.6 8.3 0.2 0.4 0.4 0.9 0.4 0.8
Low-intermediate 29.3 27.8 52.0 50.4 20.4 15.9 14.9 10.9 3.3 13.4 0.3 0.9 1.1 1.5 0.7 0.9
Low 21.7 19.4 49.3 47.0 14.3 11.9 11.1 10.0 7.2 15.8 2.0 2.8 2.3 2.9 1.7 2.1
* Including intra-EU trade
Source: own calculations using COMTRADE data.

V. 3 . 4 . 1 . 2 R e l a t i v e t r a d e b a l a n c e for the EU-1548 shows a clear improvement in high-skill products. As

Figure V.19 shows developments in the relative trade balance (RTB)
index over the period 1999–2007. This period is rather short to assess
changes over time, as the indicator exhibits a cyclical pattern. However,
the graph shows a slight improvement in the trade balance for high-
skill products. The longer-term trend, over 1989–2001, in this indicator
regards low-intermediate skill products, the EU has a positive RTB
index, the values fluctuating between 0.2 and 0.3 for the EU-15 in the
period 1989–2002.
48 See European Commission (2005), EU sectoral competitiveness indicators, OPOCE,
Luxembourg, Figure V.9.

F I G U R E V. 1 9 : R e l a t i v e t r a d e b a l a n c e , E U - 2 7 t r a d e b y s k i l l c a t e g o r y f r o m 1 9 9 9 t o 2 0 0 7

0.35 High skills

High-intermediate skills
0.30 Low-intermediate skills
Low skills
0.25
0.20
0.15
0.10
0.05
0.00
–0.05
–0.10
–0.15

1999 2000 2001 2002 2003 2004 2005 2006 2007

Source: calculated from Eurostat’s COMEXT database.

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EU industrial structure 2009 — Performance and competitiveness

V. 3 . 4 . 1 . 3 R e v e a l e d c o m p a r a t i v e a d v a n t a g e

In this context, it is interesting to look at the specialisation profile of a
few, but significant, countries. The RCA index of the EU, the US, Japan,
China and India for each of the four skill categories is shown in Figures
V.20 to V.25. The RCA indicator is presented in detail in the beginning
of Section V.3.1.4. India has a high RCA in low skills and China shows
a dual specialisation, with an RCA greater than 1 in both high and low
skills. The US and Japan are strongly specialised in high-intermediate
skills. The EU-25 has a more balanced specialisation profile, although
it shares with the US and Japan an RCA greater than  1 for high-
intermediate and low-intermediate skills.

F I G U R E V. 2 0 : E U - 2 7 R C A i n d e x b y s k i l l c a t e g o r y, a v e r a g e 2 0 0 5 – 0 6

High skilled
1.4

1.2

0.8

0.6

0.4

0.2

Low 0 High-intermediate
skilled skilled

Low-intermediate
skilled

Source: calculated from COMTRADE database.

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 Chapter V — International competitiveness of EU industry

F I G U R E V. 2 1 : U S R C A i n d e x b y s k i l l c a t e g o r y, a v e r a g e 2 0 0 5 – 0 6

High skilled
2.0
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
Low 0 High-intermediate
skilled skilled

Low-intermediate
skilled

Source: calculated from COMTRADE database.

F I G U R E V. 2 2 : J a p a n ’s R C A i n d e x b y s k i l l c a t e g o r y , a v e r a g e 2 0 0 5 – 0 6

High skilled

1.2

0.8

0.6

0.4

0.2

Low 0 High-intermediate
skilled skilled

Low-intermediate
skilled
Source: calculated from COMTRADE database.

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EU industrial structure 2009 — Performance and competitiveness

F I G U R E V. 2 3 : C h i n a ’s R C A i n d e x b y s k i l l c a t e g o r y , a v e r a g e 2 0 0 5 – 0 6

High skilled

1.2

0.8

0.6

0.4

0.2

Low 0 High-intermediate
skilled skilled

Low-intermediate
skilled
Source: calculated from COMTRADE database.

F I G U R E V. 2 4 : I n d i a ’s R C A i n d e x b y s k i l l s c a t e g o r y , a v e r a g e 2 0 0 5 – 0 6

High skilled
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
Low 0.0
skilled High-intermediate
skilled

Low-intermediate
skilled
Source: calculated from COMTRADE database.

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 Chapter V — International competitiveness of EU industry

F I G U R E V. 2 5 : R u s s i a ’s R C A i n d e x b y s k i l l c a t e g o r y , a v e r a g e 2 0 0 5 – 0 6

High skilled
1.4

1.2

0.8

0.6

0.4

0.2
Low 0
skilled High-intermediate
skilled

Low-intermediate
skilled
Source: calculated from COMTRADE database.

V. 3 . 4 . 2 Tr a d e b y t e c h n o l o g y c o n t e n t o f g o o d s V. 3 . 4 . 2 . 1 M a r k e t s h a r e s

The EU is a diversified partner that trades goods with both low- and In 2006, the EU, the US and China were on a par in terms of market
high-technology content. Its RCA in the high-tech sectors is high, shares in trade in high-technology goods. This is a very different
though not as high as in the US. picture compared to trade patterns in 1996. By 2006, China’s market
share in high-tech goods had increased by more than fivefold.

TA B L E V. 1 7 : S h a r e s i n w o r l d t r a d e b y t e c h n o l o g y c a t e g o r i e s i n 1 9 9 6 a n d 2 0 0 6 ( % )

EU EU* US Japan China India Brazil Russia

Technology 1996 2006 1996 2006 1996 2006 1996 2006 1996 2006 1996 2006 1996 2006 1996 2006
High 19.5 17.8 36.5 36.4 25.1 17.2 16.8 8.2 3.3 18.0 0.2 0.3 0.2 0.5 0.2 0.2
Medium-high 27.4 26.5 51.6 50.8 20.6 16.8 19.7 15.5 2.3 8.9 0.4 1.0 1.0 1.5 0.7 0.9
Medium-low 23.5 20.0 49.4 44.7 12.3 10.6 11.4 7.9 4.4 11.4 0.8 3.0 2.0 1.9 5.4 6.9
Low 21.2 18.4 47.7 44.6 13.4 10.4 2.4 1.7 10.6 23.4 3.1 4.1 2.5 3.4 0.7 0.9
* Including intra-EU trade
Source: own calculations using COMTRADE data.

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EU industrial structure 2009 — Performance and competitiveness

V. 3 . 4 . 2 . 2 R e l a t i v e t r a d e b a l a n c e V. 3 . 4 . 2 . 3 R e v e a l e d c o m p a r a t i v e a d v a n t a g e

Figure V.26, based on the RTB indicator, confirms the strong position
of the EU in medium-high technology products49. This graph shows a
relative improvement in high-technology products, though with the
index exhibiting consistently negative values, and a stable, though
fluctuating, picture in medium-high technology products.
49 The longer-term evolution of this indicator, for the EU-15, is shown in Figure V.12
in EU sectoral competitiveness indicators, European Commission, 2005.
The EU-25 performance in technology categories can be compared
to that of the same countries used above to compare performance in
skill categories (Figures V.27 to V.32). Here too, various specialisation
profiles can be identified. The US has the highest RCA index in high and
medium-high technology products. Japan’s comparative advantage is
particularly strong in one group of products, namely medium-high
technology. As regards India and China, a similar situation to that
observed for labour skills can be seen. India’s comparative advantage
is particularly strong in low-technology products, while China has the
same dual structure, with a high RCA in both high- and low-technology
products. Figure V.27 shows the more balanced profile of the EU, with a
higher RCA in medium-high technology products.

F I G U R E V. 2 6 : R e l a t i v e t r a d e b a l a n c e , E U - 2 7 t r a d e b y t e c h n o l o g y c a t e g o r y f r o m 1 9 9 9 t o 2 0 0 7

0.40 High tech

Medium-high tech
Medium-low tech
0.30 Low tech

0.20

0.10

0.00

–0.10

–0.20

1999 2000 2001 2002 2003 2004 2005 2006 2007

Source: calculated from Eurostat’s COMEXT database.

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 Chapter V — International competitiveness of EU industry

F I G U R E V. 2 7 : E U - 2 7 R C A i n d e x b y t e c h n o l o g y c a t e g o r y, a v e r a g e 2 0 0 5 – 0 6

High tech
1.4

1.2

1.0

0.8

0.6

0.4

0.2

Low tech 0.0 Medium-high tech

Medium-low tech
Source: calculated from COMTRADE database.

F I G U R E V. 2 8 : U S R C A i n d e x b y t e c h n o l o g y c a t e g o r y, a v e r a g e 2 0 0 5 – 0 6

High tech
1.2

0.8

0.6

0.4

0.2

Low tech 0.0 Medium-high tech

Medium-low tech

Source: calculated from COMTRADE database.

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EU industrial structure 2009 — Performance and competitiveness

F I G U R E V. 2 9 : J a p a n ’s R C A i n d e x b y t e c h n o l o g y c a t e g o r y , a v e r a g e 2 0 0 5 – 0 6

High tech
1.8
1.6
1.4
1.2
1

0.8
0.6
0.4
0.2
Low tech 0.0 Medium-high tech

Medium-low tech
Source: calculated from COMTRADE database.

F I G U R E V. 3 0 : C h i n a ’s R C A i n d e x b y t e c h n o l o g y c a t e g o r y , a v e r a g e 2 0 0 5 – 0 6

High tech
1.6

1.4

1.2
1

0.8

0.6

0.4

0.2

Low tech 0.0 Medium-high tech

Medium-low tech
Source: calculated from COMTRADE database.

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 Chapter V — International competitiveness of EU industry

F I G U R E V. 3 1 : I n d i a R C A i n d e x b y t e c h n o l o g y c a t e g o r y, a v e r a g e 2 0 0 5 – 0 6

High tech
2.5

1.5

0.5

Low tech 0.0 Medium-high tech

Medium-low tech
Source: calculated from COMTRADE database.

F I G U R E V. 3 2 : R u s s i a ’s R C A i n d e x b y t e c h n o l o g y c a t e g o r y , a v e r a g e 2 0 0 5 – 0 6

High tech
4.0

3.5

3.0

2.5

2.0

1.5

1.0

0.5

Low tech 0.0 Medium-high tech

Medium-low tech
Source: calculated from COMTRADE database.

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EU industrial structure 2009 — Performance and competitiveness

V.4 International movement of factors:
foreign direct investment
Foreign direct investment (FDI) is a source of foreign capital for
recipient countries. Apart from receiving capital in a specific sector,
the local economy also benefits from the import of new management
techniques and more sophisticated technologies as well as easier
access to international financial markets and products50. While FDI
facilitates the diffusion of knowledge and access to finance, it is also a
sign of long-term commitment.
As Figure V.33 shows, the stock of FDI in the EU has been extremely
concentrated, especially in the financial and real estate sectors. The
high share of FDI in the financial sector in 2005 is the result of the
internationalisation of financial firms. The overview shows that, in
50 Eurostat (2007b).
absolute terms, more than 80 % of outward FDI was concentrated in
four sectors and more than 80 % of inward FDI was in three sectors in
2005. The following sectors accounted for most outward FDI: financial
intermediation (43.8 %), real estate and business activities (17.5 %),
other business activities (15.1 %), and total petroleum, chemical,
rubber, plastic products (6.5 %). Inward FDI was concentrated in
three areas: financial intermediation (42.1 %), real estate and business
activities (22.4 %) and other business activities (18.1 %).
Intra-EU FDI illustrates the achievements of the single market in the EU.
Overall, about 62 % of FDI comes from the single market. More than
two thirds of FDI are from within the EU in the following sectors: real
estate, communications, other business activities, wood and publishing
and printing, trade and repair of motor vehicles, office machinery and
computers, rubber and plastic products, hotels and restaurants, and
retail trade (Figure V.34).

F I G U R E V. 3 3 : E U - 2 7 s e c t o r a l c o n c e n t r a t i o n o f F D I s t o c k i n 2 0 0 5 ( % )

100

90

80

70

60

50

40

30

20

10

0
Foreign direct investment abroad Foreign direct investment in the EU

Others
Real estate and business activities
Other business activities
Total petroleum, chemical, rubber, plastic products
Financial intermediation
Source: calculated using Eurostat data.

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 Chapter V — International competitiveness of EU industry

F I G U R E V. 3 4 : S h a r e o f i n t r a - E U F D I s t o c k i n t h e E U - 2 7 i n 2 0 0 5 ( % )

Real estate activities

Communications
Other business activities
Wood + Pulp, paper and publishing
Sale and repair of motor vehicles
Office machinery
Rubber and plastics
Hotels and restaurants
Retail trade
Financial intermediation
TOTAL
Radio, TV & communic. eq.
Wholesale trade
Textiles and clothing
Research and development
Water transport
Inland transport
Chemicals
Food, drinks and tobacco
Computer and related activities
Electricity, gas and water
Metal products
Air transport
Construction
Refined petroleum
Mining and quarrying
Machinery n.e.c.
Supporting transport activities

0 10 20 30 40 50 60 70 80

Note: Share of EU-27 intra-EU FDI in 2005 is defined as intra-EU FDI/total EU FDI.
Source: calculated using Eurostat data.

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EU industrial structure 2009 — Performance and competitiveness

In a number of sectors, EU-27 FDI abroad exceeds FDI from the rest of
the world to the EU. Figure V.35 shows that, in many sectors, EU-27 FDI
going to the rest of the world is greater than total EU-27 FDI from the
rest of the world. This can be explained by a number of factors, with
access to resources appearing to be important, as many sectors are
‘resource-driven’: refined petroleum products, utilities, metal products,
and mining and quarrying. Another major explanation is that FDI give
access to new consumer and labour markets. One third possible reason
for the imbalance is that many markets are already mature in Europe
and therefore would attract little FDI from abroad while markets are
still emerging in other parts of the world, providing opportunities for
European firms.

F I G U R E V. 3 5 : E U - 2 7 o u t w a r d F D I s t o c k t o r e s t o f t h e w o r l d / E U - 2 7 i n w a r d F D I s t o c k f r o m r e s t o f t h e w o r l d i n
2005 (ratio)

Refined petroleum
Air transport
Construction
Electricity, gas and water
Supporting transport activities
Metal products
Communications
Water transport
Mining and quarrying
Machinery n.e.c.
Computer and related activities
Retail trade
Rubber and plastics
Financial intermediation
TOTAL
Chemicals
Research and development
Food, drinks and tobacco
Wholesale trade
Hotels and restaurants
Radio, TV & communic. eq.
Wood + Pulp, paper and publishing
Sale and repair of motor vehicles
Inland transport
Real estate activities
Other business activities
Textiles and clothing
Office machinery

0 1 2 3 4 5 6
Source: calculated using Eurostat data.

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 Chapter V — International competitiveness of EU industry

In Figure V.36, the FDI intensity in EU sectors is represented by the ratio
between the share of a specific sector’s FDI in total FDI and the share of
this sector’s value added in total value added. A list of 27 sectors, from
mining to market services, is used. The most FDI-intensive sector is
financial intermediation. It is highly internationalised, as both outward
and inward FDI in the EU are relatively important. Secondly, those
sectors, mentioned earlier, where EU firms largely invest outside the
EU are resource-rich sectors (refined petroleum, mining and quarrying)
and telecommunications. Thirdly, those where FDI intensity is high and
where there is a balance between inward and outward FDI are: other
business services, chemicals, office machinery and computers.

F I G U R E V. 3 6 : S e c t o r a l s h a r e i n F D I s t o c k r e l a t i v e t o s h a r e i n v a l u e a d d e d — E U - 2 7 i n 2 0 0 5 ( r a t i o )

Share of FDI abroad relative to share in total VA

Share of FDI in the country relative to share in total VA

Financial intermediation
Refined petroleum
Mining and quarrying
Other business activities
Chemicals
Office machinery
Communications
Radio, TV & communic. eq.
Wood + Pulp, paper and publishing
Rubber and plastics
Food, drinks and tobacco
Water transport
Machinery n.e.c.
Air transport
Research and development
Electricity, gas and water
Wholesale trade
Real estate activities
Supporting transport activities
Metal products
Hotels and restaurants
Computer and related activities
Sale and repair of motor vehicles
Textiles and clothing
Retail trade
Construction
Inland transport

0 1 2 3 4 5 6

Note: share of FDI outward stock by sector in total FDI outward stock/share of sector’s VA in total VA.
Source: Calculated using Eurostat data.

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 Chapter VI — Sectoral competitiveness in the EU: synthesis and further analysis
Chapter VI
Sectoral competitiveness
in the EU: synthesis and
further analysis
This chapter provides a synthesis and further analysis of the results
presented in the previous chapters in order to obtain a more
comprehensive view of the specialisation of countries and of the
characteristics of EU sectors. First, it focuses on country specialisation.
Second, all EU sectors are combined together to produce a joint
analysis of different key indicators (value added, employment, labour
productivity). Third, a disaggregation of EU manufacturing activities
focuses on domestic and international aspects of competitiveness.
EU countries have evolved differently in terms of sectoral specificities.
The following main points emerge from Chapter III: low-skilled
activities are still present but higher-skilled activities are gaining
ground in European countries. There is still a mix of both low- and
high-tech industries. The same applies to high- and low-growing
sectors, which coexist in many countries. This chapter ‘synthesises’ the
degree of sectoral, skill, technology and growth specialisation, using
a synthetic indicator of a country’s degree of specialisation. It then
provides a compact picture of the economics of EU sectors. While the
growth of EU industry and the external competitiveness of EU sectors
are analysed separately in the rest of the report (in Chapters IV and
V, respectively), this chapter examines them together in common
summary tables and analyses. The sectoral breakdown of EU industry
is first provided at an aggregate level in order to include all sectors
in the economy. It is then presented in more detail for sectors that
include only manufacturing activities. Two cluster analysis exercises
(on all sectors and on just manufacturing sectors) group together
those sectors with the most similarities. Additionally, the links between
different sectoral characteristics are examined, focusing on recurring
questions regarding the links between value added, employment,
productivity and growth. The relationship between domestic and
external competitiveness in manufacturing sectors is also examined
further.
VI.1 Specialisation of EU countries
Chapter III describes the industry mix in each EU country in terms
of labour skills, technology intensity and growth. In this section, the
different levels of specialisation in European countries are synthesised.
The picture provided is naturally not as detailed as in Chapter II.
Table VI.1 provides insight into whether a country is specialised in
a given dimension (such as skills or technology). However, it does
not indicate the type of sector a country is specialised in. To gain an
understanding of trends over time, the data are provided for two time
periods: 1995 and 2005 or 2007.
The indicator ‘degree of specialisation in a country’ is explained in Box III.1
(indicator of sectoral specialisation). It indicates whether a country has
a low or high degree of specialisation, but does not indicate in which
category the country is specialised. A value close to 0 describes a case
of no specialisation. When reading Table VI.1, it is important to note that
the values of the indicators are lower for more aggregated category
definitions. In practice, the NACE classification refers to 28 sectors while
the taxonomies (skill, technology and growth) are broken down into
four or five subcategories. Therefore, the country values for degree of
specialisation as derived from the NACE classification are higher than the
values for degree of specialisation based on the taxonomies.
The degree of specialisation according to the NACE classification
shows that two countries became considerably more specialised from
1995 to 2006, namely Denmark and Malta. Conversely, several new
Member States — Bulgaria, Latvia, Hungary and Slovakia — have seen
their degree of specialisation in specific sectors diminish. Table II.2
provides a detailed description of the sectoral specialisation indexes,
showing in which precise sectors countries have become more or less
specialised.
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EU industrial structure 2009 — Performance and competitiveness

Looking at evolution over time, the degrees of specialisation by
taxonomy do not change for most countries51. Most countries display
similar values in 1995 and 2007. From 1995 to 2005, the few countries
that became less specialised from a skills perspective are Cyprus, Latvia,
Hungary and Poland. Concerning technology, the greatest changes
were seen in Cyprus, Hungary, Finland and Sweden, where the degree
of specialisation increased. With respect to the degree of specialisation
in specific growth-sector categories, Bulgaria, Denmark and the
Netherlands are the countries where the increase in specialisation
was most visible, while Portugal and Slovenia, in contrast, became less
specialised. Chapter II provides a detailed description of the sectors
behind these changes in a country’s degree of specialisation. The
relative inertia of most countries reflects the slow pace of structural
change: the sectoral evolution of a country is a long process.

51 The higher the value of this index, the more specialised a country in a specific
category.

TA B L E V I . 1 : D e g r e e o f s p e c i a l i s a t i o n i n a c o u n t r y a c c o r d i n g t o N A C E a n d a c c o r d i n g t o d i f f e r e n t t a x o n o m i e s :
skills, technology and growth

NACE Labour skills Tech Growth

Country 1995 2007 1995 2005 1995 2005 1995 2007

AT 2.00 2.25 0.17 0.22 0.23 0.18 0.44 0.45
BE 1.95 2.13 0.29 0.32 0.22 0.19 0.43 0.56
BG 8.70 6.72 n.a. n.a. n.a. n.a. 1.83 2.66
CY 3.87 3.57 0.39 0.24 1.41 1.76 0.42 0.63
CZ 3.22 3.68 0.38 0.49 0.61 0.51 0.93 0.58
DE 1.83 2.37 0.13 0.13 0.53 0.59 0.46 0.68
DK 2.23 4.20 0.25 0.21 0.27 0.57 0.30 1.58
EE 5.66 n.a. 0.27 0.30 1.10 1.24 n.a. n.a.
ES 3.12 3.04 0.42 0.42 0.35 0.56 0.34 0.51
FI 3.57 3.73 0.32 0.31 0.49 1.02 0.59 0.55
FR 1.32 1.64 0.26 0.29 0.34 0.24 0.47 0.61
EL 5.73 5.71 0.49 0.45 1.16 1.08 0.48 0.36
HU 5.07 3.44 0.37 0.19 0.27 0.68 0.38 0.61
IE 5.35 4.70 0.32 0.19 n.a. 1.37 0.40 0.61
IT 3.09 3.38 0.20 0.08 0.30 0.30 0.76 0.48
LT 4.94 5.06 0.58 0.54 1.21 1.02 n.a. n.a.
LU 4.68 5.07 0.45 0.63 n.a. n.a. 0.67 0.93
LV 6.76 5.12 0.54 0.36 n.a. 1.50 0.54 0.51
MT 4.42 12.19 0.35 0.40 n.a. 1.46 0.62 0.59
NL 2.66 3.28 0.09 0.12 0.27 0.48 0.47 1.06
PL 2.78 3.28 0.62 0.45 0.59 0.69 0.77 1.23
PT 5.64 5.08 0.22 0.13 0.89 1.00 1.41 0.98
RO 7.59 6.96 n.a. n.a. n.a. n.a. 1.76 1.50
SE 2.42 2.48 0.36 0.36 0.52 0.87 0.72 0.52
SI 3.35 3.06 0.26 0.22 0.31 0.15 0.89 0.31
SK 6.06 4.42 0.25 0.49 n.a. 0.73 0.51 0.60
UK 2.15 2.43 0.11 0.11 0.46 0.55 0.65 0.61
Note: The index is calculated as the Euclidean distance of the vector of specialisation for a country from the non-specialisation profile where all indices are equal to 1.
The values of the indicators are naturally lower if the definition of sectors is more aggregated. This explains the differences in magnitude between the first indicator
and the other indicators.
The indicator does not show in which type of sector the country is specialised. For instance, it does not indicate whether it is specialised in low versus high skills.
Source: own calculations using Eurostat and EUKLEMS data.

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 Chapter VI — Sectoral competitiveness in the EU: synthesis and further analysis

VI.2 Sectoral picture of the EU VI.2.1 Overview of EU sectors: summary table

The summary table below shows the characteristics of all EU sectors
in a nutshell. A cluster analysis then enables us to understand better
which sectors share most similarities. Additionally, the links between
different variables at sector level (such as labour productivity and
employment) are investigated.
Table VI.2 synthesises both the structural and dynamic characteristics
of the EU. The first two columns show the relative weights of value
added and employment in GDP and total employment in 2007.
Changes are shown over the period 1995 to 2007 in terms of annual
growth in labour productivity, value added and employment.

TA B L E V I . 2 : Va l u e a d d e d, e m p l oy m e n t a n d l a b o u r p ro d u c t i v i t y i n t h e E U - 2 7 i n t h e l at e s t ye a r s av a i l a b l e

Recent overview Recent evolution

Labour Value
NACE — Value added Employment Employment
productivity added
31-sector Sector breakdown breakdown growth
growth growth
classification 2007 2007 (1995–2007)
(1995–2007) (1995–2007)
in % in % in % in % in %
A Agriculture, hunting and forestry 1.8 5.7 2.8 0.7 –2.0
B Fishing 0.1 0.1 –0.3 –1.7 –1.4
C Mining and quarrying 0.8 0.4 –0.1 –3.9 –3.9
D Manufacturing 17.1 16.4 3.2 2.7 –0.5
DA Food products; beverages and tobacco 2.0 2.3 1.3 1.1 –0.2
DB Textiles and textile products 0.6 1.3 1.5 –1.2 –2.7
DC Leather and leather products 0.1 0.2 0.0 –3.4 –3.4
DD Wood and wood products 0.4 0.6 2.2 1.4 –0.8
Pulp, paper and paper products;
DE 1.4 1.2 2.5 1.5 –0.9
publishing and printing
Coke, refined petroleum products
DF 0.4 0.1 2.5 0.4 –2.0
and nuclear fuel
Chemicals, chemical products
DG 1.8 0.8 5.2 4.2 –1.0
and man-made fibres
DH Rubber and plastic products 0.8 0.8 2.3 2.9 0.6
DI Other non-metallic mineral products 0.8 0.7 2.9 1.9 –1.0
DJ Basic metals and fabricated metal products 2.5 2.4 2.5 2.7 0.2
DK Machinery and equipment n.e.c. 2.0 1.8 2.9 2.5 –0.4
DL Electrical and optical equipment 2.0 1.7 6.8 6.5 –0.3
DM Transport equipment 1.8 1.4 2.4 3.0 0.6
DN Manufacturing n.e.c. 0.7 1.0 1.9 1.7 –0.2
E Electricity, gas and water supply 2.2 0.8 2.0 0.5 –1.5
F Construction 6.5 7.4 –0.1 1.3 1.5
Wholesale and retail trade;
G 11.3 15.0 1.3 2.6 1.3
repair of motor vehicles
H Hotels and restaurants 2.9 4.5 –0.2 2.3 2.5
I Transport, storage and communication 7.0 5.8 3.3 4.0 0.7
J Financial intermediation 5.5 2.8 2.7 3.5 0.8
K Real estate, renting and business activities 22.5 12.3 –1.0 3.4 4.5
L Public administration and defence 6.1 6.6 0.3 0.9 0.6
M Education 5.0 6.8 –0.2 0.9 1.2
N Health and social work 6.9 9.2 0.3 2.1 1.8
Other community, social,
O 3.9 4.5 0.1 2.3 2.2
personal service activities
TOTAL 100.0 100.0 1.4 2.5 1.0
Note: The classification is broken down into 29 sectors, although the sector ‘Manufacturing’ is in fact an aggregate of all manufacturing sectors (from DA to DN).
Source: own calculations using Eurostat data.

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EU industrial structure 2009 — Performance and competitiveness

Table VI.3 gives the position of each sector in the various rankings. The
links between the various variables are then analysed. Table VI.2 and
Table VI.3 show the dynamics for individual sectors but do not indicate
which sectors have most similarities. This is examined in the following
sections.

TA B L E V I . 3 : R a n k i n g o f s e c t o r s a cco rd i n g t o v a l u e a d d e d, e m p l oy m e n t a n d l a b o u r p ro d u c t i v i t y i n t h e E U - 2 7
for the latest years available

Recent overview Recent evolution

Labour
Value added Employment Value added Employment
productivity
NACE Sectors breakdown breakdown growth rate growth rate
growth rate
2007 2007 1995–2007 1995–2007
1995–2007
A Agriculture, hunting and forestry 18 8 6 22 24
B Fishing 28 27 27 26 22
C Mining and quarrying 20 25 23 28 28
DA Food products; beverages and tobacco 13 13 17 19 15
DB Textiles and textile products 24 17 16 25 26
DC Leather and leather products 27 26 22 27 27
DD Wood and wood products 26 24 13 17 18
DE Pulp, paper and paper products; publishing and printing 19 18 10 16 19
Coke, refined petroleum products
DF 25 28 9 24 25
and nuclear fuel
DG Chemicals, chemical products and man-made fibres 17 20 2 2 20
DH Rubber and plastic products 22 21 12 7 10
DI Other non-metallic mineral products 21 23 4 14 21
DJ Basic metals and fabricated metal products 11 12 8 8 13
DK Machinery and equipment n.e.c. 15 14 5 10 17
DL Electrical and optical equipment 14 15 1 1 16
DM Transport equipment 16 16 11 6 11
DN Manufacturing n.e.c. 23 19 15 15 14
E Electricity, gas and water supply 12 22 14 23 23
F Construction 5 4 24 18 5
G Wholesale and retail trade; repair of motor vehicles 2 1 18 9 6
H Hotels and restaurants 10 9 25 11 2
I Transport, storage and communication 3 7 3 3 9
J Financial intermediation 7 11 7 4 8
K Real estate, renting and business activities 1 2 28 5 1
L Public administration and defence 6 6 20 21 12
M Education 8 5 26 20 7
N Health and social work 4 3 19 13 4
O Other community, social, personal service activities 9 10 21 12 3
Note: The classification is broken down into 28 sectors. The table does not include the total manufacturing sector (D).
Source: own calculations using Eurostat data.

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 Chapter VI — Sectoral competitiveness in the EU: synthesis and further analysis

VI.2.2 Cluster analysis

One way to describe sectors is to group them together using various is shown in the Appendix. The results are summarised in Figure VI.1,
indicators. Following this approach, sectors are grouped here into six which shows the clusters, ‘a’ to ‘f’, on the X axis and the values of the
clusters using as indicators the size of sectors (share in GDP), value added three indicators on the Y axis. Each point represents a sector. Table VI.4 is
growth and labour productivity growth. The formation of the clusters provided to identify more easily which sector belongs to which group.

TA B L E V I . 4 : C l u s t e r s u m m a r y fo r t o t a l e co n o my

Cluster Criteria Sectors

a •  Value added share: 0.4 % to 2 % •  Food products, beverages and tobacco

•  Value added growth: 0.4 % to 3 % •  Manufacturing n.e.c.
•  Labour productivity growth: 1.3 % to 2.9 % •  Electricity, gas and water supply
•  Wood and wood products
•  Rubber and plastic products
•  Transport equipment
•  Pulp, paper and paper products
•  Publishing and printing
•  Coke, refined petroleum products and nuclear fuel
•  Basic metals and fabricated metal products
•  Agriculture, hunting and forestry
•  Machinery and equipment n.e.c.
•  Other non-metallic mineral products

•  Value added share: about 2 %

•  Chemicals, chemical products and man-made fibres
b •  Value added growth: 4.2 % to 6.5 %
•  Electrical and optical equipment
•  Labour productivity growth: 5.2 % to 6.8 %

•  Wholesale and retail trade; repair of motor

•  Value added share: 7 % to 11.3 %
vehicles
c •  Value added growth: 2.6 % to 4 %
•  Financial intermediation
•  Labour productivity growth: 2.7 % to 3.3 %
•  Transport, storage and communication

•  Fishing
•  Value added share: 0.1 % to 0.8 %
•  Mining and quarrying
d •  Value added growth rates: –3.9 % to –1.2 %
•  Leather and leather products
•  Labour productivity growth: –0.3 % to 1.5 %
•  Textiles and textile products

•  Education
•  Hotels and restaurants
•  Value added share: 3.9 % to 6.9 %
•  Construction
e •  Value added growth: 0.9 % to 2.3 %
•  Other community, social, personal service activities
•  Labour productivity growth: –0.2 % to 0.3 %
•  Public administration and defence
•  Health and social work

•  Value added share: 22.5 %

f •  Value added growth: 3.4 % •  Real estate and other business activities
•  Labour productivity growth: –1 %

Note: Encompasses a large range of sectors from computers and office equipment to scientific instruments.

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EU industrial structure 2009 — Performance and competitiveness

FIGURE VI.1: Sector clusters based on GDP share, value added growth and labour productivity growth

24
22
20
18
16
14
12
10
8
6
4
2
0
–2 GDP share
–4 VA growth
–6 LP growth

a b c d e f
Cluster
Note: The lines join the within-cluster averages for value added share, labour productivity growth and value added growth.
Source: own calculations using Eurostat data.

VI.2.3 Links between variables

The renewed Lisbon strategy aims to boost both employment and
growth. It is therefore important to shed light on the links between
growth, labour productivity and employment from a sectoral angle:
— To what extent has labour productivity growth been associated with
value added growth?
— What are the links between employment and growth at sector level?
— Can labour productivity and employment grow together?
These questions are investigated in a descriptive way by looking at the
associations between the variables.
Labour productivity growth and value added growth
Labour productivity changes are mainly meaningful when seen over
the long term. That is why the time span analysed is from 1995 to 2007.
Short-term productivity changes are due to business cycles and cannot
be interpreted as structural evolution. Indeed, at firm level, changes
take time to be implemented and generate positive outcomes. For
example, sudden lay-offs may artificially increase labour productivity,
but do not mean that the organisation has become more efficient.
Figure VI.2 shows that labour productivity improvements have been
coupled with higher growth in most EU sectors.

FIGURE VI.2: EU-27 labour productivity growth and value added growth by sector 1995–2007

8
Value added growth (1995–2007)

ELECOPT
6
TRANSCOM CHEM
4 REALBUS TRANSEQPT FIN
WHOLRETRA METAL
PLAS
HOTEL OTHSER MACHIN
2 OTHMAN
HEALTH FOOTTOB MINER
CONST PAPER
WOOD
EDUC PUBADMIN AGRI
0 ELECTR REFIN

FISH TEXTCLOTH
–2
FOOT
–4 MINE

–6

–2 –1 0 1 2 3 4 5 6 7 8
Labour productivity growth (1995–2007)
Source: calculated using Eurostat data.

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 Chapter VI — Sectoral competitiveness in the EU: synthesis and further analysis

Employment and value added growth
There appears to be a positive link between sectoral employment
and sectoral value added growth (Figure VI.3). There are market
economy sectors for which employment growth has been higher than
value added growth, resulting in decreases in productivity. The most
striking is the real estate, renting and business activities sector, where
employment grew by 4.5 % from 1995 to 2007 while value added grew
by 3.4 %, resulting in productivity falling by 1.1 %. The other sectors with
this pattern are hotels and restaurants (2.3 % value added growth and
2.5 % employment growth) as well as construction (1.3 % value added
growth and 1.5 % employment growth). Employment decreased more
than value added in almost all sectors where value added decreased.
For example, employment fell more than value added in the textile
sector (–2.7 % v –1.2 %). Additionally, employment decreased while
value added increased in the coke and refining products sector (–2.0 %
v 0.4 %), the agriculture sector (–2.0 % v 0.7 %) and the electricity, gas
and water sector (–1.5 % v 0.5 %).

FIGURE VI.3: Average annual growth in EU-27 value added and employment by sector 1995–2007 (%)

8
Value added growth (1995–2007)

ELECOPT

CHEM TRANSCOM
4
FIN REALBUS
TRANSEPT
METAL PLAS
MACHIN WHOLRETRA
MINER HEALTH HOTEL
2 OTHMAN OTHSER
PAPER WOOD FOODTOB
CONST
AGRI PUBADMIN
ELECTR EDUC
REFINE
0

TEXTCLOTH
FISH
–2

FOOT
MINE
–4

–6 –4 –2 0 2 4 6 8
Employment growth (1995–2007)
Note: Sectors above the diagonal have seen increases in labour productivity.
Source: calculated using Eurostat data.

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EU industrial structure 2009 — Performance and competitiveness

Labour productivity growth and employment growth
The link between labour productivity growth and employment growth
is not straightforward. The first assumption would be that the number
of jobs actually diminishes when labour productivity increases, as the
same output may be produced with a lower number of workers. The
issue is more complex, however, because increases in productivity may
induce lower prices and increased demand. Figure IV.8 (earlier in the
report) illustrates, with specific sector examples, the process by which
productivity growth leads to decreases in relative prices. The growth
in demand can potentially offset the decrease in employment. As one
can observe from Figure VI.4, there are a number of market economy
sectors where increases in productivity have been coupled with an
increase in employment: transport, storage and communication,
basic metals and fabricated metal products, financial intermediation,
transport equipment, wholesale, retail trade and repair of motor
vehicles. Conversely, labour productivity growth in the manufacturing
sector has, generally speaking, not been associated with employment
growth. The overall manufacturing industry has seen its productivity
increase by 3.2 % during 1995–2007 while employment fell by about
0.5 %. The sectors combining the highest labour productivity growth
and largest decreases in employment were electrical and optical
equipment and chemicals (6.8 % and 5.2 % labour productivity growth
against a –0.3 % and –1.0 % change in employment, respectively).

FIGURE VI.4: Average annual growth in EU-27 labour productivity and employment by sector 1995–2007 (%)

8
Labour productivity growth (1995–2007)

7 ELECOPT

CHEM
5

4
TRANSCOM

3 MACHIN
AGRI MINER FIN
METAL
REFIN PAPER TRANSEQPT
ELECTR OTHMAN PLAS
2 WOOD
TEXTCLOTH
FOODTOB WHOLRETRA

1
PUBADMIN HEALTH
MINE OTHSER
0 FOOT FISH CONST HOTEL
EDUC

REALBUS
–1

–2
–5 –4 –3 –2 –1 0 1 2 3 4 5
Employment growth (1995–2007)
Source: calculated using Eurostat data.

VI.3 Performance and competitiveness of
manufacturing sectors in the EU
This overview focuses on manufacturing sectors for two reasons. On
the one hand, manufacturing sectors are the most tradable sectors.
They provide a very good insight into the international competitiveness
of the EU. On the other hand, indicators for manufacturing sectors are
available at a more disaggregated level than for services.
only on manufacturing. A cluster analysis enables us to understand
better which sectors share most similarities. External and domestic
competitiveness factors are analysed jointly in the form of scatter
plots.
VI.3.1 Overview of EU manufacturing sectors:
summary table

As in the previous section, the characteristics of sectors are summarised. A number of indicators are depicted in parallel in order to understand
In this section, the variables relate mainly to competitiveness and focus better the dynamics and competitiveness of manufacturing sectors.

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 TA B L E V I . 5 : M a n u f a c t u r i n g s e c t o r s i n t h e l at e s t ye a r s av a i l a b l e

Labour World
Production Employment Unit labour X/P M/AC
productivity RCA RTB market
growth growth cost growth (extra EU-27) (extra EU-27)
growth share

1995–2008 1996–2008 1996–2008 1996–2008 2006 2007 2006 2007 2007

in % in % in % in % Index Index in % in % in %
D Total manufacturing n.a. –0.6 2.3 –0.1 n.a. n.a. n.a. 13.7 11.9
DA15 Food and drink 1.5 –0.3 1.4 0.8 1.1 0.0 53.1 n.a. n.a.
DA16 Tobacco –3.0 –3.6 0.9 6 1.4 0.7 68.9 n.a. n.a.
DB17 Textiles –2.6 –3.6 1.9 2.5 0.6 –0.3 35.0 21.0 30.4
DB18 Clothing –5.0 –3.3 –0.2 5.1 0.5 –0.6 33.4 21.6 45.5
DC19 Leather and footwear –4.9 –3.0 –0.6 6.8 0.9 –0.3 41.2 29.6 41.5
DD20 Wood and wood products 1.1 –0.4 1.5 0.6 0.9 0.0 46.2 4.8 5.2
DE21 Pulp, paper and paper products 1.4 –1.3 2.6 –0.4 1.3 0.2 57.6 8.8 6.5
DE22 Printing and publishing 1.0 –0.5 1.3 0.5 1.4 0.2 58.4 2.2 1.4
DF23 Mineral oil refining and nuclear fuel 0.5 –1.9 2.3 1.8 1.0 0.0 39.6 13.6 13.9
DG24 Chemicals 3.3 –0.9 3.4 –1.5 1.4 0.2 55.3 27.9 19.2
DH25 Rubber and plastics 2.0 0.6 1.0 0.2 1.0 0.1 52.1 8.4 7.6
DI26 Non-metallic mineral products 0.8 –0.9 1.7 0.7 1.4 0.2 54.4 7.6 5.3
DJ27 Basic metals 1.1 –1.7 2.9 0 0.7 –0.2 41.8 15.2 23.3
DJ28 Fabricated metal products 2.3 0.6 1.2 0.3 1.2 0.1 53.8 6.0 4.7
DK29 Machinery and equipment n.e.c. 2.5 –0.5 2.3 0.2 1.6 0.3 52.3 20.8 9.4
DL30 Office machinery 6.1 –1.4 5.5 –7 0.4 –0.5 28.9 11.0 28.9
DL31 Electrical machinery 2.5 0.1 1.8 –0.5 1.0 0.1 42.0 14.3 9.0
DL32 Radio and TV equipment; electronic components 5.4 –1.3 5.3 –3.9 0.5 –0.3 26.7 5.3 10.2
DL33 Scientific and other instruments 3.2 0.2 2.1 –0.2 1.1 0.0 39.3 30.8 27.9
DM34 Motor vehicles 4.2 0.4 2.6 –1.2 1.1 0.3 54.2 16.2 8.1
DM35 Other transport equipment 2.5 –0.6 2.4 0.5 1.3 0.1 40.8 11.5 11.3
DN36 Furniture; other manufacturing 0.5 –0.6 1.0 0.8 0.8 –0.1 36.0 17.4 22.3
Note: Recycling activities (DN37) are not included for lack of data.
2008 data are available only up to September.
X/P means exports divided by production and M/AC means imports divided by apparent consumption.
Source: own calculations using Eurostat data.

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Chapter VI — Sectoral competitiveness in the EU: synthesis and further analysis
EU industrial structure 2009 — Performance and competitiveness

— A recent overview is provided for the production and employment
growth
— Domestic competitiveness characteristics can be assessed on the
basis of labour productivity and unit labour costs. These variables
are called ‘domestic’ because their calculation does not involve
any comparison with other regions.
— External competitiveness is reflected by several indicators: RCA
(revealed comparative advantage), RTB (relative trade balance),
and world market share.
Detailed information on the different variables (labour productivity,
unit labour costs, RCA, RTB) is presented in other parts of the report
(in Chapters IV and V). Table VI.5 provides a synthesis of the values
obtained and Table VI.6 gives the rankings on the various domestic
and external competitiveness dimensions. For information, Table VI.5
also includes two measures of openness (from Section V.2.2).
Unit labour costs are ranked from lowest to highest so that higher
ranks correspond to sectors with more favourable unit labour cost
developments. In addition, there is, almost by definition, a strong
correlation between unit labour costs and labour productivity52.
The table clearly highlights the wide differences between EU
manufacturing sectors. Unit labour costs have evolved most favourably
for two sectors: office machinery and radio and TV equipment
and electronic components. Conversely, cost competitiveness has
decreased considerably for two sectors: clothing and leather and
footwear.

52 Unit labour costs can be expressed as average labour costs divided by labour
productivity.

TA B L E V I . 6 : R a n k i n g o f m a n u f a c t u r i n g s e c t o r s ( 2 2 s e c t o r s ) i n t h e l at e s t ye a r s av a i l a b l e

Labour Unit World

Production Employment
productivity labour cost RCA RTB market
growth rate growth rate
growth rate growth rate share
1995–2008 1996–2008 1996–2008 1996–2008 2006 2007 2006
Ranking Ranking Ranking Ranking Ranking Ranking Ranking
DA15 Food and drink 11 6 15 17 11 14 8
DA16 Tobacco 20 21 20 21 3 1 1
DB17 Textiles 19 21 11 19 19 18 19
DB18 Clothing 22 20 21 20 20 22 20
DC19 Leather and footwear 21 19 22 22 16 19 14
DD20 Wood and wood products 14 7 14 14 15 15 11
DE21 Pulp, paper and paper products 12 14 5 6 7 4 3
DE22 Printing and publishing 15 8 16 13 4 5 2
DF23 Mineral oil refining and nuclear fuel 17 18 9 18 12 13 16
DG24 Chemicals 4 12 3 3 2 7 4
DH25 Rubber and plastics 10 1 18 10 13 11 10
DI26 Non-metallic mineral products 16 12 13 15 5 6 5
DJ27 Basic metals 13 17 4 8 18 17 13
DJ28 Fabricated metal products 9 1 17 11 8 10 7
DK29 Machinery and equipment n.e.c. 6 8 8 10 1 3 9
DL30 Office machinery 1 16 1 1 22 21 21
DL31 Electrical machinery 8 5 12 5 14 9 12
Radio and TV equipment; electronic
DL32 2 14 2 2 21 20 22
components
DL33 Scientific and other instruments 5 4 10 7 10 12 17
DM34 Motor vehicles 3 3 6 4 9 2 6
DM35 Other transport equipment 7 10 7 13 6 8 15
DN36 Furniture; other manufacturing 18 10 19 17 17 16 18
Note: Recycling activities (DN37) are not included for lack of data.
Source: own calculations using Eurostat data.

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 Chapter VI — Sectoral competitiveness in the EU: synthesis and further analysis

VI.3.2 Cluster analysis
The results of a cluster analysis, similar to that presented in Section
VI.2.2, are discussed below. More precisely, the cluster analysis is
based on production growth, two domestic competitiveness factors
(labour productivity growth and ULC growth) and two external
competitiveness measures (RCA and RTB53). The formation of clusters
is shown in Figure VI.11 in the Appendix. The results are summarised
in Figure VI.4, which shows the clusters, ‘a’ to ‘e’, on the X axis and the
value of the three indicators on the Y axis. Table VI.7 is provided to
identify more easily which sector belongs to which group.
A qualification is in order. The figure is used to discuss the composition
of the clusters, but it should be noted that the raw data were
standardised, which means that the production growth numbers
presented in the graph are not the raw data for this variable but the
result of standardisation. Nevertheless, the discussion of the results
refers to actual growth rates.

53 World market shares are highly correlated with the other two measures of external
competitiveness and are therefore not taken into account in this cluster analysis.

TA B L E V I . 7 : C l u s t e r s u m m a r y fo r m a n u f a c t u r i n g s e c t o r s

Cluster Criteria Sectors

a •  Production growth rates: 1.5 % to 3.2 % •  Food and drink

•  ULC growth: –0.5 % to 0.8 % •  Rubber and plastics
•  RCA: 1 to 1.3 •  Fabricated metal products
•  Electrical machinery
•  Scientific and other instruments
•  Other transport equipment

b •  Production growth rates: –2.6 % to 1.1 % •  Mineral oil refining and nuclear fuel
•  ULC growth: 0.8 % to 2.5 % •  Basic metals
•  RCA: 0.6 to 1 •  Furniture and other manufacturing
•  Wood and wood products
•  Textiles

c •  Production growth rates: 0.8 % to 4.2 % •  Pulp, paper and paper products
•  ULC: –1.5 % to 0.7 % •  Printing and publishing
•  RCA: 1.1 to 1.6 •  Chemicals
•  Non-metallic mineral products
•  Machinery and equipment n.e.c.
•  Motor vehicles

d •  Production growth rates: –5 % to –4.9 % •  Clothing

•  ULC: 5.1 % to 6.8 % •  Leather and footwear
•  RCA: 0.53 to 0.87

e •  Production growth rates: 5.4 % to 6.1 % •  Office machinery and computers

•  ULC: –7 % to –3.9 % •  Radio, TV and telecommunications equipment
•  RCA: 0.42 to 0.47

Note: The indicators of domestic and international competitiveness selected for presentation in this table are ULC growth and the RCA index.

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EU industrial structure 2009 — Performance and competitiveness

In Table VI.7, two small clusters have very clear characteristics (d and e).
Cluster d, comprising clothing and leather and footwear, displays
strongly negative production growth and markedly unfavourable
developments in ULC. Reassuringly, the EU is not specialised in
either (RCA below 1 and rather low). In contrast, Cluster e (the office
machinery and computer sector and radio, TV and telecommunications
equipment) experienced extremely high production growth and
very favourable developments in ULC. However, these positive
developments have not materialised in external competitiveness as
measured by RCA (or as measured by the two other indicators, for
which these two sectors also rank the lowest).

FIGURE VI.5: Sector clusters based on production growth, domestic competitiveness and international
competitiveness

Production growth
8 RCA
7 ULC growth
6
5
4
3
2
1
0
–1
–2
–3
–4
–5
–6
–7
–8
a b c d e f
Cluster
Note: The lines join the within-cluster averages of value added share, labour productivity growth and value added growth.

Source: calculations using Eurostat and COMTRADE data.

VI.3.3 Links between variables
High productivity or favourable unit labour cost developments are
supposedly a sign of high competitiveness in a sector. But does this
translate into external competitiveness? In fact, there appears to be a
positive relationship between domestic and external competitiveness
across the large majority of sectors, as will be seen.
VI.3.3.1 Unit labour costs and external
competitiveness
Unit labour costs and RCA
Unit labour costs have indirect impacts on external competitiveness.
Favourable developments in unit labour costs in a particular sector
create cost advantages leading to lower production costs. These lower
production costs decrease the pressure on prices, and lower prices in
tradable markets are likely to increase the sector’s exports, generating
a higher revealed comparative advantage for the sector.
However, if other trading partners experience similar or stronger
favourable developments in ULC, the potential decrease in prices
will not translate into increased exports, and revealed comparative
advantage may even decrease. Figure VI.6 plots developments in ULC
(1996–2008) against changes in RCA (1996–2006). If the two sectors of
office machinery and computers and radio, TV and telecommunications
equipment are excluded (Cluster e, which was described before
has very specific characteristics), a negative relationship between
these indicators of domestic and external competitiveness becomes
apparent. More precisely, the rank correlation54 between these two
indicators is negative and statistically significant at 1 %, confirming
that favourable developments in ULC are associated with increased
revealed comparative advantage.
54 Rank correlation measures the degree of association between the variables
without imposing a linear relationship.

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 Chapter VI — Sectoral competitiveness in the EU: synthesis and further analysis

FIGURE VI.6: Unit labour cost growth rate in 1996–2008 and RCA changes in the EU (1996–2006)

0.4

Change in RCA index (1996–2006)

WOOD
PAPER
0.3

MOTOR
0.2
INSTR
CHEM
PRINT

0.1
MACHIN
PLAS
ELECMAC
0.0 REFIN

FOOD
TRANSEQPT FOOT
METAL CLOTH
COMP TELECOM METPR
–0.1
TEXT

–0.2 MINER
OTHMAN

–0.3
–8 –6 –4 –2 0 2 4 6 8
Unit labour cost growth (%)

Note: Recycling activities (DN37) are not included for lack of data. 2008 was calculated for the months available (January–September).
Source: own calculations using Eurostat data.

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EU industrial structure 2009 — Performance and competitiveness

FIGURE VI.7: Unit labour cost growth rate in 1996–2008 in relation to world market share and RTB in
1996–2006

Change in world market share (1996–2006)

WOOD

PAPER
4

MOTOR

2 INSTR

CHEM
PRINT
0
PLAS

ELECMAC
–2 MACHIN REFIN

COMPU TELECOM METAL CLOTH

FOOT
FOOD
TRANSEQPT
–4 METPR
TEXT

–6
OTHMAN

MINER
–8

–10
–8 –6 –4 –2 0 2 4 6 8
Unit labour cost growth (%)

0.3
Change in relative trade balance index (1996–2006)

PAPER WOOD
0.2

INSTR
0.1

CHEM
PLAS
0.0
ELECMAC PRINT REFIN
MOTOR
MACHIN
FOOD
COMPU METAL
–0.1 TELECOM METPR CLOTH
TRANSEQPT

OTHMAN TEXT
–0.2
MINER
FOOT

–0.3
–8 –6 –4 –2 0 2 4 6 8
Unit labour cost growth (%)
Note: Recycling activities (DN37) are not included for lack of data.
2008 was calculated for the months available (January–September).
Source: own calculations using Eurostat data.

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 Chapter VI — Sectoral competitiveness in the EU: synthesis and further analysis

Unit labour costs compared with world market share and RTB Labour productivity and RCA

Figure VI.7 provides two scatter plots examining the association
between ULC developments and, respectively, world market share
and RTB. Inspection of these plots reveals a very similar pattern to
the association between the ULC growth and RCA changes noted
above. In these two cases, once the two outliers (office machinery
and computers and radio, TV and telecommunications equipment)
are removed from the sample, the rank correlation is negative and
statistically significant at 5 %.
By and large, the findings from Figure VI.6 and Figure VI.7 confirm an
association across most sectors between favourable developments in
ULC and improvements in external competitiveness for each of the
three measures used for this dimension of competitiveness.
VI.3.3.2 Labour productivity growth and external
competitiveness
As discussed in Section IV.3, labour productivity is another commonly
used measure of domestic competitiveness. In what follows, the
relationship between labour productivity developments and each of
the three indicators of external competitiveness is investigated using
scatter plots.
Figure VI.8 plots developments in labour productivity (1996–2008)
against changes in RCA (1996–2006). As in the plots in Figure VI.6 and
Figure VI.7, the same two sectors (office machinery and computers
and radio, TV and telecommunications equipment) appear as
outliers. Ignoring these two sectors, a positive relationship between
the indicators of domestic and external competitiveness becomes
noticeable. More precisely, the rank correlation55 between these two
indicators across the restricted set of sectors is positive and statistically
significant at 5 %, suggesting that increases in labour productivity are
associated with increased revealed comparative advantage.
Other things being equal, favourable developments in labour
productivity are expected to improve external competitiveness.
However, one has to bear in mind that, as discussed for ULC
developments, improvements in, for example, the labour productivity
of trading partners may cancel out the expected positive relationship
between this indicator of domestic competitiveness and external
competitiveness measures.
55 Rank correlation measures the degree of association between the variables
without imposing a linear relationship.

FIGURE VI.8: Labour productivity growth rate in 1996–2008 and RCA in 1996–2006

0.4
Change in RCA index (1996–2006)

WOOD
PAPER
0.3

MOTOR
0.2
INSTR
CHEM
PRINT

0.1

PLAS MACHIN

ELECMAC
REFIN
0.0
FOOD
FOOT TRANSEQPT
CLOTH METPROD METAL
TELECOM
–0.1
COMPU
TEXT

–0.2 MINER
OTHMAN

–0.3
–1 0 1 2 3 4 5 6
Labour productivity growth (%)
Note: Recycling activities (DN37) are not included for lack of data.
2008 was calculated for the months available (January–September).
Source: own calculations using Eurostat data.

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EU industrial structure 2009 — Performance and competitiveness

Labour productivity compared with world market share and RTB
Figure VI.9 provides two scatter plots investigating the association
between labour productivity changes and, respectively, world market
share and RTB. Inspection of these plots reveals once again the two
outlier sectors found in every previous plot.
Once these two outliers (office machinery and computers and radio, TV
and telecommunications equipment) are removed from the sample, the
rank correlation is positive and statistically significant at 10 % for RTB but
not statistically significant for world trade share, though also positive.
Though to a lesser extent than for labour productivity developments as
an indicator of domestic competitiveness, the findings from Figure VI.8
and Figure VI.9 suggest an association across most sectors between
favourable developments in labour productivity and improvements in
external competitiveness. More precisely, for two of the three measures
used for external competitiveness, the association is positive across
all but two sectors, while the third indicator provides a less clear-cut
conclusion.

FIGURE VI.9: Labour productivity growth rate in 1996–2008 in relation to world market share and RTB in
1996–2006

36
Change in world market share (1996-2006)

34 MACHIN

32 CHEM
PRINT
30 MINER
28 TRANSEQPT
PAPER
26 METPR
INSTR MOTOR
24
FOOD
22 REFIN
PLAS ELECMAC
20 WOOD
FOOT
18 OTHMAN
METAL
16
14 TEXT

12 CLOTH
TELECOM
10 COMPU

8
–1 0 1 2 3 4 5 6
Labour productivity growth (%)

0.3
Change in relative trade balance index (1996-2006)

WOOD PAPER
0.2

INSTR
0.1

CHEM
PLAS
0.0 PRINT ELECMAC
REFIN MOTOR
MACHIN
FOOD
METPR METAL COMPU
–0.1 CLOTH
TRANSEQ TELECOM

OTHMAN TEXT
–0.2 MINER

FOOT

–0.3
–1 0 1 2 3 4 5 6
Labour productivity growth (%)
Note: Recycling activities (DN37) are not included for lack of data.
2008 was calculated for the months available (January–September).
Source: own calculations using Eurostat data.

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 Chapter VI — Sectoral competitiveness in the EU: synthesis and further analysis

VI.4 Appendix

FIGURE VI.10: Sector clusters based on GDP share and value added and labour productivity growth

A
DF
DA
E
DD
DN
DE
DI
DH
DJ
DM
DK
DG
DL
G
I
J
B
DB
C
DC
F
L
M
N
H
O
K

0 2 4 6 8 10 12 14
Linkage distance
Note: The linkage rule is Ward’s and the similarity measure the Euclidean distance.
Source: own calculations using Eurostat data.

FIGURE VI.11: Manufacturing sector clusters based on production growth, domestic competitiveness and
international competitiveness

DA15
DH25
DJ28
DL31
DL33
DM35
DB17
DD20
DN36
DF23
DJ27
DE21
DK29
DG24
DM34
DE22
DI26
DB18
DC19
DL30
DL32

0 2 4 6 8 10 12 14
Linkage distance
Note: The linkage rule is Ward’s and the similarity measure the Euclidean distance.
Source: own calculations using Eurostat data.

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 Annexes

Annexes

A.1 Statistical nomenclatures

Table A.1 presents, in the first two columns, the codes and names of
sectors in the nomenclature of economic activities, NACE Rev. 1. The
third column contains the abridged versions of sector names used in
the figures and tables. The acronyms in the fourth column are those
used in the scatter plots. Although most of the data on industries in this
publication are presented according to the nomenclature of economic
activities NACE Rev. 1 and the corresponding Classification of Products
by Activity (CPA) when the data refer to products, two tables and a
graph in Chapter 2 are presented according to NACE Rev. 2. The code
and the whole heading of the sectors in the nomenclature at 2-digit
level, which are used in Chapter 2, are presented in Table A.2. Table
A.3 presents the final consumption expenditure of households by
consumption purpose (COICOP) 3 digits used in IV.5. Table A.4 presents
the extended balance of payments services classification used in Trade
in services in Chapter V. Royalties and licence fees were not included in
this section as they are not related to a special service activity.

TA B L E A . 1 : S e c t o ra l n o m e n c l at u re fo r e co n o m i c a c t i v i t i e s

Code NACE Rev. 1.1 NACE Rev. 1.1 (short) Acronym

a Agriculture, hunting and forestry Agriculture and forestry agri
b Fishing Fishing fish
c Mining and quarrying Mining and quarrying mine
Mining and quarrying of energy
ca Mining of energy products
producing materials
Mining and quarrying except energy
cb Other mining othmin
producing materials
d Manufacturing Manufacturing manuf
Manufacture of food products; beverages
da Food, drinks and tobacco foodtob
and tobacco
Manufacture of food products and
da15 Food and drink food
beverages
da16 Manufacture of tobacco products Tobacco tobac
Manufacture of textiles and textile
db Textiles and clothing textcloth
products
db17 Manufacture of textiles Textiles text
Manufacture of wearing apparel;
db18 Clothing cloth
dressing; dyeing of fur
Manufacture of leather and leather
dc Leather and footwear foot
products
Tanning, dressing of leather; manufacture
dc19 Leather and footwear foot
of luggage
dd Manufacture of wood and wood products Wood and wood products wood
>>>

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EU industrial structure 2009 — Performance and competitiveness

Code NACE Rev. 1.1 NACE Rev. 1.1 (short) Acronym

Manufacture of wood and of products
of wood and cork, except furniture;
dd20 Wood and wood products wood
manufacture of articles of straw and
plaiting materials
Manufacture of pulp, paper and paper
de Pulp, paper and publishing paper
products; publishing and printing
Manufacture of pulp, paper and paper
de21 Pulp and paper paper
products
Publishing, printing, reproduction of
de22 Printing and publishing print
recorded media
Manufacture of coke, refined petroleum
df Refined petroleum refin
products and nuclear fuel
Manufacture of coke, refined petroleum
df23 Refined petroleum refin
products and nuclear fuel
Manufacture of chemicals, chemical
dg Chemicals chem
products and man-made fibres
Manufacture of chemicals and chemical
dg24 Chemicals chem
products
Manufacture of rubber and plastic
dh Rubber and plastics plas
products
Manufacture of rubber and plastic
dh25 Rubber and plastics plas
products
Manufacture of other non-metallic
di Non-metallic mineral products miner
mineral products
Manufacture of other non-metallic
di26 Non-metallic mineral products miner
mineral products
Manufacture of basic metals and
dj Basic metals and metal products metal
fabricated metal products
dj27 Manufacture of basic metals Basic metals metal
Manufacture of fabricated metal
dj28 products, except machinery and Metal products metpr
equipment
Manufacture of machinery and
dk Machinery n.e.c. machin
equipment n.e.c.
Manufacture of machinery and
dk29 Machinery n.e.c. machin
equipment n.e.c.
Manufacture of electrical and optical
dl Electrical and optical equipment elecopt
equipment
Manufacture of office machinery and
dl30 Office machinery offmac
computers
Manufacture of electrical machinery and
dl31 Electrical machinery elecmac
apparatus n.e.c.
Manufacture of radio, television and
dl32 communication equipment and Radio, TV & communic. eq. telecom
apparatus
Manufacture of medical, precision and
dl33 Scientific and other instruments instr
optical instruments, watches and clocks
dm Manufacture of transport equipment Transport equipment transeqpt
Manufacture of motor vehicles, trailers
dm34 Motor vehicles motor
and semi-trailers
Manufacture of other transport
dm35 Other transport eq. trans
equipment
dn Manufacturing n.e.c. Other manufacturing othman
Manufacture of furniture; manufacturing
dn36 Furniture; other manufacturing furnit
n.e.c.
dn37 Recycling Recycling recyc
e Electricity, gas and water supply Electricity, gas and water supply electr
Electricity, gas, steam and hot water
e40 Electricity and hot water supply
supply
Collection, purification and distribution
e41 Collection and distribution of water
of water
f Construction Construction const
f45 Construction Construction
Wholesale and retail trade; repair of
g motor vehicles, motorcycles and personal Wholesale and retail trade wholretra
and household goods
Sale, maintenance and repair of motor
g50 Sale and repair of motor vehicles salemot
vehicles
Wholesale trade and commission trade,
g51 Wholesale trade wholtr
except of motor vehicles and motorcycles
Retail trade, except of motor vehicles,
g52 motorcycles; repair of personal and Retail trade retra
household goods
h Hotels and restaurants Hotels and restaurants hotel
>>>

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 Annexes

Code NACE Rev. 1.1 NACE Rev. 1.1 (short) Acronym

h55 Hotels and restaurants Hotels and restaurants hotel
i Transport, storage and communication Transport and communication transcom
i60 Land transport; transport via pipelines Inland transport inltran
i61 Water transport Water transport watran
i62 Air transport Air transport airtran
Supporting and auxiliary transport
i63 Supporting transport activities suptran
activities; activities of travel agencies
i64 Post and telecommunications Communications comm
j Financial intermediation Financial intermediation fin
Financial intermediation, except
j65 Financial intermediation finint
insurance and pension funding
Insurance and pension funding, except
j66 Insurance and pension funding insur
compulsory social security
Activities auxiliary to financial Activities auxiliary to financial
j67 auxfin
intermediation intermediation
k Real estate, renting and business activities Real estate and business activities realbus
k70 Real estate activities Real estate activities reest
Renting of machinery and equipment
k71 without operator and of personal and Renting of machinery and equipment rentm
household goods
k72 Computer and related activities Computer and related activities compu
k73 Research and development Research and development r&d
k74 Other business activities Other business activities
Public administration and defence;
l Public administration pubadmin
compulsory social security
m Education Education educ
n Health and social work Health and social work health
Other community, social, personal service
o Other services othser
activities

TA B L E A . 2 : C l a s s i f i c a t i o n o f p r o d u c t s b y a c t i v i t i e s (C PA )

Code Description
01 Crop and animal production, hunting and related service activities
02 Forestry and logging
03 Fishing and aquaculture
05 Mining of coal and lignite
06 Extraction of crude petroleum and natural gas
07 Mining of metal ores
08 Other mining and quarrying
09 Mining support service activities
10 Manufacture of food products
11 Manufacture of beverages
12 Manufacture of tobacco products
13 Manufacture of textiles
14 Manufacture of wearing apparel
15 Manufacture of leather and related products
16 Manufacture of wood and of products of wood and cork, except furniture; manufacture of articles of straw and plaiting materials
17 Manufacture of paper and paper products
18 Printing and reproduction of recorded media
19 Manufacture of coke and refined petroleum products
20 Manufacture of chemicals and chemical products
21 Manufacture of basic pharmaceutical products and pharmaceutical preparations
22 Manufacture of rubber and plastic products
23 Manufacture of other non-metallic mineral products
24 Manufacture of basic metals
25 Manufacture of fabricated metal products, except machinery and equipment
>>>

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EU industrial structure 2009 — Performance and competitiveness

Code Description
26 Manufacture of computer, electronic and optical products
27 Manufacture of electrical equipment
28 Manufacture of machinery and equipment n.e.c.
29 Manufacture of motor vehicles, trailers and semi-trailers
30 Manufacture of other transport equipment
31 Manufacture of furniture
32 Other manufacturing
33 Repair and installation of machinery and equipment
35 Electricity, gas, steam and air conditioning supply
36 Water collection, treatment and supply
37 Sewerage
38 Waste collection, treatment and disposal activities; materials recovery
39 Remediation activities and other waste management services
41 Construction of buildings
42 Civil engineering
43 Specialised construction activities
45 Wholesale and retail trade and repair of motor vehicles and motorcycles
46 Wholesale trade, except of motor vehicles and motorcycles
47 Retail trade, except of motor vehicles and motorcycles
49 Land transport and transport via pipelines
50 Water transport
51 Air transport
52 Warehousing and support activities for transportation
53 Postal and courier activities
55 Accommodation
56 Food and beverage service activities
58 Publishing activities
59 Motion picture, video and television programme production, sound recording and music publishing activities
60 Programming and broadcasting activities
61 Telecommunications
62 Computer programming, consultancy and related activities
63 Information service activities
64 Financial service activities, except insurance and pension funding
65 Insurance, reinsurance and pension funding, except compulsory social security
66 Activities auxiliary to financial services and insurance activities
68 Real estate activities
69 Legal and accounting activities
70 Activities of head offices; management consultancy activities
71 Architectural and engineering activities; technical testing and analysis
72 Scientific research and development
73 Advertising and market research
74 Other professional, scientific and technical activities
75 Veterinary activities
77 Rental and leasing activities
78 Employment activities
79 Travel agency, tour operator and other reservation service and related activities
80 Security and investigation activities
81 Services to buildings and landscape activities
82 Office administrative, office support and other business support activities
84 Public administration and defence; compulsory social security
85 Education
86 Human health activities
87 Residential care activities
88 Social work activities without accommodation
90 Creative, arts and entertainment activities
>>>

Page 192
 Annexes

Code Description
91 Libraries, archives, museums and other cultural activities
92 Gambling and betting activities
93 Sports activities and amusement and recreation activities
94 Activities of membership organisations
95 Repair of computers and personal and household goods
96 Other personal service activities
97 Activities of households as employers of domestic personnel
98 Undifferentiated goods- and services-producing activities of private households for own use
99 Activities of extraterritorial organisations and bodies

TA B L E A . 3 : S e c t o ra l n o m e n c l at u re fo r co n s u m p t i o n a c t i v i t i e s (CO I CO P )

Total Total
cp01 Food and non-alcoholic beverages
cp011 Food
cp012 Non-alcoholic beverages
cp02 Alcoholic beverages, tobacco and narcotics
cp021 Alcoholic beverages
cp022 Tobacco
cp023 Narcotics
cp03 Clothing and footwear
cp031 Clothing
cp032 Footwear including repair
cp04 Housing, water, electricity, gas and other fuels
cp041 Actual rentals for housing
cp042 Imputed rentals for housing
cp043 Maintenance and repair of the dwelling
cp044 Water supply and miscellaneous services relating to the dwelling
cp045 Electricity, gas and other fuels
cp05 Furnishings, household equipment and routine maintenance of the house
cp051 Furniture and furnishings, carpets and other floor coverings
cp052 Household textiles
cp053 Household appliances
cp054 Glassware, tableware and household utensils
cp055 Tools and equipment for house and garden
cp056 Goods and services for routine household maintenance
cp06 Health
cp061 Medical products, appliances and equipment
cp062 Out-patient services
cp063 Hospital services
cp07 Transport
cp071 Purchase of vehicles
cp072 Operation of personal transport equipment
>>>

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EU industrial structure 2009 — Performance and competitiveness

Total Total
cp073 Transport services
cp08 Communications
cp081 Postal services
cp082 Telephone and telefax equipment
cp083 Telephone and telefax services
cp09 Recreation and culture
cp091 Audio-visual, photographic and information processing equipment
cp092 Other major durables for recreation and culture
cp093 Other recreational items and equipment, gardens and pets
cp094 Recreational and cultural services
cp095 Newspapers, books and stationery
cp096 Package holidays
cp10 Education
cp101 Pre-primary and primary education
cp102 Secondary education
cp103 Post-secondary non-tertiary education
cp104 Tertiary education
cp105 Education not definable by level
cp11 Restaurants and hotels
cp111 Catering services
cp112 Accommodation services
cp12 Miscellaneous goods and services
cp121 Personal care
cp122 Prostitution
cp123 Personal effects n.e.c.
cp124 Social protection
cp125 Insurance
cp126 Financial services n.e.c.
cp127 Other services n.e.c.

TA B L E A . 4 : S e c t o r a l n o m e n c l a t u r e f o r t r a d e i n s e r v i c e s a c t i v i t i e s 56

1. Transportation
2. Travel
3. Communications services
4. Construction services
5. Insurance services
6. Financial services
7. Computer and information services
8. Royalties and licence fees
9. Other business services
10. Personal, cultural, and recreational services
11. Government services

56 For a more detailed description, see European Central Bank (2007).

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 Annexes

A.2 List of abbreviations

AC Apparent Consumption
BEC Broad Economic Classification
BOPS Balance of Payments Statistics
BRIC Brazil, Russia, India and China
CPA Classification of Products by Activity
COICOP Classification of Individual Consumption by Purpose
COMEXT Statistical database from and between European Union countries
COMTRADE Commodity Trade Statistics database
EPO European Patent Office
EUKLEMS EU level analysis of capital (K), labour (L), energy (E), materials (M) and service (S) inputs. The EU KLEMS dataset is a research database.
FDI Foreign Direct Investment
IIT Intra-industry Trade
GDP Gross Domestic Product
GFCF Gross Fixed Capital Formation
GL Grubel-Loyd
H-P Hodrick-Prescott
ICT Information and Communication Technologies
IMF International Monetary Fund
IO Input-output
M Imports
NACE Nomenclature Générale des Activités Économiques dans les Communautés Européennes (French, EU classification system)
OECD Organisation for Economic Cooperation and Development
P Production
PAT Patent
RCA Revealed Comparative Advantage
R&D Research and Development
RTB Relative Trade Balance
SBS Structural Business Statistics from Eurostat
Si Specialisation index
ULC Unit Labour Cost
UN United Nations
UNIDO United Nations Industrial Development Organisation
USPO The United States Patent and Trademark Office
VA value added
WTO World Trade Organisation
X Exports

AT Austria IE Ireland
BE Belgium IT Italy
BG Bulgaria LT Lithuania
CY Cyprus LU Luxembourg
CZ Czech Republic LV Latvia
DE Germany MT Malta
DK Denmark NL Netherlands
EE Estonia PL Poland
ES Spain PT Portugal
EU European Union RO Romania
EU-27 27 Member States of the European Union SE Sweden
FI Finland SI Slovenia
FR France SK Slovakia
EL Greece UK United Kingdom
HU Hungary US United States

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EU industrial structure 2009 — Performance and competitiveness

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WTO (2007), International Trade Statistics 2007.

Page 197
European Commission

EU industrial structure 2009 — Performance and competitiveness

Luxembourg: Publications Office of the European Union

2009 — 197 pp. — 21 x 29.7 cm

ISBN 978-92-79-10446-6
doi:10.2769/19660
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EU industrial structure 2009

NB-BL-08-001-EN-C
Performance and competitiveness
The production of EU industrial structure is a response to the increasing interest in analysing
the competitiveness of the EU economy from a sectoral perspective. This publication provides
insight into the relative performance of individual industries, and contributes to explaining the
competitiveness of the EU economy at large. The publication covers market sectors, from mining to
market services, although, wherever necessary, it refers to the whole economy, including primary
sectors and non-market services.
The work is empirical and data oriented and consists of the creation and analysis of a system

EU industrial structure 2009 — Performance and competitiveness

of statistical indicators on various facets of sectoral performance and competitiveness. The
indicators cover fields of relevance to gain insight into the economics and policy issues of EU
sectors. The publication applies the same set of indicators to all sectors and uses input–output data
to go beyond the analysis of individual sectors separately buy capturing sectoral interrelations,
such as those between manufacturing and services sectors. From a geographical point of view
the publication covers the EU-27 as a whole and individual Member States and it also makes
comparisons with other countries, such as the US, Japan and BRIC countries (Brazil, Russia, India,
China), wherever possible.
The 2009 edition of EU industrial structure covers the following topics: the recent economic
downturn, EU sectoral structure, EU sectoral growth, international competitiveness of EU industry,
synthesis and further analyses of the sectoral competitiveness in the EU. This publication follows
the path laid by EU sectoral competitiveness indicators (2005) and EU industrial structure 2007 —
Challenges and opportunities. Compared to the previous publications, the 2009 publication offers
a more detailed sectoral breakdown and adds two chapters, one devoted to the analysis of the
impact of the financial crisis on the real economy and one synthesis chapter.

EU industrial
European Commission • Enterprise and Industry structure
2009
Performance
and competitiveness
European Commission
Enterprise and Industry ISSN 1831-3043