Reviewing the nomenclature for hightechnology trade – the sectoral approach
by
Alexander Loschky
Current high-tech nomenclature
Two different approaches:
– Sectoral approach (by economic sectors, ISIC / NACE)
– Product approach (by product groups, SITC)
This presentation concentrates on the sectoral
approach.
How are high-tech sectors identified?
• R&D intensity is used as the sole indicator
• Calculating direct and indirect R&D intensities
– Direct R&D intensities:
R & D intensity y 
R & D expenditure y
output y
– Indirect R&D intensities (R&D expenditure embodied in the
intermediate goods used in the production of another
sector)
Calculation: via Input-Output tables
Why reviewing the sectoral high-tech
classification?
Current nomenclature is relatively old:
• 1997: OECD working paper by Thomas
Hatzichronoglou (using direct and indirect R&D
intensities, but figures date from 1990)
• 2005: OECD Handbook on Economic Globalisation
Indicators (minor and partial update using only direct
R&D intensities)
Calculation of indirect R&D intensities (1)
Brief description in nine steps:
1. Conversion of input-output tables (nearest to the year
2000) from national currencies into US-$ (using PPP)
2. Estimation of missing output data for certain sectors and
countries (where possible) with production data
3. Summing-up of the input-output tables of all countries into
a single table
Calculation of indirect R&D intensities (2)
4. Calculation of the direct R&D intensities:
= total R&D expenditure of sector Y for all countries / total output in
sector Y of all countries
5. Conversion of the unified input-output table of step 3 into
a table of input coefficients (A)
6. Formation of the Leontief inverse: (I-A)-1
(The Leontief inverse shows the impact of one unit of final demand
on the intermediate products.)
Calculation of indirect R&D intensities (3)
7. Transformation of the table into a table of output
necessities
(showing the amounts of intermediate products needed for one unit
of output)
8. Calculation of the total R&D intensities:
Calculation of indirect R&D intensities (of sector Y from each sector X):
The output necessities of sector Y from each sector X were
multiplied with the respective direct R&D intensities of sectors X.
Total R&D intensity of sector Y
= direct R&D intensity of sector Y + indirect R&D intensities of Y
Calculation of indirect R&D intensities (4)
9. The total R&D intensities were used to classify the
sectors for its technology intensiveness. The threshold
used were:
R&D intensity…
• … below 1.0%: low-tech
• … between 1.0% and 2.5%: medium-low-tech
• … between 2.5% and 7%: medium high-tech
• … higher than 7%: high-tech
Results of the calculation – (1) high-tech sectors
Classification of industries based on technology intensity
Nomenclature
2000
1990*
ISIC
Rev. 3
Ra
nk
dir.+
indir.
R&D
dir.
R&D
Ra
nk
33
1
12.38%
10.53%
5
6.55%
5.10%
5
4.69%
3.61%
2423
2
10.94%
10.04%
3
11.35%
10.47%
4
8.37%
7.62%
19 Radio, television &
communication equipment
32
3
9.53%
8.32%
4
9.40%
8.03%
3
9.33%
8.35%
17 Office, accounting &
computing machinery
30
4
8.99%
7.91%
2
14.37%
11.46%
2
11.19%
9.00%
23 Aircraft & spacecraft
353
5
8.79%
8.21%
1
17.30%
14.98%
1
16.06%
14.13%
IO sector / Sector description
20 Medical, precision & optical
instruments
10 Pharmaceuticals
* Data from the year 1990 and 1980 are taken from Hatzichronoglou (1997).
dir.+
indir.
R&D
1980*
dir. R&D
Ra
nk
dir.+
indir.
R&D
dir.
R&D
Results of the calculation – (2) medium-high-tech
sectors
Classification of industries based on technology intensity
Nomenclature
2000
1990*
dir.+
indir.
R&D
dir.
R&D
6
5.09%
3.68%
34
7
4.28%
18 Electrical machinery & apparatus,
nec
31
8
16 Machinery & equipment, nec
29
dir.+
indir.
R&D
dir.
R&D
Ra
nk
9
3.03%
1.58%
11
1.69%
0.98%
3.30%
6
4.44%
3.41%
7
3.68%
2.81%
3.79%
2.65%
7
3.96%
2.81%
6
4.25%
3.48%
9
3.31%
2.13%
10
2.58%
1.74%
10
2.00%
1.32%
24 excl.
2423
10
2.88%
2.38%
8
3.84%
3.20%
8
2.67%
2.15%
25
11
2.37%
1.03%
11
2.47%
1.07%
9
2.20%
1.08%
IO sector / Sector description
ISIC
Rev. 3
Ra
nk
24 Railroad equipment & transport
equip nec
352
+ 359
21 Motor vehicles, trailers & semitrailers
09 Chemicals excluding
pharmaceuticals
11 Rubber & plastics products
1980*
Ra
nk
dir.+
indir.
R&D
dir.
R&D
Results of the calculation – (3) medium-low-tech
sectors
Classification of industries based on technology intensity
Nomenclature
2000
1990*
1980*
IO sector / Sector description
ISIC
Rev. 3
Ra
nk
dir.+
indir.
R&D
dir.
R&D
Ra
nk
dir.+
indir.
R&D
dir.
R&D
Ra
nk
11 Rubber & plastics products
25
11
2.37%
1.03%
11
2.47%
1.07%
9
2.20%
1.08%
22 Building & repairing of ships & boats
351
12
2.34%
0.73%
12
2.21%
0.74%
13
1.42%
0.39%
272
+ 2732
13
1.54%
0.80%
14
1.57%
0.93%
16
1.04%
0.54%
26
14
1.49%
0.80%
15
1.44%
0.93%
14
1.10%
0.66%
36 + 37
15
1.42%
0.46%
13
1.76%
0.63%
12
1.45%
0.79%
28
16
1.36%
0.54%
16
1.35%
0.63%
15
1.06%
0.45%
271
+ 2731
17
1.14%
0.53%
18
1.10%
0.64%
18
0.78%
0.45%
23
18
1.11%
0.39%
17
1.33%
0.96%
17
0.80%
0.58%
14 Non-ferrous metals
12 Other non-metallic mineral products
25 Manufacturing nec; recycling
(include Furniture)
15 Fabricated metal products, except
machinery & equipment
13 Iron & steel
08 Coke, refined petroleum products
and nuclear fuel
dir.+
indir.
R&D
dir.
R&D
Results of the calculation – (4) low-tech sectors
Classification of industries based on technology intensity
Nomenclature
2000
1990*
1980*
IO sector / Sector description
ISIC
Rev. 3
Ra
nk
dir.+
indir.
R&D
dir.
R&D
Ra
nk
dir.+
indir.
R&D
dir.
R&D
Ra
nk
dir.+
indir.
R&D
dir.
R&D
07 Pulp, paper, paper products, printing
and publishing
21 + 22
19
0.99%
0.40%
19
0.88%
0.31%
19
0.68%
0.23%
05 Textiles, textile products, leather
and footwear
17 + 18
+ 19
20
0.97%
0.29%
20
0.78%
0.23%
20
0.56%
0.13%
04 Food products, beverages and
tobacco
15 + 16
21
0.96%
0.34%
21
0.73%
0.34%
20
0.56%
0.14%
20
22
0.83%
0.21%
22
0.65%
0.18%
22
0.55%
0.14%
06 Wood and products of wood and
cork
Results – Impact on the high-tech
classification:
• Almost no changes for the technology classification
compared to the last one, based on 1990 data.
• The only major change: precision instruments are
now high-tech and became the sector with the
highest R&D intensity.
• But note: The ranking within the high-tech and
medium-high-tech groups changed considerably.
Outlook (1)
• This exercise should be repeated each time when
new OECD Input-Output tables become available.
• Hopefully country coverage (currently 18 countries)
can be extended to even more OECD and non-OECD
countries.
• Also the classification based on the product approach
needs an update (see paper by Florian Eberth,
OECD).
Outlook (2) – The combined approach
Currently trade by high-tech sectors is calculated using
correspondence tables (ISIC  SITC).
In the future, this could be replaced by using (detailed)
sectoral foreign trade data allowing to identify the
goods actually traded by high-tech sectors.
Thank you!
Contact:
E-Mail: Alexander.Loschky@jrc.it
Phone: +39 0332 78 3077
Additional slide: Country coverage
• data from 18 countries were used for which R&D
intensities could be calculated and for which OECD
Input-Output tables were available (compared to 10
countries in 1997)
• The countries were: AU, BE, CA, CZ, DE, DK, ES, FI,
FR, UK, IE, IT, JP, KR, NL, NO, PL, SE, US
(all 18 countries are OECD members)