AUSTRALIAN MANUFACTURING IN THE GLOBAL ECONOMY
Study for the Australian Government,
Department of Industry, Innovation, Science, Research and Tertiary
Education
Final report
July 2012
TABLE OF CONTENTS
EXECUTIVE SUMMARY ..................................................................................................................... 4
FOREWORD........................................................................................................................................ 7
INTRODUCTION ................................................................................................................................ 8
CHAPTER 1 MANUFACTURING IN THE GLOBAL ECONOMY ............................................. 10
1.1 The importance of manufacturing in OECD economies .......................................................... 10
1.2 Structural trends in global manufacturing................................................................................ 17
2.2.1 A long term trend of de-industrialisation of OECD economies ........................................ 18
2.2.2 Increasing competition from emerging economies ........................................................... 20
2.2.3 The emergence of global value chains (GVCs)................................................................. 23
2.2.4 The shifting demand towards Asia .................................................................................... 28
2.2.5 Innovation and knowledge as source of competitiveness ................................................. 30
2.2.6 The blurring of manufacturing and services...................................................................... 33
2.2.7 New growth opportunities in manufacturing… also for developed economies ................ 35
2.2.8 A broader trend of back-shoring on the horizon?.............................................................. 37
CHAPTER 2 AUSTRALIAN MANUFACTURING IN INTERNATIONAL PERSPECTIVE ...... 39
2.1 A snapshot of manufacturing in Australia. .............................................................................. 40
2.2 Structural change and the mining boom .................................................................................. 45
2.3 Drivers of manufacturing performance .................................................................................... 51
2.3.1 Productivity ....................................................................................................................... 51
2.3.2 Labour costs ...................................................................................................................... 54
2.3.3 Scale (dis)advantages ........................................................................................................ 56
2.3.4 International orientation .................................................................................................... 58
CHAPTER 3 AUSTRALIAN MANUFACTURING AMID GLOBAL COMPETITION.............. 69
3.1 Australian manufactures on international markets .................................................................. 71
3.1.1 Sectoral and geographical structure of merchandise exports by Australia ......................... 71
3.1.2 Australia’s manufactures export growth ............................................................................ 75
3.1.3 International competitiveness of Australian manufacturers .............................................. 80
4.1.4 International competitiveness: price or quality? ............................................................... 84
3.2 Australian manufacturing in GVCs ......................................................................................... 86
3.3 International competition on Australia’s domestic market ...................................................... 89
CONCLUSIONS AND POLICY MESSAGES ................................................................................. 91
REFERENCES ................................................................................................................................... 96
ANNEX 1 ADDITIONAL FIGURES............................................................................................. 101
ANNEX 2 ADDITIONAL TABLES ............................................................................................... 108
2
ANNEX 3: TECHNOLOGY INTENSIVE CLASSIFICATION IN MANUFACTURING
(Based on International Standard Industrial Classification (ISIC) - Revision. 3) ............................ 115
ANNEX 4: SOURCE DATA FOR FIGURES IN THE REPORT .................................................. 116
3
EXECUTIVE SUMMARY
The Australian economy has greatly benefitted from the economic rise of Asia as illustrated in strong
economic growth, low unemployment, rising purchasing power, etc. but not all sectors are faring
equally well. The growing demand for commodities fuelled by the rapid urbanisation and
industrialisation of Asian countries (especially China and India) has pushed up world prices of mining
products resulting in increased terms of trade for Australia. While mining and related activities are
expanding, the accompanying appreciation of the Australian dollar has put increased pressure on other
traded sectors like manufacturing. The current mining boom negatively impacts on Australian
manufacturing’s competitiveness as exports have become more expensive while imports in Australian
markets have become cheaper.
The worsening performance of Australian manufacturing in recent years is however not only due to
the current mining boom. Just like other OECD economies, the Australian economy is characterised
by a long-term trend of deindustrialisation reflected in a falling importance of manufacturing in value
added and employment. In addition, globalisation is drastically changing the outlook of global
manufacturing with emerging countries gaining market share not only in more traditional
manufacturing industries but increasingly also in higher technology industries. The growing domestic
demand in these countries as well as lower (labour) costs are important drivers of the ongoing shift in
global manufacturing. Nevertheless, manufacturing in OECD countries including in Australia, is not
a sector in decline: manufacturing output and value added have continued to grow strongly up to the
Global Financial Crisis of 2007/2008 which severely impacted manufacturing demand and production
across OECD countries.
As the demand for Australian commodities is expected to remain high in the near future, Australian
manufacturing will need to adapt to the shifting comparative advantage of Australia. More than 50%
of Australia’s exports in 2010 concerned primary goods (agriculture and mining), while
manufacturing was a net importer representing 30% of Australian exports and 70% of its imports.
The international competitiveness of Australian manufacturing is concentrated in a small number of
industries directly dependent on Australia’s natural resources (‘non-ferrous metals’, ‘food, beverages
and tobacco’ and ‘wood’); in addition, there are some signs of growing competitiveness in
‘pharmaceuticals’ and ‘scientific instruments’.
But the economic emergence of Asia also creates important opportunities for Australian
manufacturing. Australia is well positioned to benefit from the emergence of large consumer markets
in Asia not only for Australian commodities but increasingly also for manufactured products from
Australia. In addition, Australian manufacturing could also benefit more from the relative proximity
of large GVCs in Asia. If managed well, Australian manufacturers could greatly benefit from the new
growth opportunities that are (relatively) nearby. The observation is however that while fast growing
Asian markets have become increasingly important in Australia’s export portfolio, Australian
manufacturers miss out on sizeable opportunities. The growth in Australian exports of manufactured
goods has not kept up with the market growth in most Asian countries.
The shift of the economic centre eastward will significantly decrease Australia’s traditional
disadvantage of remoteness from international markets which in combination with Australia’s small
domestic market has resulted in important scale disadvantages, relatively low productivity, a low
degree of internationalisation and limited integration into GVCs for Australian manufacturing.
Manufacturing in Australia has heavily suffered from the ‘tyranny of distance’; high transport and
4
trade costs reduce trade and limit the opportunities for Australia to specialise in the activities where it
possesses a comparative advantage. Distance from world markets also limits the country’s exposure
to competition and makes international producers less competitive in Australian markets.
While these structural weaknesses have limited the role of manufacturing in the Australian economy
as well in global manufacturing since long, recent developments have triggered a (further) loss of
competitiveness of Australian manufacturing. First, the slump in productivity growth since 2001 has
widened Australia’s long-standing productivity gap with other manufacturing countries even further.
Second, Australian manufacturing increasingly suffers from a cost disadvantage not only with respect
to emerging countries, but more and more also with other OECD countries. Only part of this is
explained by the negative effects of the current mining boom through the stronger Australian dollar.
Confronted with a growing competition in global manufacturing including from emerging economies,
Australian manufacturers need to develop other competitive advantages to compensate for the highcost environment they operate in. Similar to other OECD manufacturing, the long-term productivity
and competitiveness of Australian manufacturing will be increasingly based on innovation, targeted at
new products/processes/services for (new) niche markets and based on factors beyond cost efficiency.
Investments in intangible assets (brand equity, design, organizational capital, business models, etc.)
allow manufacturing firms to compete less on costs alone and more on ‘quality’, for example on
specific product characteristics like reliability, sustainability, differentiation, brand image, that
motivate customers to pay a higher price.
The development of sustainable firm-level capabilities through investment in human capital (skills
development) and collaboration with external partners (research organisations, universities, suppliers,
customers, etc.) is crucial for this. Nowadays, Australian manufacturing shows a mixed account on
innovation, which seems to be strongly focused on cost efficiency and adaptation of products and
process to the domestic market. Another point of attention is the only moderate score of Australian
manufacturing on management skills since effective management has become increasingly important
for the development of innovation capabilities in firms.
Innovation should help Australian manufacturing to broaden the number of international competitive
industries; some higher technology industries in ICT and medical technologies are developing but are
still limited in size. Adding more advanced activities on top of existing resource-based activities may
be one way to develop new competitive strengths while nurturing the resource-based strengths of
Australian manufacturing. Notwithstanding large R&D investments in resource based manufacturing
in Australia, other resource-intensive countries seem to have been more successful in developing high
technology activities to complement their advantage in resource-intensive industries.
As the business sector is the first responsible for firm performance, it has a paramount role to play in
addressing the weaknesses, reinforcing existing and developing further strengths of Australian
manufacturing. Government should focus on enabling and creating the necessary conditions through
a supportive public policy: reducing regulatory barriers, supporting the development of capabilities,
investing in infrastructure, etc. Such efforts should not only be targeted at manufacturing but include
also services sectors given the strong linkages between manufacturing and services.
Manufacturing still has an important role to play in Australia, even if the country does not have the
same strong manufacturing tradition than e.g. Germany and the United States. Manufacturing is high
on the policy agenda in most OECD economies as it contributes to a balanced economy and is an
5
important source of innovation, productivity and international trade. A broader
discussion/consultation on the future of manufacturing in Australia should help to identify the
strategic directions that have the greatest chance to bring success for Australia in global
manufacturing. The resulting re-balancing of the economy will also be important for Australia in
preparation for a time beyond the current mining boom.
6
FOREWORD
This OECD study was commissioned by the Department of Industry, Innovation, Science, Research
and Tertiary Education of the Australian Government, and is intended to provide input for the
Australian Government and the Prime Minister’s taskforce on manufacturing as well as inform the
public debate more generally.
The report was prepared by the Structural Policy Division of the OECD Directorate for Science under
the direction of Koen De Backer who is also the main author. Isabelle Desnoyers-James, Laurent
Moussiegt, Alexander Ragoussis and Dirk Pilat significantly contributed to the report.
The report has benefitted from comments and inputs provided by the Department of Industry and
Science (formerly the Department of Industry, Innovation, Science, Research and Tertiary Education)
of the Australian Government.
Copyright © 2012 Organisation for Economic Co-operation and Development (OECD)
Australian Manufacturing in the Global Economy © 2012 OECD
All rights granted herein are non-exclusive, worldwide rights to reproduce and publish the
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Due acknowledgement shall be given to the OECD by including a copyright notice on each of the
studies [© 2012 OECD] in accordance with the appropriate date indicated above, followed by the
following notice:
“The present study was produced by the OECD as background material for the work carried out by
the OECD Committee on Industry, Innovation and Entrepreneurship. The opinions expressed and
arguments employed herein do not necessarily reflect the official views of the OECD or of its member
countries.”
Attribution-NoDerivs
CC BY-ND
This license allows for redistribution, commercial and non-commercial, as long as it is passed along
unchanged and in whole, with credit to you.
7
INTRODUCTION
The discussion on the role of manufacturing for national economies has been high on the policy
agenda for many decades. In recent years, globalisation has drastically changed the outlook for global
manufacturing as emerging countries have gained important market shares, first in more traditional
manufacturing industries but increasingly also in higher technology industries. At the same time,
OECD economies are going through an important process of de-industrialisation reflected in a
declining share of manufacturing in overall economic activity. It would be wrong to conclude
however that manufacturing is a sector in decline in the OECD area; while manufacturing jobs have
declined in most OECD countries – very significantly in some countries like the United States and the
United Kingdom, the output of the manufacturing industry has continued to grow because of strong
rising productivity and efficiency. There is still a growing demand for manufactured products of
OECD countries but concerns recur about the future of manufacturing in OECD economies. Directly
linked to that is the question whether the decline in manufacturing will threaten technological
progress and innovation and the long-term future of OECD countries.
The Global Financial Crisis of 2007/2008 seems to have again revived the manufacturing debate as
some countries with a strong financial services sector were severely affected by the crisis, whereas
some countries with strong and internationalised manufacturing sectors have experienced more
limited impacts from the crisis. Some interpret this as evidence of the importance of producing
physical things for national economies, although there also examples of countries with a large share of
manufacturing in the economy that are nevertheless performing badly in economic terms.
The debate on a (new type of) ‘industrial policy’ in a growing number of countries is also related to
these issues, in particular the current policy discussion on ‘making things instead of making ideas’1
that is picking up in some OECD countries. Production fragmentation has led to a division of labour
where OECD countries have become increasingly specialised in upstream activities like R&D, design,
innovation, etc. while some emerging countries have become more specialised in manufacturing and
assembly activities. The final result of this ongoing global restructuring process might also be that
OECD countries merely produce ideas, concepts and services and not any longer the physical goods.
The fear is that the loss of certain manufacturing/assembly activities while seeking to maintain
innovative, R&D, and higher value added activities, may result in a subsequent loss of innovative
capabilities in the longer-term; hence, the question on the need for a new “industrial policy” to
support manufacturing.
The future of manufacturing is also increasingly discussed in Australia, although Australia does not
have the same manufacturing tradition as other major OECD economies like the United States,
Germany or Japan. Following the liberalisation of the Australian economy during the past decades,
Australian manufacturers have been confronted with rising import competition and sizeable
offshoring of (certain) manufacturing activities. But the discussion about manufacturing in Australia
has recently also been motivated by the boom in natural resources worldwide. The growing demand
for commodities fuelled by the rapid urbanisation and industrialisation of Asian countries (especially
China and India) has pushed up world prices of mining products. This has significantly increased the
terms of trade of Australia in recent years given Australia’s abundance of mineral resources such as
uranium, iron ore, bauxite, etc.
1
The discussion on ‘Made in America/Japan, etc.’ includes similar arguments.
8
The Australian economy has benefitted widely from this ‘external shock’ as reflected in recent figures
on economic growth, rising purchasing power, low unemployment, etc. But shocks typically set in
motion structural changes which in this case affect especially the traded sectors in Australia like
manufacturing. The strong appreciation of the Australian dollar has made Australian exports more
expensive while imports in the Australian markets have become cheaper, hence negatively impacting
competitiveness of manufacturing in Australia. The expansion of the mining sector can also be
expected to draw resources away from other sectors including manufacturing. While financial
resources for the much needed investments can also be internationally sourced, other productive
resources like e.g. human capital may become increasingly scarce if this recent boom continues. As
terms of trade for Australia are generally expected to remain at historically high levels for an extended
period, tough times are expected for manufacturing in Australia.
The economic emergence of Asia however does not create only new challenges but also important
opportunities for Australian manufacturing. Because of Australia’s remoteness, manufacturing has
traditionally suffered from the so-called ‘tyranny of distance’ directly making the production and
exports of Australian manufactures less competitive. The emergence of large consumer markets in
China, India, Indonesia, etc. makes Australia a less remote location for production and has contributed
to rapidly growing demand for manufactured products. If managed well, Australian manufacturers
could greatly benefit from these new and large growth opportunities that are (relatively) nearby.
The shift of the economic centre eastwards has the potential to revamp Australia economically. Not
only does the renewed demand for commodities redress the view of the Australian economy being a
resource-based economy, but the growing (consumer) markets in Asia will also help Australia in
defeating its remoteness-disadvantage. Manufacturing in Australia can be expected to go through
another round of structural adjustment, after the profound changes following the economic reform
since the 1970s. While the mining expansion risks to further shrink manufacturing in Australia in the
coming years, its future does not have to be bleak as sometimes depicted.
This report aims to give a detailed update of the status of Australian manufacturing from an
international perspective. It describes the place Australia currently occupies in global manufacturing
and benchmarks Australian manufacturing internationally. Chapter 1 starts in describing the trends
taking place in global manufacturing and how this may impact manufacturing industries across
different countries (OECD as well as emerging economies). Demand and supply forces reshaping
manufacturing are discussed in some detail.
Chapter 2 compares Australian manufacturing with manufacturing industries in other countries along
different dimensions. The actual performance of the sector as well as the drivers of this performance
are internationally benchmarked and explicitly related to the trends taking place in global
manufacturing. This chapter provides a first status report on the strengths and weaknesses of
Australian manufacturing.
Chapter 3 analyses the performance of Australian manufacturing on international markets in more
detail. The export performance of Australian manufacturers as well as their integration into global
value chains is assessed to get more insights in strong and weak points of Australian manufacturing.
Also the manufacturing performance on the Australian domestic market is discussed as this market
has become increasingly open during the past decades.
9
The report closes with the formulation of a number of policy implications for the future of
manufacturing in Australia. Rather than an identification of specific activities or industries in
manufacturing to be targeted, a number of policy issues are discussed which directly emerge from the
analysis of Australian manufacturing in an international/global perspective.
CHAPTER 1 MANUFACTURING IN THE GLOBAL ECONOMY
1.1 The importance of manufacturing in OECD economies2
There is no widespread consensus on the role of manufacturing for the long-term future of OECD
economies; likewise, policy makers and researchers do not agree on whether specific policies are
needed to safeguard the viability of this sector. A long list of arguments has been put forward based
on a number of stylised facts about manufacturing as a whole against other sectors of the economy.
These arguments do however not equally hold for every country (developed, emerging and
developing) nor for every sector under this broad heading. Furthermore, the contribution of
manufacturing to national economies has also largely been demonstrated to vary over time depending
on countries’ development. Taking these caveats into account, the overall message is that
manufacturing continues to play a large and central role in national economies, because of its direct
but especially indirect contributions.
Manufacturing still represents an important part of the economic activity in OECD economies,
notwithstanding its direct contribution has been declining over time (see below). Manufacturing
roughly accounted for 15 to 25% of the value added and employment created in the OECD area in
2009. Manufacturing occupies a large role in Eastern European economies reflecting the
industrialisation process of these countries in the past decade (largely linked to the joining of these
countries to the European Union). Manufacturing is also still important in high-cost OECD countries
like Germany, Finland, Sweden and Switzerland as well as in counties like Japan and more recently
Korea and Turkey (Figures 1.1 and 1.2). Manufacturing shares in employment and value added are
significantly lower for Australia.
2
This section builds further on the analysis developed in Pilat et al. (2006) ‘The changing nature of
manufacturing in OECD economies’.
10
Figure 1.1: Share of manufacturing in total employment, OECD countries, 1980-2009
2009
%
1995
1980
35
30
25
20
15
10
5
0
Source: OECD Structural Analysis Database (STAN).
Figure 1.2: Share of manufacturing in total value added, OECD countries, 1980-2009
2009
%
1995
1980
35
30
25
20
15
10
5
0
Source: OECD Structural Analysis Database (STAN).
But the importance of manufacturing is broader than its direct contributions in terms of value added
and jobs as manufacturing affects economic performance in national economies more widely and
profoundly:
11

Manufacturing is an important driver of productivity growth.
Empirical evidence clearly shows that productivity growth in manufacturing during the past two
decades was larger than in business services and in the total economy; this observation was valid
for most OECD countries but the productivity performance of Australian manufacturing was
smaller (Figure 1.3). The manufacturing sector continues to make an important contribution to
aggregate productivity growth, also in OECD countries where manufacturing has declined in
terms of employment and value added (i.e. the process of de-industrialisation, see below). A loss
of manufacturing thus could directly impact on economic growth of countries as productivity is
considered to be the basis for long-term economic growth and high per capita income3.
Manufacturing’s ability to achieve rapid productivity growth has been argued to be the reason for
the falling employment in manufacturing as fewer people are needed to produce the same level of
output. But in theory, higher productivity in a competitive market also results in lower prices,
boosting demand and motivating manufacturers to hire extra workers. The missing link in the
current juncture is on the demand side. In general, high rates of productivity growth are associated
with lower manufacturing employment when demand for manufactured products slows down; and
this has been the case for some countries recently4 (McKinsey Global Institute, 2012).
Because of higher productivity, manufacturing is able to pay higher wages also for workers who
would otherwise earn less. Controlling for differences in education and job characteristics, Helper
et al. (2012) seem to show that low-wage workers benefitted the most from US manufacturing
jobs. But the pay-premium for low skilled workers in manufacturing seems to have decreased over
time (Romer, 2012).
3
Nobel laureate Krugman (1990) famously put it as ‘Productivity isn’t everything, but in the long run it is
almost everything’.
4
Nevertheless, discussion has recently emerged on the productivity – employment puzzle in US
manufacturing. Nordhaus (2005) and Helper et al. (2012) suggest that major losses of manufacturing jobs are
very difficult to attribute to productivity gains. Most of the reported productivity in US manufacturing is
actually offshoring and quality improvements in computers and hence it is particularly the lack of
productivity growth that explains the huge job losses in US manufacturing.
12
Figure 1.3: Productivity growth in manufacturing, business services and total economy,
individual OECD countries, 1990-2009
(Average annual growth rate of multi-factor productivity, in per cent)
Manuf acturing
%
Business services
Total economy
8
7
6
5
4
3
2
1
0
Note: data for Australia are provisional
Source: OECD Productivity Database.

Manufacturing is a major source of innovation.
Manufacturing is believed to determine countries’ abilities to develop new technologies, as well
as countries’ absorptive capacities to assimilate foreign knowledge5. The majority of investments
in Research and Development (R&D) are undertaken in manufacturing: 60% or more of business
R&D investments are made by manufacturing firms in several OECD countries (Figure 1.4).
Nevertheless, the share of manufacturing in R&D has declined over time due to a variety of
factors, such as growing R&D in certain services sectors, the outsourcing of R&D to specialised
laboratories that are classified in the services sector, as well as better measurement of R&D in
services. Empirical evidence also indicates that manufacturing companies are more active in
innovation particularly through the introduction of new products and/or processes, although the
difference with the services sector is small in some countries (including Australia); services are
more active in marketing and organisational innovations (Figure 1.5).
Overall, manufacturing is seen as an important driver of innovation and technological change in
the economy; a large part of innovation in services is also closely linked to developments in
manufacturing. The loss of manufacturing activities could set a chain reaction in motion which
may erode innovation activities and the so-called ‘industrial commons’ (a foundation of shared
knowledge and capabilities within an industry) because of important co-location effects between
manufacturing/production on the one hand and R&D and service activities on the other hand
5
The higher productivity growth of manufacturing is directly linked to higher R&D investments and
innovation in manufacturing.
13
(Pisano and Shih, 2009). Manufacturing is part of a complex innovation process and ceding it
might result in a certain loss of R&D and design capabilities in the longer term.
Figure 1.4: Share of manufacturing in total business R&D, OECD countries, 2000 and 2010
(in percentage)
2000
%
100
80
60
40
20
0
Source: OECD Science, Technology and Industry Scoreboard 2011
14
2010
Figure 1.5: Innovation active firms in manufacturing and services, 2006-2008
(in percentage of all firms in manufacturing and services)
Manufacturing
%
Services
100
90
80
70
60
50
40
30
20
10
0
Source: OECD Science, Technology and Industry Scoreboard 2011.

Manufacturing accounts for the majority of international trade
Manufactured goods make up the majority of exports (two thirds or more in most OECD
countries) suggesting that a country’ ability to export cannot be maintained without a
manufacturing sector (Figure 1.6). Exceptions are resource rich countries like Australia and
Norway where primary products account for the largest share of exports. In this sense,
manufacturing is making a large contribution to the opening of national economies and their
integration in the global economy. The foreign income received from manufactured exports is
used to pay for imports; manufacturing is hence considered to be essential for reducing
(maintaining) trade deficits (surpluses) of countries6.
(Some) services are much more difficult to trade as they cannot be stored; many still require faceto-face contact between producers and consumers; and they are highly sensitive to cultural and
language differences. While trade in services is rapidly growing, it still represents only a small
fraction of trade in manufactured goods7,8. Exports of services in engineering, design, etc. often
6
Manufacturing also accounts for the majority of imports and some countries run trade deficits in
manufacturing (like e.g. the United States and the United Kingdom) while others (e.g. Germany) run
manufacturing trade surpluses.
7
Services trade might however be underestimated as the quality of statistics of international trade in goods is
higher than this of services trade statistics.
8
International trade is however only one of the 4 modes of international engagement in services, next to:
residents of one country consuming services in foreign markets, commercial presence and movement of
personnel.
15
follow from specific manufacturing activities; hence, the tradability of these services is very
closely linked to manufacturing.
Figure 1.6: Share of manufacturing in total exports, OECD countries, 2010
(In percent)
Agriculture
Mining and Quarrying
Manufacturing
Waste
Confidential and Unallocated
Services
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Source: OECD Bilateral Trade Database and IMF Balance of Payments.

Manufacturing demand stays high because of its economy-wide linkages
Notwithstanding its decreasing share in most OECD countries, manufacturing’s importance for
the whole economy remains large as manufacturing provides important inputs to other sectors of
the economy and satisfies a broad range of final and intermediate demands. The share of
manufacturing in total demand (i.e. final and intermediate demand) is much higher than in value
added (in current prices) and employment (see below); in large OECD manufacturing economies
manufacturing still accounts for around one-third of total domestic demand (Figure 1.7). Smaller
countries represent somewhat lower shares, while also in resource-rich countries like Australia the
share of manufacturing in domestic demand is lower. Rapidly industrialising countries like China
and India show higher shares.
16
Figure 1.7: Share of manufacturing in total demand, OECD countries, China and India, 1995, 2000 and
2005
(In percent)
1995
%
2000
2005
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Source: OECD Input-Output Database
These arguments are not really questioned at the opposite spectrum of discussion, but proponents of
the services sector indicate that services have dramatically changed over time and certain categories
are increasingly displaying the manufacturing characteristics discussed above. Services sectors, it is
argued can be as productive - if not more productive - than manufacturing. Likewise trade in services
is on the rise using various modes of supply; hence, market openness is progressively less dependent
on goods production. Innovation, in particular marketing and organisational innovation, is becoming
more prominent in services.
In addition, distinguishing between manufacturing and services is becoming increasingly difficult.
Manufactured products are more and more sold with add-on services and draw a large part of their
value from these embodied services (see below). This calls first and foremost for an integrated view
on manufacturing and services as very complementary sectors in national economies; targeted policies
should not work against this complementarity. Furthermore, it is argued that de-industrialisation is
largely a natural process characterising the development of (all) countries; trying to stop and even
reverse this is economically undesirable (by slowing down manufacturing productivity) and/or
unrealistic (by boosting manufacturing’s share in final demand.
1.2 Structural trends in global manufacturing
Demand and supply forces have been dramatically reshaping the outlook of global manufacturing;
these forces have been playing out for decades and will continue to unfold over the decades ahead.
Globalisation has resulted in an increasing number of firms, countries and other economic actors
taking part in today’s global economy that have become increasingly connected across borders.
17
Technological progress has altered the dynamics in manufacturing and created numerous
opportunities for companies and countries to innovate. Economic advancement in emerging countries
due to manufacturing is quickly changing the comparative advantage of these countries and affecting
the global location of manufacturing.
In discussing the future of manufacturing, a number of structural changes will be described in more
detail. These trends are changing the nature, structure and organisation as well as the geography of
manufacturing on a global scale and have important consequences for individual countries.
2.2.1 A long term trend of de-industrialisation of OECD economies
The gradually declining importance of manufacturing in OECD economies is not an idiosyncratic
phenomenon, but a rather common feature of the development path of most countries. Agriculture
typically accounts for the bulk of GDP and employment in the initial stages of economic
development, as is still the case in many developing countries. In later stages, its share in total value
added and employment declines and the manufacturing sector grows as economies industrialise (like
e.g. in China and India). In recent decades, many OECD economies have experienced a decline in the
share of manufacturing in overall employment, with a concurrent rise in the share of services due
among others to the growing consumer demand for services.9, 10
The share of manufacturing in total employment and value added has significantly decreased in
G7 countries as well as in Australia over the period 1970-2010 as is shown in Figure 1.8; yet the
magnitude of the change depends on the data one is looking at. A steady decline of manufacturing
appears to be most prominent in terms of employment, explaining why the de-industrialisation debate
in OECD countries often focuses on the loss of manufacturing employment. The share of
manufacturing in value added seems to be relatively more volatile, as in some countries for some
years even an increase is observed. Nevertheless, a long-term declining trend is also clearly visible for
value added.
The declining share of manufacturing in value added is to some extent also due to price effects. Since
much of the manufacturing sector is characterised by relatively high productivity growth (see above),
prices of manufacturing products tend to increase only little over time and may even fall. This
contrasts with the experience of many parts of the services sector, where productivity growth has been
slower and prices tend to go up more strongly over time. Manufacturing products have become
relatively cheap and therefore account for a smaller proportion of the economy than they did before
(Pilat et al., 2006). This also explains why the share of manufacturing in total value added in constant
prices has fallen much less over time; in some countries like the United States, Canada and Japan, this
share shows a remarkably stable pattern (Figure 1.8).
9
Formally, because of non-unitary income elasticity of services (and higher than manufactured products) but
also demographic factors: the growing labour participation of women (resulting e.g. in the growth of
personal services) and the ageing of society (resulting e.g. in the growth of health care services).
10
This is also due to a statistical artefact as many in-house service activities have been outsourced by
manufacturing companies like e.g. cleaning, transport, etc. (Pilat et al, 2006; Rowthorn and Ramaswamy,
1998; The Economist, 2011).
18
Figure 1.8: Share of manufacturing in total employment and value added (current and constant prices),
G7 countries and Australia, 1970-2010
EMPLOYMENT
%
40
Germany
35
30
Italy
25
Japan
France
20
15
United States
Canada
10
Australia
United
Kingdom
5
0
1970
1975
1980
1985
1990
1995
2000
2005
VALUE ADDED, CURRENT PRICES
%
40
35
Japan
Italy
30
Germany
France
25
20
15
United Kingdom
10
Canada
United States
5
Australia
0
1970
1975
1980
1985
1990
1995
2000
2005
VALUE ADDED, CONSTANT PRICES
%
40
35
Germany
30
Japan
Italy
25
20
15
Canada
10
France
United Kingdom
United
States
5
Australia
0
1970
1975
1980
1985
1990
Note: Germany = West Germany before 1991.
Source: OECD Structural Analysis Database (STAN).
19
1995
2000
2005
It should be stressed that de-industrialisation describes in essence the declining importance of
manufacturing in national economies relative to other industries (in most cases: services). But it
would be wrong to conclude that manufacturing is a sector in decline in the OECD area; while it is
true that manufacturing employment has fallen, the output of the manufacturing industry has
continued to grow because of the strong productivity growth in manufacturing. Value added (in
constant prices) has significantly increased in G7 countries as well as in Australia over the period
1991-2010, which illustrates the large and growing demand for products manufactured by these
countries11 (Figure 1.9). The Global Financial Crisis of 2007/2008 abruptly stopped this growth
process and a considerable drop in value added is observed in all G7 countries; Australia fared a bit
better, but nevertheless the (international) demand for Australian manufactured products has also
fallen in most recent years.
Figure 1.9: Index of manufacturing value added (in constant prices), G7 countries and Australia,
1991-2010
(1991 = 100)
200
180
United
States
Canada
160
Australia
140
France
120
100
United Kingdom
Germany
Italy
Japan
80
1991
1994
1997
2000
2003
2006
2009
Source: OECD Structural Analysis Database (STAN).
2.2.2 Increasing competition from emerging economies
OECD countries jointly still dominated global manufacturing in 2010 but their share is rapidly
declining: the OECD area accounted for about 60% of world-wide manufacturing in 2010 compared
to 80% in 2002 (Figure 1.10). Manufacturing has grown rapidly in non-OECD countries: in the first
place China which accounted for 19% of world manufacturing value added in 2010 and has become
the largest manufacturer in the world. Asia and Latin America account for most of emerging country’s
manufacturing but growth in Asia was four to five times faster than Latin America during the last
decade. The share of Asian countries excluding China was about 12% in 2010, while South/Central
America accounted for about 5.6% of global manufacturing; Africa accounted for only 1.6% of
manufacturing value added in 2010.
11
Demand for manufacturing products however has grown only slowly in advanced economies; in contrast
manufacturing demand has grown strongly in emerging economies (OECD, 2010).
20
Figure 1.11 shows manufacturing growth in non-OECD economies in more detail for value added,
employment and exports with the growth performance of China clearly standing out. The large shift
of manufacturing to emerging countries is partly due to the relocation of industries from developed
countries within global value chains; the growing domestic demand in these countries is another
important driver (see below). Emerging countries have become very attractive for more labour
intensive activities, as their labour costs are a fraction of these of more developed economies (Pilat et
al. 2006). Although labour costs account for only a fraction of total production costs (with
considerable differences across industries), it is one of the main factors that drive the location choices
of firms.12 A recent study (Hepburn, 2011) documents that emerging regions have increased their
share in value added especially in more traditional industries like Food and Beverages, Textiles and
Apparel, Leather and Footwear, Paper, etc.
Figure 1.10: Share in world manufacturing value added, 2010
(In percentage of world manufacturing value added)
Other Europe,
Africa, 1.6
3.1
South & Central
America, 5.6
OECD EU, 21.9
Other OECD,
10.4
Japan, 10.7
China, 18.9
Other Asia &
Oceania, 9.5
United States,
18.2
Source: United Nations Statistics Division.
Figure 1.11: Share of major emerging regions in world manufacturing
(In percentage of world manufacturing)
12
Labour costs should however be examined relative to a country’s level of productivity in the manufacturing
sector. High labour costs can only be supported if they coincide with a high level of labour productivity;
conversely, countries with low levels of labour costs typically have low levels of labour productivity.
21
VALUE ADDED
1990
%
2000
2010
20
18
16
14
12
10
8
6
4
2
0
East Asia
excl. China
China
South Asia
South East Latin America
excl. Mexico
Asia
Mexico
Middle East Sub-Saharan South Africa
and North Africa excl.
South Africa
Africa
EMPLOYMENT
1990
%
2000
2009
40
35
30
25
20
15
10
5
0
East Asia
excl. China
China
South Asia
South East Latin America
Asia
excl. Mexico
22
Mexico
Middle East Sub-Saharan South Africa
and North Africa excl.
Africa
South Africa
EXPORTS
2000
%
2007
2010
12
10
8
6
4
2
0
East Asia
excl. China
China
South Asia
South East Latin America
excl. Mexico
Asia
Mexico
Middle East Sub-Saharan South Africa
and North Africa excl.
South Africa
Africa
Note: East Asia excl. China includes China - Hong Kong Special Administrative Region, China - Macao Special Administrative
Region, Mongolia, Republic of Korea and Chinese Taipei; South Asia includes India, Iran (Islamic Republic of), Nepal,
Pakistan, and Sri Lanka; South East Asia includes Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam; Latin
America excl. Mexico includes Argentina, Bolivia (Plurinational State of), Brazil, Chile, Colombia, Ecuador, Peru, Suriname,
Uruguay, Venezuela (Bolivarian Republic of), Costa Rica, Guatemala, Honduras and Panama; Middle East and North Africa
includes Algeria, Egypt, Morocco, Tunisia, Jordan, Kuwait, Oman, Qatar, Saudi Arabia, Syrian Arab Republic and Turkey; SubSaharan Africa excl. South Africa includes Botswana, Cameroon, Eritrea, Ethiopia, Gabon, Kenya, Lesotho, Malawi, Mauritius,
Mozambique, Niger, Senegal, Swaziland, Uganda, United Rep of Tanzania and Zimbabwe
Source: United Nations Statistics Division.
2.2.3 The emergence of global value chains (GVCs)
International production, trade and investment are increasingly organised within so-called global
value chains (GVCs) as the past decades have witnessed a strong trend towards the international
dispersion of value chain activities such as design, production, marketing, distribution, etc. Different
stages of the production process are increasingly located across different economies: intermediate
inputs like parts and components are produced in one country and then exported to other countries for
further processing and/or assembly in final products. In the process of international fragmentation,
many (multinational) firms have often offshored the most labour intensive activities (like e.g.
assembly) towards emerging countries often in search for lower costs and higher efficiency. At the
same time, the search for lower costs is not the only factor driving the growth of production in
emerging markets; the search for new markets characterized by rapid growth has also been an
important driver.
A single final good is nowadays often processed in many countries with sequential stages in the value
chain being performed in the location most suited to the activity. Correspondingly, value added is
being added in different countries throughout the production process and countries just like firms
become increasingly specialised in specific functions within GVCs. International trade nowadays
increasingly happens across different production stages within industries and even within
23
(multinational) enterprises as intermediate goods, finished goods as well as related services are
exported and imported between affiliates of the same firms located in different countries.
The expansion of GVCs also means that national economies no longer rely exclusively on domestic
resources to produce goods and services and export these to the rest of world (Sturgeon and Gereffi,
2009). Imports have become increasingly important for exports; the import content of exports has
increased in almost all countries in recent decades (Figure 1.12). The degree of participation in GVCs
depends on the size of each country and patterns of specialization. Smaller economies tend to have
higher shares of imports embodied in their exports; larger countries have a larger availability and
wider variety of domestically sourced intermediate goods making them less reliant on imports of
intermediates. Also countries with substantial natural resources such as Australia have lower ratios of
import contents in exports as mining activities require less intermediate goods in the production
process (De Backer and Yamano, 2012).
International fragmentation is far more developed in manufacturing than in services; though important
differences exist across industries. The degree of vertical specialisation is found to be particularly
large in basic industries that are heavily using primary goods like cokes and refined petroleum, basic
metals, chemicals, and rubber and plastics. Fragmentation is also large in a second group of hightechnology industries for modular products. Parts and components are often produced in one country
before they are exported to another country where the assembly is taking place. This international
division of labour is found in industries like electrical machinery, radio/television and communication
equipment, office, accounting and computing machinery but also motor vehicles (Figure 1.13)
Figure 1.12: Import content of exports by country, 1995 and 2005
(In percentage of total exports)
1995
70%
60%
50%
40%
30%
20%
10%
0%
24
2005
Note: The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of
such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the
West Bank under the terms of international law.
Source: De Backer and Yamano (2012).
Figure 1.13: Import content of exports by industry, 1995 and 2005
(In percentage of total exports)
OECD average 1995
OECD average 2005
70%
60%
50%
40%
30%
20%
10%
0%
Source: De Backer and Yamano (2012).
The strong manufacturing growth of Southeast Asia and China in particular is closely related to the
emergence of GVCs (though it is not the only factor, as discussed above). Products are often designed
and conceived in developed countries, manufactured in emerging countries like China with inputs
sourced from other third countries. Figure 1.14 shows how China imports large volumes of
intermediates from Europe, Japan and other OECD economies to produce (often in so-called ‘export
processing zones’) final goods for export. Especially in higher technology industries such as ICT
products, China’s strong export performance is to a large extent based on the assembly of
intermediates imported from other countries.
But manufacturing/assembly often constitutes only a small part of the value added: several case
studies (like e.g. Apple’s iPod and iPhone) have shown that Chinese activities only represent a small
part of the total product value. Aggregate results show that the share of foreign value added in total
Chinese manufactured exports is about 50% (Koopman et al., 2008). China has recently been
undertaking major efforts to increase its value added in global products and move beyond pure
assembly activities.
25
Figure 1.14: Import content of exports for selected economies and regions, 2005
(By economy/region or origin of imports, USD millions, at current prices)
Source: Science, Technology and Industry Scoreboard, (OECD, 2011)
26
Box 1: The regional character of GVCs
GVCs have largely contributed to the increasingly global character of manufacturing, but nevertheless a strong
regional focus still remains (see Figure). Countries source intermediates and incorporate them in their exports to
a larger degree from neighbouring countries which is likely related to the importance of distance and trade costs
for vertical trade. The import content of exports of European countries is heavily based on other European
countries: in most countries around three quarters of the intermediates embodied in exports are sourced from
around Europe (see figures below).
Within the NAFTA region, Canada and Mexico are heavily oriented towards the other NAFTA countries: more
than 50% of the imported intermediates embodied in their exports originate in the NAFTA zone.
Also in Asia, the majority of the intermediates embodied in exports are sourced from within the region. Previous
research has shown that a triangular trade pattern has emerged in this region, in which parts and components are
produced by more developed countries like Japan, and Korea and then exported to emerging countries like e.g.
China and recently increasingly also to other countries like Vietnam and Cambodia where the assembly of the
different intermediates into finished products is takes place.
The assembled final products and intermediates are then exported back to Japan, Korea, etc. as firms re-import a
growing part of the production they relocate. Assembled products from China are also exported to other
developed countries/regions such as Europe and the United States where they may undergo in addition some
smaller changes (packaging, marketing, etc.) and hence appear in the vertical trade of these countries.
Import content of exports with partner countries, 2005
European countries
From Europe
From NAFTA
From East Asia
From Other Asia
From RoW
From Other Asia
From RoW
70%
60%
50%
40%
30%
20%
10%
0%
Other countries
From Europe
From NAFTA
From East Asia
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
27
2.2.4 The shifting demand towards Asia
Asia has become an important supply centre for manufacturing goods due to the emergence of GVCs
and the relocation of manufacturing activities by (multinational) firms from developed countries
towards emerging countries. Emerging countries have attracted large inflows of foreign direct
investment (FDI) during the past decade especially in production (Figure 1.15). FDI flows to China
and the rest of South-East Asia have leapt from an average of about USD 50 billion a year in
1995-1999 to about USD 150 billion a year in 2005-2009.
Figure 1.15: Outward FDI flows from EU, Japan and the United States to BRICS13 countries,
yearly average 2003-2009
(USD billion at current exchange rates)
Source: Science, Technology and Industry Scoreboard (OECD, 2011).
The attractiveness of countries like China, India and Brazil is however not only determined by lower
labour costs, but also by their large and rapidly growing home markets. China and India in particular,
the two most populated countries in the world, are expected to quickly become important markets for
manufacturing products as they experience fast economic advancements as reflected in their high
GDP growth rates. Global consumer demand has so far been concentrated in (rich) OECD economies
but a new middle class14 is projected to emerge in Asia and particularly in China and India
(Figure 1.16). While the size of the middle class could globally increase from 1.8 billion people to
3.2 billion by 2020 and to 4.9 billion by 2030, almost 85% of this growth is expected to come from
Asia. In 2000, Asia (excluding Japan) only accounted for 10 per cent of the global middle class
13
BRICS: Brazil, the Russian Federation, India, China and South Africa
14
The global middle class is defined as all those living in households with daily per capita incomes of between
USD 10 and USD 100 in PPP terms (Kharas, 2010).
28
spending but this could reach 40 per cent by 2040 to climb to almost 60 per cent in the long-term
(Kharas, 2010).
Figure 1.16: The global middle class, by country, 2000-2050
100%
90%
80%
Others
EU
United States
Japan
Other Asia
India
China
70%
60%
50%
40%
30%
20%
10%
0%
2000
2012
2024
2036
2048
Source: The emerging middle-class in developing countries (Kharas, 2010, OECD Development Centre Working paper).
The emergence of new growth centres will significantly shift the world’s centre of economic gravity
eastwards (Quah, 2011). Kharas (2010) estimated the global economic centre of gravity in 1965 to be
located in Spain in the middle of the then 3 largest economic concentrations in Europe, the
United States and Japan (Figure 1.17). Since then, the economic centre is moving to the Southeast
very close to an axis connecting Washington DC and Beijing (shown in orange on the map). India,
China, Indonesia and Vietnam are expected to pull the centre of economic gravity in the world further
to the East.
29
Figure 1.17: Economic centre of gravity, 2000-2050
(GDP at current prices)
Source: The emerging middle-class in developing countries (Kharas, 2010, OECD Development Centre Working paper)
2.2.5 Innovation and knowledge as source of competitiveness
Because of enhanced competition by emerging countries, innovation has become crucial for the longterm competitiveness of OECD manufacturing. Innovation through the introduction of a new or
significantly improved products, process or method, has always been an important driver of growth in
most OECD countries; yet more so in the current competitive global environment. Innovation and
knowledge increasingly determine the creation and growth of value added and employment in
manufacturing; and multi-factor productivity growth is also closely linked to innovation and
improvements in efficiency (OECD, 2010)
Global innovation in manufacturing has traditionally been dominated by OECD countries; responsible
for the majority of world R&D investments. But the global R&D landscape is changing as non-OECD
economies increasingly invest large amounts in R&D and knowledge. Emerging economies account
for a sharply growing share of global R&D investments; China’s R&D investment growth is
outpacing that of several OECD countries and is expected to accelerate (World Economic Forum,
2012). Other BRIICS15 countries like India and Russia have set-up large research programmes.
R&D investments are an important element but not the sole driver of innovation as complementary
assets such as software, human capital and appropriate organisational structures are needed to make
innovation successful. Human capital has been singled out as the most critical resource for
manufacturing competitiveness in the future; talent-driven innovation will be increasingly determined
by the ‘quality and availability of a country’s workers, scientists, researchers, engineers and teachers –
who collectively have the capacity to continuously innovate and, simultaneously, improve production
efficiency’ (2010 Global Manufacturing Competitiveness Index, Deloitte Touche Tohmatsu). The
competition for talent intensifies since manufacturing companies in several countries increasingly face
15
BRIICS: Brazil, the Russian Federation, India, Indonesia, China and South Africa.
30
talent shortages and they are often not able to attract enough workers from the limited pool of human
capital. Reversely, the large pools of engineering graduates in emerging countries, combined with the
above mentioned large R&D investments allow these countries to rapidly strengthen their innovation
capabilities.
Innovation is closely related to the broad accumulation of so-called intangible (or knowledge-based)
assets, which are typically categorised as computerised information, innovative property (including
R&D) and economic competencies (including firm-specific capital and organizational capital).
Intangible investments have become increasingly important over time reflecting the growing
knowledge economy of OECD countries; recent World Bank research shows that intangible capital is
the largest component of wealth at all levels of income but increasingly so in upper-middle and higher
income countries (Canuto and Cavallari, 2012). In the United States and the United Kingdom
intangible investments are larger than tangible investments such as equipment, material, buildings,
etc. (Figure 1.18). Investments in brand equity, design, organizational capital, business models etc.
allow OECD manufacturers, typically operating in high cost environments, to compete on other
aspects than costs.
The growing of the so-called ‘knowledge manufacturing’ is also reflected in the changing industrial
structure of OECD countries towards higher technology intensive industries; most OECD countries
(one exception is Australia, see below) show an export specialisation in high and medium-high
technology manufacturing industries16 (Figure 1.19). The international reallocation of resources
accompanying globalisation has resulted in emerging economies accounting for a larger share of more
labour-intensive traditional industries. Remaining activities in low and medium-low manufacturing
industries in OECD countries are often not that ‘traditional’ as they have to be very innovative
(beyond R&D) and differentiate their output in order to stay competitive in the global markets. This
specialisation pattern - developed countries in higher technology and emerging countries in lower
technology – is however not static, as emerging countries, in particular China, are becoming more
important exporters of high technology products17.
16
See Annex 3 for the OECD classification (based on direct R&D and R&D embodied in intermediate and
capital goods) of manufacturing industries in high technology, medium-high technology, medium-low
technology and low technology intensive industries (Hatzichronoglou, 1997).
17
This is to a large extent related to China being a large manufacturing centre within GVCs; however, as
discussed above, these manufacturing activities often consist of pure assembly activities of imported
intermediates for exports and do not necessarily yield high value for local manufacturers.
31
Figure 1.18: Investment in fixed and intangible assets, OECD countries, 2006
(As a percentage of GDP)
Machinery and equipment
R&D and other intellectual property products
%
Software and databases
Brand equity, firm-specific human capital, organisational capital
30
25
20
15
10
5
0
Source: Science, Technology and Industry Scoreboard (OECD, 2011).
Figure 1.19: Share of high and medium-high technology industries in manufacturing exports, 2009
(As a percentage of total manufacturing exports)
%
High technology
Medium-high technology
100
90
80
70
60
50
40
30
20
10
0
Source: OECD Structural Analysis Database (STAN)
32
2.2.6 The blurring of manufacturing and services
The character of manufacturing is profoundly changing and the distinction between manufacturing
and services has become increasingly blurred. Manufacturing is nowadays much broader than the
production of goods and includes several service-related activities in upstream as well as downstream
stages. Modern manufacturing includes a wide range of different activities and makes ‘more than only
things’.18 As GVCs increasingly allow for the unbundling of business functions and pure production
activities are increasingly located to emerging economies, manufacturers in OECD countries rely
more on complementary non-production functions to create value.
A large part of the future growth in manufacturing is expected to come from so-called ‘manuservices’ which involves combining advanced manufacturing with a range of different services
(Sissons, 2011). Manufacturing products are no longer only physical assets but increasingly include
services content; likewise manufacturing companies no longer sell only goods but instead sell bundles
including design, development, marketing, warranties and after-sales care. A company like Rolls
Royce for example does not only sell cars but ‘solutions, outcomes or experiences’ to better meet the
needs of customers and to differentiate from competitors. Xerox has restructured itself to a
‘document solution’ company, offering technology advanced printers systems but also services like
document managing and consulting; in fact, services represent around 40% of Xerox’s turnover and
are expected to contribute to 50% in the next years (Benedettini et al., 2010).
This process is directly related to the growing knowledge intensity of manufacturing industries as
intangible assets transform the determinants of competitive success. A growing number of
manufactured products owe a large part of their success to services attached to the product, like for
example a range of applications linked to Apple’s iPhone. In the automotive sector, the cost of
developing new vehicles is increasingly dominated by software services, while high-end vehicles rely
on millions of lines of computer code and advanced on-board processors (Nolan, 2012).
A corollary of the above is a much broader definition of a manufacturing job which is no longer
associated only with the pure production process (fabrication, assembly, etc.). An increasing part of
the employees in manufacturing are employed in occupations that can be considered as servicesrelated, such as management, business, finance and legal professionals. In 2008, on average, the share
of services-related occupations in manufacturing in the OECD area had reached about 35%; following
an upward trend in almost all countries (Figure 1.20).
18
In fact, due to offshoring many manufacturing companies in OECD countries are relatively more involved in
design, development, etc. than in the actual physical manufacturing/assembly activities. Hence the call in
some countries for ‘Making things instead of ideas’ (see above).
33
Figure 1.20: Services-related occupations in manufacturing, 2000 and 2008
(As a percentage of all employees in manufacturing)
2000
%
60
50
40
30
20
10
0
Note: Services related occupations are defined as ISCO-88 major groups: 1) Legislators, senior officials and managers; 2)
Professionals; 3) Technicians and associate professionals; 4) Clerks and 5) Service workers and shop and market sales
workers.
Source: Science, Technology and Industry Scoreboard (OECD, 2011).
The manufacturing and services is further reinforced by the increasingly complex interactions
between manufacturing and services industries, including outsourcing from manufacturing to services
firms, as well as the use of intermediate inputs from independent service providers that had not been
previously integrated in the final good producing firm or industry. Services industries make important
contributions to manufactured products deliveries of intermediate inputs: the contribution of services
value added needed to satisfy demand for manufactured products varies between 15 and 30% and this
percentage has increased over time (Figure 1.21).
34
Figure 1.21: Services sector value-added embodied in manufacturing output, 1995 and 2005
(As a percentage of total value added of manufactured goods in final demand)
1995
%
40
30
20
10
0
Source: Science, Technology and Industry Scoreboard (OECD, 2011).
2.2.7 New growth opportunities in manufacturing also for developed economies
As there is increasing competition from emerging economies, manufacturers in developed economies
continuously search for new growth opportunities. ‘Green manufacturing’ is generally believed to
have a large growth potential in developed economies through innovation in new products, services,
activities, business models, etc. As the demand and the cost of energy will increase with future
population growth and industrialisation, green growth and increased resource efficiency will become
only more important. As such, environmentally sustainable products may not only help addressing
the global challenges of reducing energy consumption and producing clean energy, but also contribute
to the competitiveness of developed economies in manufacturing based on innovation. Likewise,
green manufacturing is expected to create a considerable number of new jobs.
A survey of the Economist Intelligence Unit among senior executives in US manufacturing predicted
the highest growth for green technology and energy for the coming years (Figure 1.22). Recent
estimates for the United States indicate that the ‘clean economy’ (i.e. the production of goods or
services with an environmental benefit) is nearly three times as manufacturing-dependent as the
overall economy; several technologies and products critical to the clean economy are highly
manufacturing intensive (Muro et al., 2011). A large part of the jobs in electric vehicle technologies,
water-efficient products, energy-saving consumer products, solar and wind energy products, etc. are
indeed in manufacturing (Helper et al., 2012). Environmental goods constitute an important and
growing part of the developed economies’ exports (World Bank, 2012).
35
Figure 1.22: Future growth of manufacturing sectors in the United States
(‘Which industry sectors hold the greatest opportunity for growth in the United States over the next years?’)
Next 3 years
Next 12 months
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Source: Economist Intelligence Unit (2012).
Technical progress in information and communication technologies (ICT) has dramatically
transformed the manufacturing industry during the past decades as it has allowed companies to slice
up their value chains and relocate specific activities geographically. Further technological
advancements in ICT are predicted to lead to an increasing digitalisation of manufacturing over time
which would gradually alter the outlook of (parts of) manufacturing in the future: not only the way
goods are made but also where19 (The Economist, 2012).
Digital manufacturing through e.g. clever software in combination with the emergence of novel
materials and new production techniques (e.g. nanotechnology) is expected to reshape production
processes in manufacturing. While mass-produced products will continue to be manufactured
according to more traditional - albeit more automated and flexible - methods, new ways of
manufacturing will increasingly result in smarter products as well as smarter production processes
(World Economic Forum, 2012). Digital technology will particularly lower the cost of producing
smaller batches of a wider variety; hence as scale economies decrease, ‘manufacturing on-demand’ is
expected to become (more) economically feasible. Additive manufacturing such as 3-D printing for
example builds products from successive layers of material and allows better for products tailored to
individual customers’ needs.
Labour costs will overall be less important in these new products and production processes; hence
curbing the need for offshoring of manufacturing activities to low labour cost regions. This would
especially create growth opportunities for high technology manufacturing20 in developed economies;
19
‘… a third industrial revolution is under way now; manufacturing is going global…’ (The Economist, 2012).
20
This high tech manufacturing would not be limited to higher technology intensive industries, but could also
happen in more traditional industries (like e.g. embedded software on advanced computer chips in clothing).
36
it is not sure however that this would directly result in large numbers of extra jobs given the small
importance of labour (costs) in the total production process. Furthermore, given the high technology
intensity, most of these jobs would be concentrated at the high skill end.
2.2.8 A broader trend of back-shoring on the horizon?
Will the offshoring of manufacturing to emerging countries slow down and will the growth of GVCs
be turned back to developed economies? A number of companies (especially in the United States)
have been reported to increasingly consider bringing activities they offshored to China back to the
United States. Analysis by the Boston Consulting Group (2011) estimated that this trend of ‘backshoring’ (also called ‘on-shoring’ or ‘re-shoring’) could lead to a revival or ‘renaissance’ of the
manufacturing industry in the United States.21 Several reasons have been put forward to justify the
interest in back-shoring for manufacturing companies.
A first explanation (the most important according to Boston Consulting Group) is the changing cost
structure of production in emerging countries. While market size and growth remain the most
important location factors international investment, lower (labour) costs have been an important
motivation for the offshoring of certain activities (OECD, 2011). Countries like China have
witnessed average hourly wage increases of 15-20% per year which have been eroding their cost
advantage in labour-intensive activities; also other countries like India, Indonesia, the Philippines, etc.
experienced salary increases following the growth of the middle classes (see above). The average
hourly wage in emerging economies was estimated to be around 2% of the US average in 2000 and is
expected to rise to 9% in 2015 (Figure 1.23 - World Economic Forum). As productivity differences
narrow, and labour shares of total production costs shrink, savings from offshoring become much
smaller. Companies try to respond to these rising labour costs by increasingly automating factories in
emerging countries, relocating production to other emerging countries where labour costs are still low
and/or eventually back-shoring specific activities.
21
Boston Consulting Group estimates that in areas such as transport, computers, fabricated metals and
machinery, 10-30% of the goods that the United States now imports from China could be made at home by
2020, boosting American output by USD 20-55 billion a year.
37
Figure 1.23: Average hourly wages in developing countries
Source: Deloitte analysis, Economist Intelligence Unit data; published in World Economic Forum (2012).
Another explanation for the trend towards back-shoring is that there are certain hidden costs, which
have not been taken fully into account in the offshoring decision (Porter and Rivkin, 2012); often too
much focus is put on labour cost savings while additional costs for establishing production processes
overseas are underestimated. A 2011 study by Ernst & Young showed that more than one third of US
manufacturers experienced higher than expected total costs of entering high growth markets like
China, India and Brazil. Indirect costs might become unexpectedly high because of additional needs
for monitoring and training, travel and personnel costs, transportation costs, higher obsolescence and
inventory costs, or unanticipated loss of intellectual property. Products manufactured in emerging
countries but destined to the home market might then be produced at higher ‘total landed costs’.
Third, back-shoring is inscribed in firms’ strategies to better balance cost savings and risk dispersion
in GVCs. Natural disasters like the recent Japanese earthquake/tsunami and the floods in Thailand
have given rise to global disruptions of GVCs and have halted the worldwide supply of products and
intermediates in several industries. In order to diversify the risks inherent in their supply chains,
companies increasingly consider alternative GVCs for the same product. In addition to GVCs in low
cost countries, companies set-up (often shorter) GVCs in higher cost countries close to their major
markets. Supply chains have become more complex and extensive which often means extra risk which
is not always visible and hence less controllable by firms. Just-In-Time models, lean structures and
the absence of redundancy make that a breakdown in one part of the chain may quickly have
detrimental effects throughout the value/supply chain.
38
One specific category of increased risk in GVCs is exchange rate risk as the international
fragmentation of activities exposes companies to currency volatility. Companies increasingly
consider establishing a cost base where products are sold as a hedge against volatile currencies.
Nevertheless, the impact of a currency appreciation/depreciation is complex within GVCs as local
currency depreciations will make exports of final goods cheaper but also make imported components
more expensive. Other things being equal, it can be expected that the lower the domestic content in a
country’s exports, the smaller the effect of an appreciation of that country’s currency on the trade
volume will be22 (Koopman et al. 2008).
A fourth reason to bring manufacturing activities back home is the larger operational flexibility it
offers for companies. The organisation in long and complex GVCs across different countries directly
limits companies in adjusting the production process to market signals. Negative shocks to final
demand are not always easily incorporated in GVCs’ scheduled production runs; the Global Financial
Crisis of 2007/2008 demonstrated how a slowdown in downstream activities transforms into an
amplified reduction in the demand for inputs that are located upstream. Furthermore, specific needs of
customers can be more rapidly taken into account and lead to shorter lead times as developers,
engineers, manufacturing and operating staff are closely located to each other (see also discussion on
‘manufacturing on-demand’ above). Physical distance often leads to less efficient cooperation and
coordination between the different production stages.
Despite back-shoring’s growing appeal, there is no consensus on how big this has/will become. It is
expected that offshoring to emerging countries will stay an important strategy in manufacturing
notwithstanding that (labour) costs are on the rise in these countries. This is also because emerging
countries offer large and fast growing markets for manufactured products given the rising middle
class (as discussed above). Back-shoring to developed economies might become more prevalent in
technological and quality products characterized by fast product cycles where feedback from the
market is important; it is not clear if this will result in large numbers of extra jobs in manufacturing at
home. The mass production of labour-intensive, commoditised products will most likely stay
concentrated in emerging economies where production costs including of labour are lower.
CHAPTER 2 AUSTRALIAN MANUFACTURING IN INTERNATIONAL PERSPECTIVE
This section benchmarks Australian manufacturing against manufacturing industries in other major
OECD countries and emerging economies, by relating the performance and structural characteristics
of manufacturing in Australia to the broader trends in global manufacturing described in the previous
section. The current process of structural change within the Australian economy and the impact on
manufacturing especially in light of the recent mining boom is a central part of the analysis. Australia
is compared in particular to Canada and Norway as countries richly endowed with natural resources,
as well as to important manufacturing countries like Germany and the United States. The following
analysis focuses on a number of key indicators and determinants without describing Australian
manufacturing industry in full detail. Based on this analysis, some observations are put forward
regarding the future of manufacturing in Australia.
22
Evenett and Francois (2010) argue that given the growing imports of Chinese parts and components into US
final products, an appreciation of the Chinese currency will positively affect the US exports to China but
reduce the US competitiveness elsewhere.
39
2.1 A snapshot of manufacturing in Australia.
A number of key indicators illustrate the position of manufacturing in the Australian economy
(Table 2.1). In 2011, manufacturing in Australia created 107 billion AUD of gross value added and
accounted as such for 8% of Australia’s GDP; sales turnover in manufacturing amounted to
AUD 366 billion. Australian manufacturing represented in 2011 10% of total private investments in
Australia (i.e. AUD 12 billion) and employed 7.9% of the Australian labour force (i.e.
953 000 persons).
The world share (in terms of value added) of Australian manufacturing varied around 1% during the
past decades (Figure 2.1). The shares of historically strong industrial producers such as the United
States, Italy, Germany have gradually fallen over the last twenty years while China, Brazil, Russia
have expanded rapidly. China has recently overtaken the United States as the largest manufacturing
country in terms of value added (see also above).
Table 2.1: Key indicators on manufacturing in Australia
Key indicators
Gross Value Added versus GDP (million AUD)
Private New Capital Expenditure (million AUD)
Employed persons versus Labour Force (thousands) (a)
Profits (million AUD in current prices) (b)
Sales (million AUD current prices)
Sales (million AUD chain volume)
Inventories (book value in million AUD; current prices)
Inventories (book value in million AUD; chain volume)
Manufacturing
Total economy
Share
107,634
12,343
953.5
3,994
366,441
355,420
49,982
47,565
1,318,960
119,741
12,085.4
49,299
8.2%
10.3%
7.9%
8.1%
Note: a) November 2011; b) December 2011
Source: Australian Bureau of Statistics (ABS)
40
144,481
144,089
Figure 2.1: Share of total world manufacturing value added
(In percentage of total world manufacturing value added)
%
1990
2000
2010
30
25
20
15
10
5
0
Source: United Nations Statistical Division, National Accounts Main Aggregates Database, March 2012.
The analyses in Part 1 on the importance of OECD manufacturing in productivity growth, innovation,
exports and total demand suggested already the smaller, albeit still important, role of manufacturing in
Australia. Comparing the structure of the Australian economy with those of other major OECD
economies points to an overall smaller size of manufacturing in Australia (Figure 2.2; see
Figure A.2.1 and A.2.2 in Annex 1 for more detailed results). While de-industrialisation results in a
decreasing importance of manufacturing in all countries,23 Australian manufacturing is becoming
increasingly squeezed between a large and growing services sector on the one hand and a fast
expanding mining industry on the other.
The value added and employment shares of Australian manufacturing are below the average shares in
G7 countries; services account for the majority of the value added (both in nominal and real terms)
and employment created in Australia and G7 countries. A similar observation emerges when
analysing investments with lower and decreasing shares for Australian manufacturing in gross fixed
capital formation (GFCF). The recent downward trend is directly linked to the growing capital
investments in the mining industry as production capacity is added in huge quantities to match the
higher demand and prices of natural resources.
The weight of manufacturing in Australia as opposed to G7 countries is especially different in terms
of exports and R&D investments. Manufacturing in Australia accounts for a significantly smaller
23
Nevertheless, except for employment, manufacturing reports consistently rising figures for value added,
exports, investments and R&D investments, but other sectors are growing faster resulting in a decreasing
importance of manufacturing in national economies (see discussion above).
41
share of total exports of goods compared to G7 countries. The recent mining boom explains partly this
falling export share of manufacturing as exports of mining commodities have rapidly grown (in
volumes and prices) in recent years. The limited contribution of manufacturing to total R&D
investments in Australia is related to the smaller share of manufacturing in business R&D investments
(BERD) and to the relatively smaller share of business R&D in gross domestic expenditure on R&D
(GERD). Services and mining are responsible for a large part of the business investments, while a
large share of GERD in Australia is performed in higher education and government institutions
(OECD, 2011).
Figure 2.2: Contribution of manufacturing to total R&D (GERD), exports of goods, value added,
employment and gross fixed capital formation (GFCF), 1990-2010
(In percentage of totals)
G7 COUNTRIES1
AUSTRALIA
%
R&D
Exports
Value added
Employment
GFCF
%
R&D
80
80
70
70
60
60
50
50
40
40
30
30
20
20
10
10
0
0
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Exports
Value added
Employment
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Note:
1) Japan excluded in GFCF
Source: OECD Structural Analysis Database (STAN), OECD Main Indicators on Science and Technology (MSTI), OECD
Bilateral Trade Database (BTD); Australian Bureau of Statistics (ABS) for data on Australia.
Manufacturing activities in Australia are to a large extent linked to its abundant natural endowments:
the largest manufacturing industries are (i) food, beverages and tobacco products; (ii) the treatment of
mining output (petroleum, metal industries etc.) and (iii) wood and paper products (Figure 2.3). Other
important industries in terms of employment (but also value added) are ‘Machinery and equipment’
and ‘Transport equipment’. This sectoral composition looks rather similar to other countries rich in
natural resources like Canada and Norway; differences are somewhat larger with major manufacturing
countries like Germany and the United States.
42
GFCF
Figure 2.3: The industrial composition of manufacturing, Australia, Canada, Germany, Norway and the
United States, 2009
(In percentage of manufacturing employment)
AUSTRALIA
Furniture and
other
Machinery
manufacturing,
and
6.3
equipment,
12.6
AUSTRALIA, CANADA AND NORWAY
Australia
Food,
beverages and
tobacco
products, 22.5
Canada
Norway
Food, beverages and
tobacco
25
Manufacturing n.e.c.
and recycling
Textiles, leather and
footwear
20
15
Textile,
clothing,
leather,
footwear, 4.4
Transport
equipment, 8.0
Wood, 4.9
Metal products,
15.2
Non-metallic
mineral
products, 3.7
0
Petroleum and
coal products,
0.8
Paper, printing and
publishing
Basic metals and
fabricated metal
products
Chemical, rubber and
plastics products
Non-metallic mineral
products
GERMANY
Furniture and
other
manufacturing,
5.4
Machinery and
equipment, 5.5
Transport
equipment,
11.3
Wood
5
Machinery and
equipment
Paper and
printing, 7.1
Chemical and
rubber
products, 8.0
10
Transport equipment
UNITED STATES
Food,
beverages and
tobacco
products, 12.0
Food,
beverages and
tobacco
products, 12.9 Textile,
clothing,
leather,
footwear, 3.8
Furniture and
other
manufacturing,
8.1
Textile,
clothing,
leather,
footwear, 2.3
Wood, 1.9
Machinery and
equipment,
19.5
Wood, 3.0
Paper and
printing, 4.9
Metal products,
4.0
Paper and
printing, 14.2
Petroleum and
coal products,
6.4
Non-metallic
mineral
products, 16.0
Transport
equipment,
10.5
Chemical and
rubber
products, 8.0
Petroleum and
coal products,
Chemical and 0.9
Metal products,
13.1
rubber
Non-metallic products, 11.0
mineral
products, 3.1
Source: OECD Structural Analysis Database (STAN); Australian Bureau of Statistics (ABS) for data on Australia.
The manufacturing landscape in Australia has significantly changed over time following the gradual
liberalisation of the Australian economy. The post-Second World War era was characterised by
restrictive regulation focusing on shielding domestic producers from foreign competition through
tariffs, quotas, price controls and production subsidies to protect import-competing firms (Lippoldt
and Sztajerowska, 2012). The mid-1970s was the turning point for the economy when deregulation
started in addition to floating the Australian dollar. Important programs of economic reform have
since led to sustained reductions in effective rates of assistance for manufacturing and agriculture
(Figure 2.4). Estimates by the Productivity Commission (2011) show that the effective rate of
assistance for manufacturing as a whole fell from around 35% in 1970-71 to 4.4% in 2009-10.24
Tariff assistance in particular has declined during the past 30 years, while budgetary assistance (tax
concessions and outlays such as subsidies, grants, loans, credits, etc.) to industry has more than
doubled in real terms since the 1960s (Productivity Commission, (2011). The highest measured
24
Internationally comparable evidence on industry assistance is not available.
43
effective rates of assistance are recorded in manufacturing, particularly the automotive industry, and
textiles clothing and footwear industries. These two industries absorb the largest share of the
estimated budgetary assistance; nevertheless, reductions in tariff assistance have also resulted in
decreasing effective rates of assistance in these two industries.
Figure 2.4: Effective rate of industry assistance by industry, Australia
(In percent)
Manufacturing
Agriculture
40
Agriculture
Mining
Manufacturing
Food, beverages and tobacco
Textile, clothing and footwear
Wood and paper products
Pinting, publishing and media
Petroleum, coal and chemicals
Non-metallic mineral products
Metal products
Motor vehicles and parts
Other transport equipment
Other machinery and equipment
Other manufacturing
35
30
%
25
20
15
10
5
0
4.7
0.2
4.4
3.2
12.7
4.7
1.5
3.7
2.6
4.4
11.1
2.0
3.5
5.1
Note The effective rate of assistance is defined as the net assistance received per dollar of value added; Overlapping
observations arise from revisions to industry input and output measures used to estimate effective rates.
Source: Productivity Commission (2011)
The liberalisation of the Australian economy during the past decades has resulted in profound
structural changes, particularly within Australian manufacturing in the decline of high cost
manufacturing and the rise of elaborately transformed manufacturers (Productivity Commission,
2003). Overall, during the past decade Australia has witnessed job losses in manufacturing, especially
in the ‘Textile, Clothing and Footwear’ cluster as well in ‘Petroleum and coal products’, ‘Furniture
and other manufacturing’ and ‘Chemicals’ (Figure 2.5). Manufacturing activity has expanded in
‘Food, beverages and tobacco’, ‘Machinery and equipment’ and slightly less in the ‘Wood’ industry.
Manufacturing employment has fallen less in Australia than in countries like Germany and the United
States over the period 1999-2009; especially this last country has witnessed a sharp decrease in
employment in its manufacturing industries25.
25
During the period 1970-1990, Australian manufacturing reported much larger losses in employment than
manufacturing in other countries, partially due to the increasing import penetration in the Australian market
(Marceau et al, 1997).
44
Figure 2.5: Employment growth in manufacturing, Australia, Germany and the United States, 1999-2009
(Percentage growth rate)
Australia
%
Germany
United States
20
0
-20
-40
-60
-80
Source: OECD Structural Analysis Database (STAN); Australian Bureau of Statistics (ABS) for data on Australia
2.2 Structural change and the mining boom
The structure of the Australian economy26 has over time gradually moved away from agriculture and
manufacturing towards services and more recently also (back) towards mining. The huge demand in
Asia for commodities used in steel and energy production since the beginning of the 21st century has
triggered a strong expansion of the Australian mining industry (coal, iron ore, liquefied natural gas;
Connolly and Orsmond, 2011). The recent boom in commodity prices has increasingly raised
concerns on the possible effects of the mining boom on other parts of the economy like manufacturing
and has stimulated once more interest in the issue of the so-called ‘Dutch disease’27.
26
Especially in terms of value added in current prices (see above)
27
The potential effects of a resources boom on other parts of the economy was first described by Australian
economist Bob Gregory (1976) and was later formalised in trade models such as Corden and Neary (1982).
45
Box 2: The natural resources curse and the Dutch disease
Rich and fast growing economies like Norway, Canada, Sweden, Finland, Australia and New Zealand show that
the abundance of natural resources (oil, gas, minerals, etc.) can be a blessing. Counter-intuitive at first glance,
the idea that natural resources might also have adverse effects on the competitiveness of other sectors is now
also accepted; to the extent that it has been argued that large endowments may actually become more of a curse,
leading to slow economic growth and redistributive struggles (Canuto and Cavallari, 2012).
The term ‘Dutch disease’ has been used for describing the Dutch experience following the discovery of a large
natural gas field; the resulting real appreciation of the Dutch currency (following the increase in real income, i.e.
the expenditure effect) combined with the enhanced competition for production factors like labour and capital
(i.e. the resource movement effects) that resulted in a decline of the Dutch manufacturing industry. This shift
away from manufacturing has been argued to be detrimental to long term economic performance as competitive
manufacturing industries do not return as quickly or as easily as they left, in periods when natural resources
begin to run out or if there is a downturn in prices.
The existence of a recourse curse or Dutch disease is still a controversial issue; while there is relatively robust
evidence that terms of trade increases cause real exchange rate appreciation, the evidence on the shrinking of the
manufacturing is, at best, mixed (Brahmbhatt et al., 2010). Also the empirical evidence on the negative impact
on long term economic growth is inconclusive; some studies like Sachs and Warner (1995, 2001) estimated a
negative growth impact of natural resource intensity, while others (Lederman and Maloney, 2007) don’t find a
negative impact of natural capital abundance.
Recent World Bank research, using new direct measures of natural capital show no clear pattern between GDP
per capita and shares of natural capital of countries (see Figure). Econometric analysis, taking into account other
categories of capital (intangible and tangible), fails to qualify natural resources as a curse or a blessing (Canuto
and Cavalleri, 2012). The eventual effect is assumed to depend on particular determinants at the national level:
studies seem to indicate that Dutch disease effects are more likely to arise under specific conditions such as
weak institutions or a poor educational system, often the case in developing countries (Coudert et al., 2008).
Likewise Brahmbhatt et al. (2010) show how weak governance and poor economic policies might drive the
misallocation and mismanagement of resources, as they shift out of productive activities into unproductive rentseeking activity.
Natural capital (NCP) and GDP per capita
Source: (Canuto and Cavalleri, 2012).
46
The sharp increase in Australia’s terms-of-trade accompanying the current mining boom has led to a
large appreciation of the Australian dollar (Figure 2.6). This was impossible in previous mining
booms as Australia had a fixed (nominal) exchange rate; combined with a central wage setting
system. The adjustment of terms-of-trade happened then via an increase in domestic inflation, thereby
affecting the Australian economy in a disruptive way (Banks, 2011). Greater flexibility in foreign
exchange, labour and product markets allows Australia to better capture benefits from the current
boom while cushioning the economy against excessive imbalances and the risk of overheating
(Lippoldt and Sztajerowska, 2012).
The high exchange rate reduces export revenue for domestic producers (as prices are typically set on
world markets) while rendering imports cheaper for consumers; hurting thereby the competitiveness
of internationally exposed industries like manufacturing28. In addition, production factors like capital
and labour might be bid away from manufacturing to the mining sector, following the higher
commodity prices and mining industry profits (Connolly and Orsmond, 2011), or to services as a
result of the revenue brought in by the resource boom.29 These negative effects may be dampened to
some extent as higher terms-of-trade increases gross domestic income boosting demand also for
(domestic) manufacturing products.
Because of the production links with the rest of the economy, the growing mining activity is also
expected to benefit other industries, from construction to services as well as parts of the
manufacturing sector. Arguments have been put forward that resource sectors in advanced countries
are highly skilled and generate their own spillovers and, as such, often create new opportunities in
other parts of the economy (Australian Government, 2011). Input-output data for Australia show that
services are expected to benefit the most of the expansion of the mining industry: backward linkages
are estimated to be 5 times larger for services compared to manufacturing.
28
Data by the Australian Bureau of Statistics (ABS) show an increasing share of Australian merchandise
exports invoiced in foreign currency (especially USD); while this keeps exports competitive, the
appreciating AUD will nevertheless negatively impact the profitability of Australian manufacturing (as less
AUD is received).
29
Notice that the shift of labour from the lagging to the booming sector could be negligible, since mining
generally employs few people. The so-called ‘expenditure effect’ of the revenue brought in by the resource
boom increases demand for labour in services, outpacing substantially the corresponding growth in
manufacturing. This shift from the lagging to the non-tradable sectors (often called indirectdeindustrialization) accounts for the largest drain of resources away from manufacturing (see Corden and
Neary, 1982).
47
Figure 2.6: Terms of trade and nominal effective exchange rate, Australia
Terms of Trade (2005=100)
Nominal Effective Exchange Rate (2005=100)
180
160
140
120
100
80
60
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Source: OECD Economic Outlook Database
Empirical evidence suggests that the current resources boom has indeed accelerated the process of
structural change in the Australian economy (Figure 2.7). An index of structural change capturing
changes between large sectors and along different dimensions (value added in current and constant
prices, employment and investment)30 shows that the rate of structural change has increased in the
Australian economy since 2003,31 especially in terms of value added in current prices (reflecting the
rising commodity prices) and investments. The evidence seems less clear for value added in constant
prices and employment which reflects to some extent the large time lags between investment and
actual production, as well as the low labour intensity of the mining sector (Connolly and Lewis,
2010).
Similar observations emerge when comparing Australia with other natural-resource intensive
countries like Canada and Norway. All three countries benefit from the current resources boom and
structural change in their national economies has accelerated to some extent, most prominently in
investments and value added in current prices but less in value added in constant prices and
employment (see Figure A.2.3 in Annex 1).
30
One index to describe structural change often used in the economic literature and which proves to be flexible
for comparisons among different distributions over time and across countries is the Finger-Kreinin
dissimilarity index (Finger and Kreinin, 1979). This index ranges between zero and one (indicating
maximum dissimilarity) and measures how much a given distribution of sectors (market services, mining,
manufacturing, construction, etc.) differs from a chosen benchmark and changes over time. Its formula is as
follows:
where 𝑠𝑗𝑡 denote the 5-year average share of sector 𝑗 in year 𝑡.
31
Battelino (2012) dates the start of the current boom from around 2005.
48
Figure 2.7: Structural change in the Australian economy
Structural change Index (Finger-Kreinin dissimilarity index)
Value added (current prices)
Employment
Value added (constant prices)
12
12
10
10
8
8
6
6
4
4
2
2
0
Investments
0
1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010
1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010
Source: OECD Economics Department.
An important contraction of manufacturing activity has been observed in Australia since the
beginning of the mining boom, but it would be wrong to classify this completely as the negative
impact of the resources boom on manufacturing. Structural change is a broader process going beyond
temporal booms in mining and oil industries, even in countries richly endowed with natural resources.
The decline in the Canadian manufacturing industry for example is considered coming merely from a
standard long-term de-industrialisation trend that is unrelated to oil exports (Bayoumi and Mühleisen,
2006). Likewise, de-industrialisation and the mining boom work both in the same direction in
affecting manufacturing employment in Australia32.
In addition, the Global Financial Crisis of 2007/2008 seems to have dramatically impacted
manufacturing activity. The contraction of manufacturing, illustrated by falling growth rates of value
added and investments, occurred rather simultaneously across Australia, Canada and Norway (two
other resource-rich countries) and Germany and the United States (two major manufacturing
countries). The break in the series seems to be concentrated around 2007/2008 clearly pointing to the
Global Financial Crisis as the main reason for the downturn in global manufacturing; the fact that
investments are hit the hardest across countries confirms this conclusions (Figure 2.8).
Also the size of the contraction seems not too different across countries (including natural resourcerich and resource-poor countries) further lending support to the (preliminary) conclusion that the
negative impact of the current mining boom on Australian manufacturing seems up to 2010 rather
weak.33 Manufacturing value added (both in current and constant terms) decreased relatively less in
32
Banks (2011) reports that manufacturing’ share in total employment has fallen by 1.4 percentage points since
2007, which is 0.5 percentage points larger than the long term average rate.
33
The aggregate evidence does not confirm the studies which have modelled the likely impacts of the recent
terms of trade improvement on the Australian economy, like e.g. the Monash Multi-Regional Forecasting
model; see OECD (2012) for a discussion. It should be kept in mind however that the analysis presented
49
Australia, reflecting the fact that the Australian economy was relatively less affected by the
2007/2008 global crisis.
The duration and strength of a possible effect on Australian manufacturing is directly dependent on
the length of time over which the exchange rate level will stay high. It is generally expected that the
terms of trade for Australia remain at historically high levels for an extended period following the
rapid industrialisation and urbanisation of Asia (Australian Government, 2011). The effects of the
current mining boom might become more permanent in Australia and reflect a longer term change in
Australia’s comparative advantage. Nevertheless, there is also reason to believe that terms-of-trade
will not improve by more over the next years. Large investments in the mining sector are expected to
expand supply and ease the demand surplus for mining products, thereby lowering terms of trade and
the effective exchange rate to some extent.
Figure 2.8: Value added (current and constant prices), investments and employment, manufacturing,
Australia, Canada, Germany, Norway and the United States, 1991-2010
1991 = 100
VALUE ADDED, CURRENT PRICES
Australia
Canada
Norway
VALUE ADDED, CONSTANT PRICES
Germany
United States
Australia
Canada
Norway
United States
Germany
250
300
250
200
200
150
150
100
100
50
50
1991
1994
1997
2000
2003
2006
1991
2009
1994
Canada
Norway
United States
2000
2003
2006
2009
EMPLOYMENT
INVESTMENTS
Australia
1997
Germany
350
Australia
Canada
Germany
Norway
United States
150
300
250
200
100
150
100
50
0
50
1991
1994
1997
2000
2003
2006
2009
1991
1994
1997
2000
2003
2006
2009
Source: OECD Structural Analysis Database (STAN); Australian Bureau of Statistics (ABS) for data on Australia
above goes only up to 2010; the Australian dollar has further appreciated in 2011 with possible impacts that
are not captured in the presented aggregate evidence.
50
2.3 Drivers of manufacturing performance34
2.3.1 Productivity
Productivity growth in Australia was a major success story during the 1990s, as the Australian
economy reported record-high growth rates in both labour and multi-factor productivity (Figure 2.9).
Major regulatory reforms and gradual liberalisation accounted for much of that improvement;
Australian productivity during that period accelerated faster than in most other OECD countries.35
From 2001 onwards Australia’s productivity growth slumped however with zero to negative growth in
multi-factor productivity in most recent years. Several reasons have been put forward for the falling
productivity growth in the 2000s including more temporary factors: the effect of drought on
agriculture output, the effect of the dramatic increase in commodity prices on mining inputs and
outputs (e.g. more extraction of lower quality deposits), the slowdown in productivity-enhancing
reforms, rising profitability allowing less-efficient firms to remain in business (Productivity
Commission, 2010; Dolman, 2009; Eslake, 2011). Part of the productivity slump can be related to the
current mining boom as Australia’s productivity performance is broadly in line with other resourcerich countries like Canada and Norway.
Figure 2.9: Labour and multi-factor productivity, Australia 1990-2010
(Annual percentage growth)
Multi-factor productivity
Labour productivity
5
4
3
2
1
0
-1
-2
Source: OECD Productivity Database.
Interestingly, the strong productivity catch-up of Australia at the economy-wide level during the
1990s did not extend to the manufacturing industry. The productivity gap with the United States
34
These factors directly determine the speed and size of structural change (see also Pilat et al., 2006).
35
International comparisons of productivity have to be interpreted with care as they might be subject to
differences in scope and statistical methods across countries, cyclical movement and noise in the data, as
well as unmeasured changes in volume, quantity and quality of outputs and inputs. Growth comparisons are
on average ‘better’ than level comparisons, if only because of the adjustment of price differences across
countries.
51
which is traditionally considered as being at the productivity frontier has gradually widened over time.
While the labour productivity level of Australian manufacturing was estimated to be at 84% of the US
level in 1980, this figure fell to 77% in 1990, 62% in 2000 and even 53% in 2005. The Productivity
Commission (2010) attributed that downward trend to manufacturers overall using more inputs to
achieve the same outcomes. It can be expected that the recent crisis has aggravated the productivity
problem as manufacturing output growth fell in absolute terms while input of capital and labour
increased further. Manufacturing is estimated to have contributed most to the recent slump in multifactor productivity growth at the national level (Parham, 2012).
Figure 2.10 presents multi-factor productivity growth for individual manufacturing industries for
Australia, Germany and the United States during the periods 1990-2000 and 2000-2007 (see
Figure A.2.4 in Annex 1 for similar graphs on labour productivity). The results clearly show the
overall lower productivity growth in Australia compared to the United States but also Germany;
Australian manufacturing reported negative multi-factor productivity growth in several industries
during both periods. Multi-factor productivity seems to have decreased especially in more traditional
industries like textiles but also in food, beverages and tobacco. Germany and the United States on the
contrary reported positive productivity growth in these industries. The comparisons for another large
industry in Australia, the metal industry, are more favourable for Australia with stronger multi-factor
productivity growth in the period 2000-2007.
Figure 2.10: Growth in multi-factor productivity in manufacturing industries
(Annual percentage growth)
AUSTRALIA
GERMANY
52
53
UNITED STATES
Source: EUKLEMS.
2.3.2 Labour costs
The increasing importance of emerging economies has drastically changed the competitive conditions
in global manufacturing as these countries are able to compete with labour costs which are only a
fraction of those in developed economies. Australia is positioned at the high-cost end and the stronger
Australian dollar renders labour even more expensive for manufacturers. Manufacturing labour costs
are still lower in Australia than in Norway, Switzerland or Germany, but have increased by 6% yearly
during the period 1997-2010 (Figure 2.11). Together with Norway, Australia has witnessed the
strongest growth in hourly compensation costs (expressed in USD) in manufacturing. Estimates by the
US Bureau of Labor Statistics indicate that this strong increase is for more than 70% due to the
appreciation of the Australian dollar.
54
Figure 2.11: Hourly compensation costs (in USD) in manufacturing, 1997 and 2010
(United States = 100)
1997
2010
180
160
140
120
100
80
60
40
20
0
Note: Compensation costs relate to all employees in manufacturing and include (1) direct pay, (2) employer social insurance
expenditures and (3) labor-related taxes (see table 1). Direct pay includes all payments made directly to the worker, before
payroll deductions of any kind, consisting of pay for time worked and directly-paid benefits. Social insurance expenditures refer
to the value of social contributions (legally required as well as private and contractual) incurred by employers in order to secure
entitlement to social benefits for their employees; these contributions often provide delayed, future income and benefits to
employees. Labor-related taxes refer to taxes on payrolls or employment (or reductions to reflect subsidies), even if they do not
finance programs that directly benefit workers.
Source: US Bureau of Labor Statistics.
High labour costs in absolute terms are not necessarily problematic; labour costs should be examined
relative to a country’s level of productivity in the manufacturing sector. High labour costs can only be
sustained if they coincide with a high level of productivity; low labour cost countries typically have
low labour productivity. The recent fall in productivity growth in Australian manufacturing has
resulted in rising unit labour costs (ULCs, i.e. labour costs per unit of product) from 2004 onwards,
even abstracting from the negative impact of the appreciating Australian dollar (Figure 2.12). While
labour costs only account for a fraction of total manufacturing costs in developed economies36, the
evidence indicates that Australian manufacturing suffers from a cost disadvantage not only with
respect to emerging countries, but now also increasingly with other OECD countries. The high
exchange rate of the Australian dollar in combination with domestic cost negatively affects the
international competitiveness of Australian manufacturing. It is clear that Australian manufacturers
will need to further develop other competitive advantages (innovation, knowledge, branding, etc.) to
compensate for the high cost environment they operate in.
36
Because of the offshoring of labour-intensive activities to emerging countries, capital deepening and
automation, etc.
55
Figure 2.12 Unit Labour Costs (ULC) in manufacturing, 1995-2010
(2005 = 100)
Australia
Germany
United States
G7
OECD - Total
130
120
110
100
90
80
70
Note: ULCs are calculated as Total Labour costs dived by real output (both expressed in national currency); hence changes in
the exchange rate are not reflected in these results
Source: OECD Labour Costs Database.
2.3.3 Scale (dis)advantages
Previous research has shown that considerable advantages to scale exist in manufacturing industries;
examples are chemicals and pharmaceuticals, motor vehicles, etc. (Antweiler and Trefler, 2002).
Operating in a small remote economy, Australian manufacturers suffer from important scale
disadvantages, especially in ‘chemicals, rubber and plastics’ and ‘transport equipment (Figure 2.13).
This means that Australian manufacturers do not produce at the minimum efficient scale leading to
higher unit costs for manufactured products in Australia. A 2007 report by the Productivity
Commission (Dolman et al., 2007) similarly reported that firms employing less than 10 persons were
found to play only a little role in US manufacturing but accounted for almost one-quarter of
Australian industry.
The large distance to markets also prevents firms in some industries in Australia from achieving the
same economies of scale as those of their competitors in Europe or North America (Battersby, 2006).
Long distances hamper Australia’s access to foreign consumers as well as providers of capital
equipment and intermediate goods, thereby negatively affecting the realisation of scale economies and
hence manufacturing productivity.37 But Australia lacks ‘deep’ markets for its manufacturing products
not only because of its large ‘external’ distance to world markets but also because of its smaller and
fragmented home market (Australian Treasury, 2008; OECD, 2008). With a population of 22 million
37
Distance is assumed to play a less important role in services, because of the technological progress
particularly in ICT which has rendered the delivery of certain services from a distance very easy.
56
dispersed across a large country, ‘internal’ distances between fragmented regional markets are also
significant in Australia.
Figure 2.13: Average scale in manufacturing, Australia, Germany and United States, 2008
(Average number of persons engaged per manufacturing enterprise)
Australia
120
Germany
United States (2006)
267
100
80
60
40
20
0
Note: number of employees instead of numbers of persons engaged for United States
Source: OECD Structural Analysis Database (STAN); Australian Bureau of Statistics (ABS) for data on Australia
57
Box 3: Australia and the ‘tyranny of distance’
Geoffrey Blainey was the first to coin the phrase ‘the tyranny of distance’ for the name of his book published in
1966 explaining how the economic performance of Australia has been influenced by its remoteness from
economic activity in the rest of the world. Blaine described how the distance of Australia from important centres of
economic activity as well as the dispersal of population within Australia retarded the flow of commodities and
people. Traditional growth theory has largely neglected geographic distance and the influence of neighbouring
countries as it relies essentially on national characteristics (i.e. factor endowments and technological progress).
But distance can affect productivity and income levels through various channels, including trade, foreign
investment and technology diffusion. Large transport and trade costs typically reduce trade, thereby limiting the
opportunities for countries to specialise in the activities where they possess a comparative advantage. Distance
from world markets also limits the exposure to competition and the diffusion of knowledge.
The evidence on the impact of remoteness on economic activity is large. The OECD (2008) found that the
distance from Australia (which stood out as the most remote OECD country based on 5 indicators: population
density, distance to markets, market potential, market access and access to suppliers) to world markets
contributed to lowering Australia’s GDP per capita by 10.6% on average between 2000 and 2004 relative to the
average OECD country. Battersby (2006) reported that the Australia’s vast and remote geography may explain
45% of the difference in labour productivity between the United States and Australia. Redding and Venables
(2004) showed that market and supplier access explain up to a third of variation in per capita income differences.
Nevertheless, Australia and New Zealand traditionally challenged the ‘tyranny of distance’ as they punched
above their weight’ (Leamer, 2007) and did better than the predicted norm given their degree of remoteness
(Withers, 2007).
On the other hand, the same trade costs that weigh on exports make international producers less competitive in
Australian markets. Remoteness increases the natural protection afforded to industries and high transport costs
render imported goods and services less competitive allowing thereby inefficient firms (which have not fully
realised economies of scale) to exist profitably. High import barriers for specific manufacturing industries in the
past only added to that natural protection, multiplying failures in the Australian market.
Arguments have been put forward that the tyranny has been defeated as economic distances have become
smaller during the past decades because of major technological progress in logistics (e.g. shipping technology
such as containerisation) and communication. The OECD (2008)38 however found, maybe surprisingly, that the
distance to world markets reduces trade to a similar extent today as it did in 1970. Using new transport costs
data, evidence was reported that real average international transport costs for Australia and New Zealand more
than doubled between 1973 and 2006. In the case of maritime transport (which is important for Australia), it may
be that rising fuel costs and increasing port and airport charges have offset the gains from technological
innovations39. These weight-based measures of real cost of transport (using an unchanged weight/value ratio
over time) probably underestimate the decline in ad valorem transport costs Hummels (2007) reported that the
weight/value ratio of traded goods has significantly fallen over time as many goods are now relatively light.
Consequently, transports costs might have decreased relative to the value of the transported goods (OECD,
2008).
Irrespective of the changes in transport costs, Australia will benefit from the emergence of large (consumer)
markets in Asia and its overall economic distance will decrease 40. As the global economic centre is shifting to the
East, the distance of Australia to these new world markets will still be significant but smaller than to markets in
Europe and the United States. While in the 1950s about 15% of world GDP was located within 10,000 kilometres
of Australia, in 2010 about one-third of world GDP fell within the 10,000km range. And if emerging Asia keeps
growing, that figure could be almost as high as two-thirds of world GDP by 2050 (Thirlwell, 2012).
2.3.4 International orientation
The large distance from world markets contributes to a large extent to the more limited degree of
internationalisation of the Australian economy and its lower participation in GVCs. As already
38
Frankel (1997) was the first to note this; other papers followed.
39
OECD (2008) reports however that measured price indices for ocean shipping may not adequately reflect
improvement in the service provided, for instance time savings brought about by containerisation.
40
While the cost represented by Australia’s remoteness from major market as measured by per capita GDP was
estimated at more than 10% in 2005, that handicap could drop by 3 percentage points by 2050.
58
discussed, large economic distances result in high trade costs (in the same way as tariffs do) which
hamper the global integration of Australia. Blum and Leamer (2000) estimated that exporting a good
to a country 1 500 kilometres away is on average equivalent to an import tariff between 7 and 17%.
The trade/GDP ratio is typically lower in Australia than in other OECD economies, both for import
penetration ratios (i.e. the share of the domestic market served by imports) and export shares (i.e. the
part of production that is exported) across countries. Figure 2.14 shows that Australia ranks among the
OECD countries with the lowest import penetration ratios and export shares. The export share of
Australian manufacturing is strikingly low in international perspective, exceeding only those of Japan
and the United States.41
Interestingly, the wedge between export shares and import penetration in Australia is more
pronounced than in other OECD countries. This distinct stylised fact was already reported in the
1980’s and 1990s (Oliveira Martins, 1993; Clark et al., 1996) and is probably due to several factors:
the composition of exports (large Australian exports in agricultural and mining products, and higher
imports of manufactured products), scale (Australian exports suffer from a significant scale
disadvantage making exports more expensive, see above), geography (differences between origins of
imports and destinations of exports), etc. Over the last years, this difference between import
penetration and export shares for Australian manufacturing has widened further, as import penetration
has grown much more than the share of production which is exported (Department of Innovation,
Industry, Science and Research, 2011). One explanation for this is related to structural reforms in the
1980s and 1990s that have liberalized and opened the Australian market to foreign producers. More
recently, the increased terms-of-trade and the corresponding appreciation of the Australian dollar have
led to strong income growth as well as lower import prices adding to the attractiveness of foreign
products (in particular luxury goods) in Australia.
41
The lower global integration of these two countries is explained especially by their large domestic markets
(particularly in terms of export share).
59
Figure 2.14: Import penetration ratio1 and export share2 in manufacturing, Australia and other major
OECD countries, 2009
%
Import penetration
Export share of production
60
50
40
30
20
10
0
Note: 1) import penetration defined as imports in percentage of domestic apparent consumption
2) export share defined as exports in percentage of production
Source: OECD Structural Analysis Database (STAN); Australian Bureau of Statistics (ABS) for data on Australia
In order to overcome (some of) the large trade costs, foreign companies have set up subsidiaries in
Australia to serve the local market, while reversely Australian companies have located subsidiaries
abroad to serve foreign markets. Foreign companies bring important benefits to host countries, such as
technology and knowledge, human capital, increased competition, etc. (OECD, 2008). Economic
distance has limited the growth of trade but seems less a constraint on investment; Australia’s share of
world trade and world production is around 1% while inward and more recently also outward FDI42
has been several times larger43 (McCredie, 2007).
Figure 2.15 indicates that Australia has attracted a significant amount of foreign direct investment
(FDI) compared to major OECD economies. Australia has attracted a lot of FDI over time especially
in different sectors including services and mining (with some mergers and takeovers of Australian
firms by foreign groups); one fifth of its inward FDI stock in 2010 (almost AUD 90 billion) was in
manufacturing industries. Some of the recent investments in Australia serve as export platforms and
are probably related to Australia’s relative proximity to Asia; in addition, investment in Australia
benefits from a stable and growing market in Australia, efficient institutions, English as business
language, etc.
42
As no data are available on Multinational Enterprises (MNEs) for Australia, data on FDI stocks have been
used. FDI is however a merely financial concept which does not necessarily represent economic activities of
multinational firms (in terms of turnover, employment, etc.).
43
Ample theoretical as well as empirical research in the international business literature has shown how large
transportation favours international investment above international trade.
60
Australia has become an important international investor abroad during the last decade. Again the
proportion of manufacturing in total outward FDI of Australia is smaller than in other sectors;
illustrating the important investments activities of Australian services firms (and to lesser extent
mining firms). Just like in international trade (see below), Asia has become increasingly important for
Australian outward investment, attracting almost 10% of the outward FDI stock of Australia in 2010.
Likewise, outward investments flows from Australia have significantly grown during the last decade
with increasingly more investments going to Asia; in particular China, India, Indonesia, etc.
Figure 2.15: Inward and outward FDI positions, 2010
(In percentage of GDP)
Total FDI
Manufacturing
United
Australia
Kingdom
(2009)
Canada
Germany
(2009)
Turkey
France
United
States
Italy
Korea
Japan
Source: OECD International Investments Database and OECD National Accounts database.
The integration of Australia into GVCs likewise is less pronounced than in other countries. As
production process are dispersed geographically with one stage in one country producing inputs for a
subsequent stage in another country, intermediates trade within the same industry has become more
important. Indices on intra-industry trade, for total goods as well as intermediates separately, point to
a lower and decreasing integration of Australia into production networks organised on a global scale
(Figure 2.16).
61
Outward
Inward
Outward
Inward
Outward
Inward
Outward
Inward
Outward
Inward
Outward
Inward
Outward
Inward
Outward
Inward
Outward
Inward
Outward
Inward
90
80
70
60
50
40
30
20
10
0
Figure 2.16: Intra-industry trade in manufacturing, 1995 and 2010
(Grubel-Lloyd index)
%
All goods, 2010
Intermediate goods, 2010
All goods, 1995
Intermediate goods, 1995
100
90
80
70
60
50
40
30
20
10
0
Note:
Intra-industry trade is calculated as the Grubel-Lloyd index:
100 * [1 – (∑(EXPOi - IMPOi) / (∑(EXPOi + IMPOi))]
This index varies between 0 and 100. If a country exports and imports roughly equal quantities of a certain product, the index
value is high. Whereas if trade is mainly one-way (whether exporting or importing), the index value is low. OECD (2005)
discusses the limitations of this index.
Source: OECD Bilateral Trade by End-Use Database.
d) Innovation and knowledge
The last decades witnessed a shift in specialisation in OECD economies towards higher technology
and knowledge manufacturing industries, following the growing competition from emerging
economies in more traditional labour-intensive sectors. In addition, OECD manufacturers
increasingly compete on the basis of innovation and knowledge to compensate the high cost
environment they are operating in; the previous analysis has shown that Australia has also become a
high cost country for manufacturing during the past decade.
Australian manufacturing is still strongly oriented towards lower and medium technology production;
resource-based industries undertake typically smaller R&D investments and hence are typically
classified as lower technology industries (OECD, 2010). Compared to other major OECD economies,
the value added created in Australian manufacturing originates largely from lower technology
intensive activities, while only a smaller fraction comes from high technology industries (Figure
2.17). Other resource-intensive countries like Norway and Canada, but especially Finland and Sweden
62
seem to have been successful in developing high technology activities to complement their advantage
in resource-intensive industries44.
Figure 2.17: Value added in manufacturing, by technological intensity classes, 2008
High-technology
Medium-high technology
Medium-low technology
Low-technology
100%
80%
60%
40%
20%
0%
Source: OECD Structural Analysis Database (STAN); Australian Bureau of Statistics (ABS) for data on Australia.
This lower technology specialisation of Australian manufacturing explains to a large extent the overall
lower business R&D-intensity and lower patent propensity of manufacturing in Australia compared to
other major OECD countries (see Figures A.2.5 and A.2.6 in Annex 1). Aggregate figures on
innovation performance should thus be interpreted with care since they are heavily dependent on the
structure of countries’ industrial production.
It is noteworthy that a significant amount of R&D is also performed in low-technology industries,
particularly in resource-based economies. OECD countries can remain competitive in specific
segments in lower technology industries when they are able to compensate for their higher (labour)
costs by successfully innovating. The international fragmentation of production allows countries and
firms to specialise in higher value added, knowledge intensive segments, also within lower technology
industries.
Australia invests indeed heavily in R&D in lower technology industries which most likely contribute
to the strong economic performance and specialisation of manufacturing in these industries
(Figure 2.18). Especially in medium-low technology industries such as ‘Basic metals and fabricated
metal products’, but also in low technology industries like e.g. ‘Food and beverages’, Australia shows
44
See Annex 3 for the OECD classification (based on direct R&D and R&D embodied in intermediate and
capital goods) of manufacturing industries in high technology, medium-high technology, medium-low
technology and low technology intensive industries (Hatzichronoglou, 1997).
63
a very high R&D intensity. The picture is quite different in higher technology industries, with
Australia only investing a fraction of what other major OECD economies are investing in R&D in
these industries.
Figure 2.18: Business R&D intensity, by technological intensity classes, 2007
(Business R&D investments in percentage of value added)
Medium-low technology
%
Low technology
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
Japan
France
(2006)
Canada Australia Germany
(2006)
(2005)
High-technology
%
United
States
Korea
United
Mexico
Kingdom
Italy
Medium-high technology
40
35
30
25
20
15
10
5
0
United
States
France
(2006)
Canada
(2006)
Japan
United
Kingdom
Korea
(2006)
Germany Australia
(2005)
Italy
Mexico
Source: OECD Structural Analysis Database (STAN)
As discussed in Part 1, R&D investments are only one source for innovation and knowledge
generation; non-technological forms of innovation like e.g. marketing and organizational innovation
which are less related to R&D, have become increasingly important, especially in countries whose
industrial specialisation and structure limit the scope for technology based R&D activities.
Manufacturing firms in Australia are to a large degree active in non-technological innovation, in
particular marketing and organisational innovation (exclusively or in combination with
product/process improvements; Figure 2.19). Australian manufacturing scores relatively well in
international comparisons based on this broad definition of innovation; a large number of innovative
firms are active in more traditional industries like food and metal (Smith, 2007). A large part of the
64
innovation efforts are targeted at modifying and adopting products and processes for the Australian
domestic market; Australian firms introducing product innovations that are new to international and
domestic markets are less numerous compared to other countries (Department of Innovation, Industry,
Science and Research, 2011).
Figure 2.19: Innovation strategies in the manufacturing industry, 2006-2008
(As a percentage of all manufacturing firms)
Product or process innovation only
Product or process & marketing or organisational innovation
Marketing or organisational innovation only
%
100
80
60
40
20
0
Source: OECD Science, Technology and Industry Scoreboard 2011 and Measuring Innovation: A New perspective (OECD,
2010).
Product and process innovation are not always based on R&D (Figure 2.20): figures on innovation
and the R&D status for Australia show that almost two thirds of product innovators are not
undertaking R&D themselves. The same observation emerges when analysing the link between R&D
and process innovation. These results underline that innovation performance is much broader than
only investing in R&D, especially in the case of Australian manufacturing. As discussed in Part 1,
innovation is increasingly based on the broad accumulation of so-called ‘intangible assets’:
computerised information, innovative property (including R&D) and economic competencies
(including firm-specific capital and organizational capital). A recent report by the Productivity
Commission estimated the intangible capital stock for the total economy and concluded that Australia
had a ratio of intangible investment to output that is around mid-range of the estimates for other
countries. Australia has a lower ratio than Finland, the United States, the United Kingdom, France,
Germany and Japan, but a higher ratio than Canada, the Netherlands, Italy and Spain (Barnes and
McClure, 2009).
65
Figure 2.20: Product and process innovators by R&D status, total economy, 2006-2008
(As a percentage of product and process innovators)
R&D active firms
Firms without R&D
100
90
80
70
60
50
40
30
20
10
Korea
(2005-07)
Finland
France
United
Kingdom
South
Africa
(2005-07)
Italy
Russian
Federation
New
Australia
Zealand (2006-07)
(2008-09)
United
States
Process
Product
Process
Product
Process
Product
Process
Product
Process
Product
Process
Product
Process
Product
Process
Product
Process
Product
Process
Product
Process
Product
0
Brazil
Note: data refer to manufacturing only for Korea and Russian Federation
Source: OECD Science, Technology and Industry Scoreboard 2011.0
Collaboration is one way to pursue innovation without undertaking R&D; research has shown that
firms that collaborate on innovation spend more on innovation than those that do not, suggesting that
collaboration is likely to be undertaken to extend the scope of a project or to complement firms’
competencies more than to save costs. Confronted with increasing global competition and rising
innovation costs, companies can no longer survive on their own innovation efforts but look
increasingly for new, more open, modes of innovation by collaborating with external partners,
whether suppliers, customers or universities.
In most countries collaboration in innovation with foreign partners is at least as important as domestic
cooperation; while in Australia innovating firms work almost exclusively with national innovation
partners (Figure 2.21). Part of this national collaboration is with government research organisations
and higher education institutions which occupy a relatively strong position within the Australian
innovation system. There are some indications that SMEs, which dominate Australian manufacturing,
collaborate less in innovation (compared to larger firms) both on a national and international level.
Economic distance is assumed not only to impact the international trade (and investment) position of
countries but also to hamper the international collaboration in innovation, as establishing networks
over large distances is sometimes very costly45. Technology flows (i.e. payments for R&D services
and receipts from patents and licenses) reflect a rather low level of internationalization of knowledge
for Australia (OECD, 2011). Because of knowledge being tacit and difficult to codify, knowledge
spillovers decline with distance even in a world with enormous communication possibilities. The use
45
Also other S&T indicators point to the limited international collaboration in innovation for Australia: R&D
funds from abroad, domestic ownership of foreign inventions, foreign ownership of domestic inventions, etc.
(see OECD Science, Technology and Industry Scoreboard 2011).
66
of knowledge for technology development beyond formally contracted parties declines by half on
average for every 1,200 kilometres (Keller, 2002). Economic distance impedes a successful transition
to more knowledge manufacturing; Australian firms will hence have to make more efforts to tap into
international ideas and technologies or access specific skills and competencies abroad.
Figure 2.21: National and international collaboration in innovation, total economy, 2006-2008
(As a percentage of innovating firms)
National only
International
%
40
35
30
25
20
15
10
5
0
Source: OECD Science, Technology and Industry Scoreboard 2011.
e) Human capital and management
Human capital plays a key role in innovation and more broadly in the creation of knowledge within
manufacturing; high-level skills in manufacturing workforces are important building blocks for the
development of sustainable firm capabilities. Notwithstanding a relatively high share of the
Australian adult population with tertiary education (37% versus 30% as the OECD average) and
immigrants that are relatively highly educated (in comparison to other OECD countries), Australian
manufacturing seems relatively unsuccessful in attracting this human capital. Data by the Productivity
Commission (2007) indicated that employees in Australian manufacturing have on average
significantly lower educational attainment than their peers in the United States (13% had a bachelor
degree or higher versus 22% in the United States).
Australian manufacturing employs a relatively small but growing number of Human Resources in
Science and Technology (HRST)46 compared with other major OECD economies which is again
likely to be related to its industrial structure (Figure 2.22). Looking more closely at the number of
researchers (i.e. professionals engaged in the conception and creation of new knowledge, products,
46
Human resources in science and technology (HRST) are defined according to the Canberra Manual (OECD
and Eurostat, 1995) as persons having graduated at the tertiary level of education or employed in a science
and technology occupation for which a high qualification is normally required and the innovation potential is
high. HRST occupations include professionals, technicians and associate professionals (see OECD Science,
Technology and Innovation Scoreboard, 2011).
67
processes, methods and systems and directly involved in the management of projects) gives similar
insights: manufacturing in Australia scores relatively weakly from an international perspective with
only 1 per thousand employees being a researcher (Figure 2.23).
Figure 2.22: Number of HRST employees in manufacturing, 2008
(As a percentage of all employees)
%
Average annual growth rate 1998-2008
35
30
25
20
15
10
5
0
-5
France
Germany
Italy
United
Kingdom
United
States
Australia
Canada
Source: OECD Skills by Industry Database.
Figure 2.23: Researchers in manufacturing and services, 2009
(Per thousand employment in industry)
Manuf acturing
‰
Services
14
12
10
8
6
4
2
0
Source: OECD Science, Technology and Industry Scoreboard 2011.
68
Other sectors
Turkey
Japan
High performance (in manufacturing) is however not only based on HRST and researchers, especially
in more resource-based economies; previous research has shown that management is increasingly
important for the development of innovation capabilities in firms. Better management capabilities
have been demonstrated to positively affect productivity performance (Bloom et al., 2007). An
international study by the Australian government showed that management performance in Australian
manufacturing is rated as moderately above average when benchmarked on people, operations and
performance (Figure 2.24). More in detail, significant differences were found between SMEs and
large firms (in particular MNEs) as well as across industries. In addition, the educational attainment of
Australian managers in manufacturing was lower compared to their peers in other countries
(Australian Government, Department of Innovation, Industry, Science and Research, 2009).
Figure 2.24: Overall management performance, 2009
3.4
3.3
3.2
3.1
3
2.9
2.8
2.7
2.6
2.5
Source: Australian Government, Department of Innovation, Industry, Science and Research. Report ‘Management matters in
Australia: Just how productive are we? (2009).
CHAPTER 3 AUSTRALIAN MANUFACTURING AMID GLOBAL COMPETITION
This section discusses the performance of Australian manufacturing on international markets, first by
analysing the export performance of Australian manufacturers from a sectoral and geographical
perspective (what is exported and where?). The international competitiveness of Australian
manufacturing is assessed along different dimensions to get more insights into the challenges that
Australian manufacturers are facing on international markets. The export performance in most recent
years is studied in particular to determine if and to what extent Australian manufacturing has been
affected by the mining boom and the associated appreciation of the Australian dollar. In addition, the
international (import) competition on the domestic market is also touched upon.
Within these analyses, specific attention is devoted to Asia, as the shift of global manufacturing
towards that region offers large and new opportunities for Australian manufacturing. The results aim
to shed light on whether Australian manufacturers are capturing these opportunities and aims to
69
identify challenges and barriers they are confronted with. As global manufacturing is increasingly
organised within GVCs, a discussion on the integration of Australian manufacturing in GVCs
complements the analysis.
This competitiveness analysis focuses on Australian exports of goods; in particular on manufactured
goods. It should however be kept in mind that Australia has become an important exporter of services
in past years, for example in education, travel (tourism and business), etc. Trade in services
accounted for 19.6% of Australia’s total trade in goods and services; services exports grew by an
average of 6.5% per annum between 2005 and 2010.47
47
Just like for manufacturing, there is a growing discussion on the possible impact of the high Australian
dollar on Australia’s trade in services.
70
Box 4: The OECD Bilateral Trade Database by Industry and End-Use
Export and import data come from the new OECD STAN Bilateral Trade Database by Industry and End-use
category (BTDIxE), where values of imports and exports of goods are broken down by industrial sector and by
end-use category at the same time. This data source has been used throughout this section (except for the data
on price and quality) in order to assure consistency.
This new database builds further on the OECD STAN Bilateral Trade Database (BTD) which has been regularly
published since the mid-1990s and presents trade values broken down by the 3 rd Revision of the International
Standard Industrial Classification (ISIC Rev.3). Using the Broad Economic Categories classification of the United
Nations Statistics Division (UNSD) allows a distinction between the end-use (intermediate, final, capital, etc.) of
traded goods. This information enables a better analysis of the integration of countries into GVCs.
The OECD Bilateral Trade Database by Industry and End-Use Category (BTDIxE) is derived from OECD’s
International Trade by Commodities Statistics database (ITCS) and UNSD’s Comtrade database, where values
and quantities of imports and exports of all commodities (i.e. merchandise trade) are compiled by partner country
and according to product classifications. In ITCS and Comtrade data are classified by reporting, or declaring,
country (i.e. the country supplying the information), by partner country (i.e. origin of imports and destination of
exports) and by product (currently reported according to HS Rev.3, 2007).
To compile the bilateral trade database by industry and end-use category, each traded product within a
Harmonised System (HS) code from ITCS and Comtrade was assigned to a single ISIC Rev.3 industry and a
single end-use category. Thus, eight sets of conversion keys were produced using correspondence tables
developed internally by the OECD’s Directorate for Science, Technology and Industry based on the
correspondence tables published by UNSD. In particular, trade flows are divided into 58 economic activities and
9 categories of goods including the three main end-use categories: capital, intermediate inputs and consumption.
In this first version of BTDIxE, estimates of imports and exports are presented for 65 reporters: (i.e. the 34 OECD
member countries in 2011 and 30 non-member economies and the Total World) as well as 67 partners (all 34
OECD countries, 30 non-member economies, 2 ‘residual partners’ the ‘Rest of world’ and ‘unspecified’ as well as
a world total). The reporter ‘Total World’ is calculated by aggregating the trade flows of all BTDIxE reporters; this
estimated reporter World in BTDIxE covers approximately 95% of total reported world trade. Data are expressed
in current price US dollars and broadly cover the time-period 1988-2010.
Australian exports of goods in this database amounted to USD 211 830 billion in 2010, of which
USD 74 390 billion were from manufacturing industries. One point of attention specifically for Australia concerns
the unallocated or confidential trade, i.e. trade which is not allocated to any regular (HS or SITC) product codes
and/or not recorded by partner country, due to confidentiality or other reasons such as incomplete or ambiguous
information. In the source database ITCS, values under this item stem from the category “commodities not
specified according to kind” (for products) and from “other areas not elsewhere specified” (for partners). The
share of unallocated or confidential trade in total trade varies across reporters and is often likely to be
concentrated in certain groups of products (or industries), partners and sometimes certain years.
Export data from Australia are especially affected by this problem, although the quality of the data has improved
over time at least for unallocated or confidential products. In 2000, 19% of Australian merchandise exports could
not be classified to specific industries. This figure fell to 5% in 2010. The share of unspecified partners increased
however from 2% in 2000 to 12% in 2010. The increase in mining exports is likely to play a role in it, but the
problem requires some caution in interpreting evolutions over time also for manufacturing products.
The OECD-DSTISTI working paper ‘Compilation of Bilateral Trade Database by industry and End-Use category’
includes more details on the database. [http://www.oecd-ilibrary.org/science-and-technology/compilation-ofbilateral-trade-database-by-industry-and-end-use-category_5k9h6vx2z07f-en]
3.1 Australian manufactures on international markets
3.1.1 Sectoral and geographical structure of merchandise exports by Australia
The de-industrialisation in developed OECD economies has been accompanied by diminishing market
shares in terms of exports. Declining export shares are reported for major manufacturing economies
like the United States, Japan, France and, to a lesser extent, Germany (Figure 3.1). Australia is no
exception, as the share of Australian manufacturing in world exports has contracted over the past
71
fifteen years from 0.75% to 0.63%48; Australian manufacturing exports are concentrated in lower
technology intensive industries (Figure 3.2). The growing importance of emerging economies in
exports is strongly driven by the performance of China which has become world’s largest exporter of
manufactured products. But other emerging economies like India, Thailand, the Russian Federation,
Turkey and Brazil have also expanded their manufacturing activities over the last decade.
Australia’s small and declining share in world exports of manufactured goods stands in sharp contrast
with the country’s shares in world exports of basic commodities: mining and primary goods exports
from Australia represented respectively about 3% and 11% of world exports in 2010 (Figure 3.2). The
share of mining of metal ores, mining of coal and lignite, extraction of petroleum have increased by
factors between two and six following the recent mining boom. The share of primary goods has
fluctuated considerably during the period 1996-2010, but the 2010 share is at about the same level as
in 1996. The structure of Australia’s export (of goods) portfolio clearly illustrates this growing
specialisation towards mining products (see Figure A.3.1 in Annex 2). Mining is responsible for about
55% of total goods exports from Australia; manufacturing for 35%; and primary products (agriculture,
hunting, forestry, etc.) for about 5%49.
Figure 3.1: Export market shares in manufacturing, 1996 and 2010
(In percentage of world exports)
%
2010 1996
14
13
12
11
10
9
8
7
6
5
4
3
2
1
0
Source: OECD Bilateral Trade Database.
48
Australian manufacturing shows a gradually declining export market share over the period 1996-2010,
except from a significant drop in 1998, which is likely to be related to the Asian crisis.
49
Confidential and unallocated exports are the remaining 5%.
72
Figure 3.2: Australia’s export market shares in all goods and in manufacturing, 1996-2010
(In percentage of world exports)
%
Mining and quarrying
Agriculture
All goods
Total manufacturing
%
12
11
10
9
8
7
6
5
4
3
2
1
0
1996 1998 2000 2002 2004 2006 2008 2010
Medium-low tech.
Low technology
Total manufacturing
Medium-high tech.
High technology
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
1996 1998 2000 2002 2004 2006 2008 2010
Source: OECD Bilateral Trade Database.
An issue that has drawn a lot of attention in Australia is whether this explosive growth in mining
exports has come at the expense of Australia’s exports of manufactured goods. The weight of
Australian manufacturing exports has not changed much since 2005 (i.e. the start of the mining boom)
at least until 2010; its world share in manufacturing remained stable at 0.63%50 (Figure 3.3).
Furthermore, other major manufacturing OECD countries, with the exception of Korea, have lost
substantial market shares during the same period which is most likely explained by the rapid
emergence of new competitors (China in the first place). Canada, another country benefitting from the
current resources boom, has also lost a large market shares on international markets, although the
Canadian dollar appreciated less than the Australian dollar. Of course, these aggregate data not
control for all different forces at play (of which currency appreciation is only one).
50
While aggregate data do not seem to offer a lot of evidence for claims that the appreciation of the Australian
dollar has negatively impacted manufacturing exports, previous research has nevertheless highlighted the
important influence of the exchange rate on Australian manufactures exports (Norman, 2006; Dvornak et al.,
2005).
73
Figure 3.3: Export market shares of selected countries, manufacturing goods, 2003-2010
(In percentage of world exports)
12
10
Germany
United States
8
Japan
France
6
Korea
Canada
4
Australia
Norway
2
New Zealand
0
2003
2004
2005
2006
2007
2008
2009
2010
Source: OECD Bilateral Trade Database
The geographical composition of Australian exports shows that growing mining exports are mainly
(by more than 90%) destined to the Asian region; nevertheless an important restructuring has taken
place among destinations within Asia (Figure 3.4). Fast industrialising countries like China and India
are gaining importance at the expense of de-industrialising Japan: the share of mining exports shipped
to Japan has fallen from 45.4% to 23%, while the share to China grew from 5.5% to 40.2% in 2010.
Korea is another important market for Australian mining products, with a share of 12% that has
largely remained stable between 1995 and 2010.
The Asian region is also the largest export market for Australian manufactures, but less important
compared to mining products: about 54% of manufactured goods exported from Australia were
destined to Asia in 2010 as opposed to 90% in mining. While some geographical re-orientation is also
taking place here (larger shares again for China and India), the process seems less intense compared to
mining products. Table A.3.1 in Annex 2 presents the destination markets for the largest export
industries in Australia clearly shows the importance of the growing Asian market.
The emerging economies in Asia are large markets for Australian basic commodities, not only in
mining but also for primary products. More than half of Australian agriculture exports go to the Asian
region; with China accounting for almost 25% of the total figure. The United States, and to a lesser
extent also Europe, remain particularly important export markets for manufactured goods; the United
States for example in iron and steel, machinery and equipment, and food, beverages and tobacco.
74
Figure 3.4: Geographical structure of Australia’s mining and manufacturing exports, 1996 and 2010
(In percentage of total exports of Australia)
Manufacturing
Mining and quarrying
Source: OECD Bilateral Trade Database.
3.1.2 Australia’s manufactures export growth
Australia’s merchandise exports increased from 54 billion USD in 1995 to 221 billion USD in 2010,
largely driven by rising exports of mining products as indicated above. Mining exports grew from
USD 10 billion in 1995 to USD 115 billion in 2010 due to both larger volumes and higher prices.
Growth in manufacturing exports was more limited (from USD 30 billion in 1995 to USD 74 billion
in 2010). Given that growth in world exports was much higher, this resulted in a loss of market share
of Australia in manufacturing exports.
Export growth typically happens along the intensive margin (i.e. through the growth of existing trade
flows) and along the extensive margin (i.e. through new trade flows: new products and/or new
geographical destinations)51. For most OECD countries, the largest contribution to export growth
comes from the intensive margin (see Beltramello et al. 2012) while the extensive margin is
significantly more important for emerging economies. Australian manufacturing stands in between;
51
The definition of the extensive margin adopted in this report consists of new combinations of old products to
old destinations (i.e. an existing product exported to an existing market but not for the product in question),
old products to new destinations, new products to new destinations and new products to old destinations.
The intensive margin involves growing exports of an existing combination of old products to old
destinations.
75
50% of export growth between 1995 and 2010 was accounted for by changes in the extensive margin,
well above that of historically large manufacturing countries such as Japan, Germany, or the United
States (Figure 3.5). This clearly suggests that Australian manufacturers have been relatively
successful in launching new combinations of products and destinations in their product portfolio
during the period 1995-2010.
A large part of the growing Australian exports, both along the extensive and the intensive margin,
goes to the Asian market. The share of new product/partner linkages with Asian countries accounted
for almost half of the variation along the extensive margin between 1995 and 2010, which indicates
that Australian manufacturers were successful in developing new activities targeted at Asian markets;
relatively more so than other manufacturing countries. China and India were the most important
markets for these new export activities. Asia also ranks highly along the intensive margin, as 40% of
the larger exports of existing product/market combinations are directed to the region; China and India
are here slightly less important.
Figure 3.5: Australia’s manufactures export growth: intensive and extensive margin, 1995-2010
(In percentage of export growth)
Note: Other Asian countries are: Brunei, Cambodia, Myanmar, Hong Kong (China), Indonesia, Japan, Korea, Laos, Malaysia,
Philippines, Singapore, Thailand, Viet Nam. Intra-area trade is included.
Source: Calculations based on OECD Bilateral Trade Database.
76
Box 5: Further explaining Australia’s manufactures export growth - decomposing the intensive margin
An additional “shift and share” analysis sheds more light into the dynamics of Australia’s export
performance; does Australia’s export growth (along the intensive margin) derive from its specialisation in
products for which world demand is high (sectoral component); from an orientation towards (Asian) markets
where demand for imports is high relative to world demand (geographical component); or is it the result of pure
export competitiveness (or lack thereof) of Australian manufacturers 52. Results were calculated for the periods
1995-2005 and 2005-2010 in order to analyse the most recent developments (see Figure). This shows foremost
that Australian manufacturers, like their counterparts in all other developed OECD countries, have experienced a
significant loss of ‘pure’ export competitiveness, while emerging economies have become more competitive.
The sectoral effect or industry mix for Australia is positive during the two considered periods, indicating that
Australia is exporting more products for which world demand is growing. The greater importance of this sectoral
effect during the most recent period (2005-2010) reflects in particular growth in mining-related manufactures
exports. The geographical component or market mix contributed negatively to Australia’s export growth in the
period 1995-2005, indicating that Australia did not export (a lot) to growing markets then.
In the most recent period 2005-2010, Australia’s manufacturing export growth was however unaffected by
this geographical mix, suggesting that Australia has restructured its export portfolio geographically over the years
(e.g. within Asia and away from slower growing markets in Japan and Korea to fast growing markets in China,
India, Indonesia, Malaysia, etc.). The lack of a positive geographical effect for Australia clearly indicates at the
same time that Australian manufacturers could do better in tapping into growth markets. Other OECD
manufacturers (Germany, France, Italy, Japan and Korea) target growth markets much better as reflected in
positive geographical effects.
Contribution of structural and performance effects to export growth in manufacturing
2005-2010
1995-2005
52
The key intuition behind “shift-share” analysis is that a country’s export growth does not occur in a vacuum
77
Following this aggregate analysis, a growth-share matrix53 for Australia’s manufactured exports was
developed to provide more detailed insights on the position of Australian manufacturers in specific
markets and/or industries.54 The aim is to better understand the strengths and weaknesses of
Australian manufacturers across different markets and industries, in order to better identify possible
opportunities for producers in international markets.
Figure 3.6 shows, at the level of total manufacturing, the relative market share of Australia by
destinations (i.e. the share of the foreign market that is served by Australian exports) on the horizontal
axis, while the vertical axis presents market growth in individual economies (calculated as the growth
in world imports destined to that country during 2005-2010). The size of the balls is proportional to
the size of the market economies (proxied by the value of world imports into that market). The results
again clearly underline the importance of Asian economies in the export portfolio of Australian
manufacturers, i.e. most Asian economies are positioned in the upper right quadrant. Economies like
Indonesia, China, India, etc. account for above-average shares in Australia’s manufacturing exports
and have grown by more than the world average. Australian manufacturers should thus be in a
favourable position to capture future growth in these markets, some of which e.g. China, Singapore,
India and Korea are also already large in absolute terms.
In other growing markets like for example Brazil, Argentina, Cambodia, etc. Australia seems to be in
a much weaker position. Many European countries are featuring in the lower left quadrant indicating
that they are growing less rapidly than the world market while also being less important for Australian
manufacturing. New Zealand is at the lower right quadrant and therefore – not surprisingly - a very
important due to proximity but slowly growing for Australian manufacturing exports.
but in a global trade context. Hence, export growth is affected by several variables, notably the growth of
world trade itself, the country’s mix of trading partners as well as the bundle of products it exports. All these
factors that contribute to a country’s export growth can be broken down and analysed individually. The
residual term, capturing the variation that is not explained by those variables, can then be interpreted as a
pure indicator of the export competitiveness of a country. See for more info Beltramello et al. (2012).
53
Similar to the Growth-Share Matrix of the Boston Consulting Group, which was developed to guide
companies in their investment decisions on specific product-market combinations.
54
Because of the problem of unspecified and confidential partners in Australian exports (see Box 4), imports
(total and from Australia) in individual countries have been used to calculate the Australia’s market share
and market growth rates in individual countries. Imports from Australia reported by importing country A are
not necessarily the same as exports to country A reported by Australia, illustrating the larger problem of
mirror statistics in international trade. For example, Australia’s market share in world exports of
manufacturing is 0.63% versus 0.59% in world imports.
78
Figure 3.6: The export portfolio of Australian manufacturing - growth-share matrix 2005-2010
Market
size
Market
size
160
Brazil
Growth of imports from the World 2005-2010 (%)
Indonesia
140
Russia
120
Chile
Argentina
100
Cambodia
Slovak Republic
India
China
Saudi Arabia
80 Albania
Poland
Thailand
Czech Rep.
Moldova
60
Romania
Korea
Singapore
Turkey
Germany Neth.
South Africa
Hong Kong
Norway
Switz.
Malaysia
40Bul.
Isr
Slov.
Chinese Taipei
Serbia
Cyp. Mex.
Lith.
Sweden
Average growth of imports
Hung.
Fra
Austria
Japan
Canada
from the World 2005-10 (36%)
Port.
Italy
20
Latvia Est. Belg
United States
B&H
Philippines
Lux.
Malta
Den.
Greece
United Kingdom
Spain
0
Croatia Finland
Ireland
-20
0
0.5
N-Z (19.2)
Average Australian market share
for all countries (0.6%)
1
1.5
Market share of Australia (%)
2
2.5
Source: Calculations based on OECD Bilateral Trade Database.
In order to assess whether Australian manufacturers do capture growth opportunities in different
markets, Figure 3.7 relates import growth in individual economies during 2005-2010 on the vertical
axis – just like in Figure 3.6 – to the growth of exports from Australia to these economies. Economies
positioned to the left point to ‘missed’ opportunities as the growth of Australian exports there has not
followed growth in the market. The results indicate that this is the case for a large number of
economies, including the majority of Asian partners. Only in few markets, most of them (still)
relatively small for manufacturing exports in 2010, did Australian export growth follow or exceed
total market growth. While the results in Figure 3.6 overall indicate a rather good positioning of the
export portfolio of Australian manufacturing – with a strong position in fast growing markets - results
in Figure 3.7 show that Australian manufacturers do not fully capture the offered growth
opportunities.
The above analyses can also be made at the level of individual manufacturing industries in order to
identify opportunities across international markets in specific industries. Data for selected countries
are presented in Tables A.3.2 and A.3.3 in Annex 2.
79
Figure 3.7: The export portfolio of Australian manufacturing – market growth versus Australia’s exports,
2005-2010
184.1360836
Market size
160
Brazil
Growth of imports from the World 2005-2010 (%)
Indonesia
140
Russia
120
Chile
100
India
Cambodia
Saudi Arabia
80
Albania
Poland
60
40
20
0
Argentina (563)
Slovak Rep.
China
Czech Rep
Thailand
Sing.
Turkey
Korea
S. Africa
HK
Germany
Nld
Malaysia
Norway
Mex
Bulgaria
Isr
Taipei
Slovenia
Swe Cyp Hun
Lithuania
ItalyCanada
FranceSerbia
Portugal
Jpn
Belgium
Austria Estonia
Latvia
UK
Philippines
NZ
Denmark
USA
Fin
Croatia
SpainGreece
-20
-100 -80
Moldova
Romania
Switzerland
Luxembourg
Bosnia & Herzegovina
Ireland
-60
-40
-20 0
20 40 60 80 100 120 140 160 180 200 220
Growth of imports from Australia 2005-2010 (%)
Source: Calculations based on OECD Bilateral Trade Database.
3.1.3 International competitiveness of Australian manufacturers
The previous discussion was largely centred around Australia’s market shares across industries and
economies; but in which industries are Australian manufacturers successfully competing on
international markets? The comparative advantage of Australia is, in line with results reported above,
largely concentrated in primary products and mining goods (Figure 3.8). Indices of revealed
comparative advantage (RCA > 1)55 point to the clear supremacy of mining industries in terms of
competitiveness (mining of metal ores, mining of coal and lignite) over all other exporting industries
55
Empirical measures of comparative advantage go back to the seminal work of Balassa (1965): comparative
advantage is expected to determine the structure of exports, hence the construction of export performance
indices to ‘reveal’ the comparative advantage of countries:
RCAi,c = (Xi,c/Xi, world)/(Xtotal, c /Xtotal, world)
where Xi,c and Xi, world are respectively the exports of industry i by country c and the world, while Xtotal, c. and
Xtotal, world refer to total (manufacturing) exports by country c and the word. A value larger than 1 indicates
that country c possesses a comparative advantage and is specialized in industry i, while a value smaller than
1 point to a comparative disadvantage.
80
in Australia. The competitiveness of Australian mining was already established fifteen years ago, but
was situated in different types of activities like extraction of crude petroleum and gas at the time.
Australian manufacturing stands out as overall being less competitive with international
competitiveness concentrated in a very limited number of industries. The most internationally
competitive industries are the non-ferrous metal industries (a medium-low technology industry), i.e.
downstream industries active in processing mining output, such as the treatment of non-ferrous
metals, or refined petroleum, coke and lignite. In addition, two low technology industries – food,
beverages and tobacco, and wood products – also show RCA indices above 1. While Australia has
significantly strengthened its international competitiveness over the longer period 1996 and 2010,
more recent years have witnessed loss of competitiveness of Australian manufacturing in these
industries.
Australian manufacturing shows also competitiveness in the high technology industry of
pharmaceuticals which is most likely related to the important activities of foreign MNEs in Australia.
Recently, also another high technology industry, scientific instruments, has shown important gains in
international competitiveness.
Table A.3.4 in Annex 2 presents the main competitors in the industries where Australia is
internationally most competitive. The results clearly reflect the evolving landscape in world
manufacturing with competition for Australian exporters emerging from all regions: while some
manufacturing industries are (still) dominated by US and European producers, other industries reflect
the rapid emergence of China and other countries like India, Indonesia, etc. Japan and Korea are still
important producers in industries like iron and steel and machinery and equipment. Important
competitors for Australia in mining industries are the United States, Russia and China; in agriculture
mainly the United States and Europe.
Relating the international competitiveness of Australian manufacturing to evidence on the ‘tyranny of
distance’, shows that Australia is clearly specialised in industries for which distance-related costs are
important and where they might decrease international trade (Figure 3.9) As discussed above,
Australia’s remoteness is already weighing heavily upon its export activity: high distance-related
costs56 make shipments overseas considerably costlier and hence may potentially erode the
competitive advantages of producers.57 Elasticities of trade to distance give an indication of the extent
to which exports diminish with remoteness in each industry; they are negative as larger distances act
as higher barriers to trade.58
Figure 3.8: International competitiveness of Australia, goods exports, 1996 and 2010
(RCA index)
ALL GOODS
56
Distance-related costs capture expenses directly affected by, but also indirectly associated with geographical
distance. Remoteness increases expenses for shipments overseas, in addition to costs imposed by regulatory
or cultural distance (that is, dissimilarity in market regulations, national business law, government policies,
as well as languages, history, customs) that are highly correlated with geographical distance.
57
Trade in manufactures is naturally assumed to be more sensitive to distance than services trade, the latter not
necessarily involving movement of people or materials.
58
Elasticities of trade to distance for each manufacturing industry were calculated using world bilateral trade
data (Miroudot and Ragoussis, 2009).
81
82
MANUFACTURING GOODS
2010
2005
1996
11
10
9
8
7
6
5
4
3
2
1
0
Source: OECD Bilateral Trade Database.
Figure 3.9: International competitiveness, export market growth and economic distance
Note: the size of the circles indicates the export value
Source: OECD Bilateral Trade Database and Miroudot and Ragoussis (2009).
Both the large export industries of metal products (including non-ferrous metals) and food, beverages
and tobacco show high (negative) elasticities of trade to distance, and hence one would expect that
83
ceteris paribus Australian manufacturers would be less competitive in these industries.59 But
competitiveness is clearly more than only trade costs and distance; instead, the close linkages of these
industries to natural resources (agriculture as well as mining) have allowed Australian manufacturers
to greatly overcome this disadvantage60. Analysing this from a dynamic perspective, there seems to be
some tendency, albeit not very strong, that manufacturing exports in industries less affected by
distance exhibit on average higher growth rates over the last fifteen years. This observation might
signal that ‘the weightless economy’ (i.e. products and industries characterised by very large
value/weight ratios making remoteness a smaller constraint) is becoming more important in the export
portfolio of Australian manufacturers. Nevertheless, the close link between manufacturing exports and
natural resources is not expected to change in the medium run.
4.1.4 International competitiveness: price or quality?
Australian manufacturers are increasingly operating from a high-cost domestic environment (see
above) which forces them to compete on other aspects than costs alone. Higher ‘quality’ could
compensate to some extent for higher production costs, larger transportation costs, etc. and preserve
competitiveness in global markets (relative to lower priced products). ‘Quality’ should be interpreted
rather broadly as referring to all specific product characteristics (reliability, sustainability,
differentiation, brand image, etc.) that motivate customers to pay a higher price for the product.61 But
does Australian manufacturing compete mainly on price by exporting cheaper products, or on higher
quality for which it can also demand a higher price?
By not only taking into account the product/industry dimension but also the quality of the exported
products, more detailed insights can be obtained into the source of Australian competitiveness on
international markets. Unit values defined as the values of exports/imports divided by the quantities
shipped are typically used to assess the quality of exported/imported products (see e.g. Fontagné et al.,
2006). The distribution of free-on-board (fob, i.e. net of transportation costs) unit values across traded
goods allows a decomposition of bilateral trade flows of countries into three broad quality ranges:
high, medium, and low quality. The methodology relies on a calculated world unit value for each HS6 product defined as the median of the unit values of all bilateral transactions.62
59
This might be also the reason why Australia has challenged the ‘tyranny of distance’ as they punched above
their weight’ (Leamer, 2006) and did better than the predicted norm given their degree of remoteness
(Withers, 2007).
60
It is also interesting to observe that traditional industries which have been rather generously assisted by the
Australian government such as the textile or automotive industries stand out as more sensitive to distance.
Gaining international competitiveness as an objective for government support in these industries is thus
likely to be less effective and efficient.
61
Products vary in quality; hence competition in foreign markets within industries is not homogeneous. The
‘new trade theory’ basically relies on the demand for variety by final customers: product variety and
economies of scale give rise to large flows of intra-industry trade between similar countries. Countries
specialise in the same products/industries but in different varieties which are sold internationally at the same
price (Helpman and Krugman, 1985). In addition to this horizontal differentiation (i.e. product varieties of
the same quality but with different characteristics valued by consumers), trade models have also discussed
intra-industry trade in vertically differentiated goods, i.e. product varieties of different quality (Falvey, 1981;
Falvey and Kierzkowski, 1987; Flam and Helpman 1987).
62
See De Backer and Moussiegt (2011) for more details on the methodology. The data used are from the
BACI-database of the Centre d’Etudes Prospectives et d’Informations Internationals (CEPII).
84
Some caution is however warranted in interpreting unit values as indicators of quality, especially in
the case of Australia. Differences in unit values may not only reflect quality, but also differences in
production costs or exchange rate changes; it is clear that the appreciation of the Australian dollar in
recent years will most likely influence the analysis. Moreover, theoretical models predict different
relationships between distance of export markets and export unit values. Empirical studies tend to
show that exporters charge higher (fob) unit values to more distant countries and that average prices
are higher in more remote countries (Martin, 2010). This would mean that Australia’s remoteness
would directly result in higher average unit prices for manufacturing exports of Australia compared to
other countries, which could be due higher quality per se but also due to higher mark-ups, or the use
of more expensive packaging needed for more distant markets. Dependent on who (consumers or
producers) bears the transportation costs, this will directly impact the competitiveness of Australian
manufacturers in international markets.
Figure 3.10 indicates that on average Australian manufactured exports are concentrated in the midrange price segment, especially in the large export categories of medium-low and low technology
products. High-priced exports are slightly less important in Australia’s export portfolio compared to
other major manufacturing producers like Germany and the United States. This suggests then that
Australian manufacturers, compared to their German and US counterparts, are less successful in
‘quality’ competition, but it is clear that more detailed analysis is needed to confirm this conclusion.
Low-priced and low-quality exports are overall less important in developed OECD countries, while
emerging countries like China export relatively more in these categories63 (see also De Backer and
Moussiegt, 2011). Figure A.3.2 in Annex 2 presents the results for individual manufacturing
industries, ranked by the RCA-index.
63
Considerable policy attention has recently been devoted to the increasing competition of emerging countries,
in particular China, in higher technology intensive industries. The exports of developed and emerging
countries increasingly overlap, i.e. countries increasingly export the same products and are active in the same
industries. However, when examining the quality of the exported products, it becomes clear that products
exported by emerging and developed economies are not close substitutes. In general, emerging countries
overall export lower quality/price products, and the differences in quality increase, the higher the technology
intensity of industries. In lower technology industries, products exported by developed and emerging
countries are somewhat similar (De Backer and Moussiegt, 2011).
85
Figure 3.10: Manufacturing exports by quality/price and technology class, 2010
Low price
Australia
Medium price
Germany
High price
United States
China
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Source: Calculations based on CEPII BACI database.
3.2 Australian manufacturing in GVCs
The discussion on GVCs in global manufacturing (see Chapter 1) had already indicated that
integration into GVCs has overall been rather slow for Australian manufacturers. The remoteness of
Australia is a natural explanation for this stylised fact as the spatial organisation of production across
borders is strongly dependent on the proximity between the locations of subsequent production stages.
Transportation of intermediate goods which are typically characterised by lower values/weight
ratios,64 to and from Australia is both costly and time-consuming. This disadvantage of economic
distance (see also above) is not compensated by low labour costs and/or the presence of fast growing
domestic markets which emerging economies in Asia can offer.
Most industries in Australian manufacturing are only weakly involved in GVCs (Figure 3.11); a proxy
for GVC participation has been calculated as the sum of foreign value added in Australia’s exports
(in % of total exports of Australia)65 and Australia’s value added incorporated in other countries’
exports (in % of exports by these other countries). Participation in GVCs does not exceed 40% in
most industries and stems mainly from the value that is created in Australia which is then exported to
be included in exports by other countries. Australia largely produces intermediates within
international production networks and is hence merely positioned in the upstream stages of GVCs.
An index of ‘Distance to final demand’66 clearly shows large values for most industries in
64
Miroudot and Ragoussis (2009) compute also elasticities of vertical trade to distance and show that these are
higher than the respective elasticities of trade in individual industries.
65
Similar (but not identical) to the import content of exports discussed above.
66
This index measures the upstreamness of countries in GVCs, i.e. how upstream countries are positioned in
GVCs, e.g. by producing raw materials or intangibles involved at the beginning of the production process
(research, design, etc.).
86
manufacturing and - not surprisingly – mining (Figure 3.12). Mining in particular is the most obvious
upstream activity of Australia in GVCs as the country’s exports in that industry are extensively used
as inputs for steel production in China, Japan and Korea. The distance to final demand is smaller in
agriculture and especially ‘Food, beverages and tobacco’ as most producers in this industry sell
directly to final consumers.
Figure 3.11: Participation in GVCs, agriculture, mining and manufacturing in Australia, 1995 and 2009
(In percent)
2009
1995
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Source: Calculations based on World Input-Output Database (WIOD); see Miroudot and De Backer (2012) for information on
the calculation of the index.
87
Figure 3.12: Distance to final demand, agriculture, mining and manufacturing in Australia, 1995 and 2009
(Index)
2009
1995
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
Note: The index takes the value of 1 if all production is sold to final consumers
Source: Calculations based on World Input-Output Database (WIOD); see Miroudot and De Backer (2012) for information on
the calculation of the index.
Following the increasing importance of GVCs, exports of some countries are to a large extent made
up of imports of intermediate inputs from abroad; export competitiveness can accordingly be very
dependent on activities in other countries (Beltramello et al., 2012). The overall smaller participation
into GVCs and the positioning in the upstream stages of GVCs suggest that the competitiveness of
Australian manufacturing is largely based on domestic activities. This is indeed the case for the
industry ‘Food, beverages and tobacco’, as export competitiveness does not seem to be built on large
imports of intermediates. The same applies, maybe surprisingly given the large presence of foreign
MNEs, for the pharmaceutical industry (Figure 3.13).
The other important export industry for Australia, ‘Non-ferrous metals’, shows a somewhat different
profile as its international competitiveness seems to some extent associated with sizeable imports of
intermediates. The fact that Australia’s competitiveness in that industry completely derives from the
production of intermediates (illustrated by the dark shaded ball for this industry) indicates that the
county’s producers are targeting upstream or midstream stages of GVCs in this industry. A similar
observation emerges for the wood industry.
The relative proximity of large GVCs in Asia creates important opportunities for Australian
manufacturing because of smaller economic distances. But it should be noted that Asian countries
display strong complementarities across industries which is both the cause for, and a consequence of
their deep economic integration within GVCs (WTO and IDE-JETRO, 2011). Successful integration
within these elaborated GVCs requires then a careful assessment of the structural diversity and
complementarity between manufacturing in Australia and Asia, which could leverage the
88
development of new competitive activities in Australia. This calls for follow-up work on a more
detailed level of analysis, e.g. the product level in order to identify how Australian exports
(intermediate, final and capital goods) can be successfully incorporated in the GVCs in Asia. A direct
matching of import and export products of Australia with import/export flows of the different Asian
countries is a first step in this.
Figure 3.13: Export competitiveness and import intensity, Australia, 2010
(RCA indices)
Total exports value
Exports of intermediates
3.5
Food, beverages,
tobacco
Non-ferrous metals
(10.1)
3
2.5
2
Wood
RCA total exports
1.5
Pharmaceuticals
0
0.5
Instruments
1
Coke, refined petroleum 1.5
1
2
Paper, printing, publ.
Other machinery, n.e.c.
Chemicals Iron & steel
Motor vehicles
0.5
Aircraft, spacecraft
Fabricated
Other transport metal products
Other
manuf.
Radio, TV, comm.
Rubber & plastics
Computers Electrical Non-metallic
Textiles
equipment
machinery mineral prod.
0
RCA imported intermediates
Note: The vertical axis represents the index of revealed comparative advantage (RCA) of total exports; the horizontal axis
represents the index of revealed comparative advantage (RCA) of imports of intermediates and is calculated as:
RCA(M)int-i,c = (Mint-i,c/Mint-i, world)/(Mint-total, c /Mint-total, world)
where Mint-i,c and Mint-I, world are respectively the imported intermediates of industry i by country c and the world, while Mint-total, c.
and Mint-total, world refer to total intermediates imported by country c and the world.
Source: Calculations based on OECD Bilateral Trade Database.
3.3 International competition on Australia’s domestic market
Australian manufacturers do not only compete on international markets but also increasingly on their
home market. Manufactured goods traditionally represent the largest category of imports for Australia
resulting in a sizeable manufacturing trade deficit for Australia. Overall, Australia illustrates very well
the traditional theory of comparative advantage and one-way trade as it mainly exports primary
89
products (agriculture and mining) while it imports manufactured products; two-way trade is much
smaller and is concentrated in manufacturing and services (Figure 3.14).
Figure 3.14: Sectoral distribution of Australia’s export and imports, 2010
(In percent)
Source: OECD Bilateral Trade Database and IMF Balance of Payments.
The Australian domestic market for manufactured products has been rather closed in the past because
of high import barriers, in addition to high transport costs which render imported goods and services
less competitive. While remoteness still acts as a natural barrier for foreign sales in the Australian
market, regulatory reforms in the 1980s have opened the domestic market to international
competition. Furthermore, the appreciation of the Australian dollar has made imports cheaper for
Australian customers. The result has been a growing import penetration (i.e. imports as a share of
domestic sales) in manufacturing industries (Figure 3.15). Unsurprisingly, import penetration is
higher in industries where Australian producers are less competitive in international markets such as
machinery, transport equipment and the textile industry.
A closer look at import shares by partner country reveals that overall China and other emerging Asian
economies dominate imports of manufactures into Australia, with a very strong presence in mediumlow and low technology products (see Table A.3.5 in Annex 2). European and American
manufacturers score overall better in high-technology products. Although the high market share of
China in these products (electronics) is maybe striking; this result is most likely related to the
assembly activities in China within the related GVCs. Parts and components are imported by China
from other countries, and assembled in final products which are then exported to world markets.
90
Figure 3.15: Import penetration, manufacturing industries, Australia, 2005-2010
(Average 2005-2010)
% 80
70
60
50
40
30
20
10
0
Note: Import penetration defined as imports in percentage of domestic apparent consumption
Source: Australian Bureau of Statistics.
CONCLUSIONS AND POLICY MESSAGES
The economic emergence of Asia (especially China and India) is strongly benefitting the Australian
economy; the accompanying process of structural change has however resulted in a two-speed
economy in which traded sectors like manufacturing are under increasing pressure.

The growing demand for commodities fuelled by the rapid urbanisation and industrialisation
of Asian countries (especially China and India) has pushed up world prices of mining
products; this ‘external shock’ has strongly increased Australia’s terms of trade and has,
among other factors, contributed to increased wealth, strong economic growth, rising
purchasing power, as well as low levels of unemployment for Australia;

The strong appreciation of the Australian dollar is central to the structural adjustment of the
Australian economy to the external shock of increased prices for natural resources; it prevents
the economy from overheating as was the case during previous resources booms;

The recent economic performance has been strongly uneven between sectors with especially
the mining industry and related sectors driving aggregate growth; the strong appreciation of
the Australian dollar has made Australian exports more expensive while imports in Australian
markets have become cheaper, hence negatively impacting the competitiveness of Australia’s
manufacturing sector.
91

The contraction of Australian manufacturing in recent years is not solely related to the
current mining boom; structural change within Australia has resulted in a declining
importance of manufacturing during the past decades.

A long-term trend of de-industrialisation characterises all developed OECD economies
resulting in falling shares of manufacturing in total employment and value added; this does
not mean however that manufacturing is a sector in decline: up to 2009, the output of OECD
manufacturing (including Australian manufacturing) continued to grow and the share of
manufacturing in value added in constant prices has remained relatively stable (reflecting the
limited price increases of manufactured goods relative to services).

The drop in manufacturing activity (in absolute terms) in most recent years can be primarily
explained by the Global Financial Crisis (GCF) of 2007/2008 which had a major impact on
global manufacturing.

The resources boom has accelerated the process of structural change in the Australian
economy; its impact works largely in the same direction as the long-term trend of deindustrialisation and the GCF’s impact on Australian manufacturing; data up to 2010 do not
support the conclusion that the mining boom has dramatically impacted on Australian
manufacturing.

The projection that Australia’s terms of trade will remain at historically high levels for an
extended period will most likely affect the competitiveness of Australian manufacturing in the
future as the impact of high exchange rates may become permanent and may grow the longer
the appreciation lasts.
Australian manufacturing suffers since years from a number of structural weaknesses which have
limited its role in the Australian economy as well at the global level.

Manufacturing plays a small but still important role in Australia compared to other large and
medium-sized OECD countries, often lagging behind mining and services; the frequently
lauded contributions of manufacturing to national economies (in terms of productivity,
innovation, international trade and economy-wide linkages) are also somewhat smaller in
Australia.

Because of the large importance of primary industries, Australia still has the image of being
primarily a resource-based economy; Australian manufacturing is relatively small in the
global context.

Australian manufacturing suffers heavily from the ‘tyranny of distance’ as relatively high
transport and trade costs reduce trade and limit the opportunities for Australia to specialise in
the activities where it possesses a comparative advantage; remoteness has directly resulted in
important scale disadvantages for Australia in all manufacturing industries; these scale
disadvantages are especially pronounced in chemicals, rubber and plastics and transport
equipment;

In addition, remoteness hampers the internationalisation of Australian manufacturers and their
integration in GVCs; nevertheless, Australian manufacturing has become more internationally
open (especially through imports, inward and outward investment).

Distance from world markets also limits the country’s exposure to competition and makes
international producers less competitive in Australian markets. High import barriers in the
past only added to that natural protection and allowed inefficient firms to exist. Major
economic reforms have led to the gradual liberalisation of the Australian economy and to
rising import penetration in Australian manufacturing.
Recent developments have triggered a (further) loss of competitiveness of Australian
manufacturing; this stresses the urgent need for Australian manufacturers to compete differently,
i.e. strongly based on innovation, as competition in global manufacturing will only grow
92

While Australia’s remoteness has resulted in a long-term productivity disadvantage, the
slump in productivity growth since 2001 has widened the gap with other manufacturing
countries further; Australian manufacturing has reported zero to negative growth in multifactor productivity in most recent years reflecting the strong growth in inputs relative to
manufacturing output.

Some emerging economies, China in the first place, have become important players in global
manufacturing and have attracted important manufacturing activities; the growing domestic
demand in these countries as well as lower (labour) costs are important drivers of the ongoing
shift in global manufacturing.

Australian manufacturing increasingly suffers from a cost disadvantage not only with respect
to emerging countries, but more and more also with other OECD countries; part of this is
explained by the strong Australian dollar.

Australian manufacturers will need to (further) develop other competitive advantages to
compensate for the high-cost environment they operate in; just like in the rest of the OECD,
the long-term productivity and competitiveness of Australian manufacturing is increasingly
based on innovation, targeted at new products/processes/services for new niche markets and
going beyond cost efficiency;

Firm-level capabilities in innovation heavily depend on human capital (skills development)
and collaboration with external partners (research organisations, universities, suppliers,
customers, etc.).
Australian manufacturing shows a mixed account on innovation and knowledge performance broadly
defined; human capital in particular is identified as a possible bottleneck for the future.

Investments in intangible assets (brand equity, design, organizational capital, business
models, etc.) allow manufacturing firms to compete on other aspects than costs alone;
Australia’s intangible investment is around the average within the OECD.

Australian manufacturing is characterised by a relatively low business R&D intensity, a
strong focus on process instead of product innovation, low emphasis to ‘new-to-the market’
innovation (i.e. more adaptation to the domestic market) and a significantly lower
international collaboration in innovation; the strong resource-based orientation of Australian
manufacturing and, again, Australia’s remoteness contribute to this performance;

On the other hand, Australian manufacturers are very active in marketing, organizational and
non-technological innovation; and invest more in R&D in lower-technology industries;

While the level of skills in the Australian workforce is high by standard measures and
immigrants are relatively highly educated, Australian manufacturing does not seem successful
in attracting this human capital; the share of researchers and human resources in science and
technology is very low compared to other manufacturing OECD countries;

Management is crucial for the development of innovation capabilities within firms;
management performance in Australian manufacturing is rated as moderately above average
compared with other OECD countries when benchmarked on people, operations and
performance.
The specialisation of Australian manufacturing is closely linked to Australia’s abundance of natural
resources; more broadly, Australia’s comparative advantage is concentrated in the
production/exports of primary goods (agriculture and mining) while it imports especially
manufactured products.

More than 50% of Australia’s merchandise exports in 2010 concerned primary goods
(agriculture and mining) due to the increased demand for Australian commodities (e.g. metal
ore, coal, etc.); manufacturing represented 30% of Australian exports, but 70% of imports.
93

The international competitiveness of Australian manufacturing is concentrated in a small
number of industries; Australian manufacturers are strongly competitive in industries directly
dependent on Australia’s natural resources (‘Non-ferrous metals’, ‘Food, beverages and
tobacco’ and ‘Wood’); in addition, the competitiveness of ‘Pharmaceuticals’ and ‘Scientific
instruments’ appears to be growing.

While the total export market share has remained stable during 2005-2010 (i.e. since the start
of the mining boom), Australian manufacturing has lost competitiveness in its two most
important export industries (‘Non-ferrous metals’, ‘Food, beverages and tobacco’).

Australia’s natural resources are a major source of competitiveness and have helped
Australian manufacturers to challenge the ‘tyranny of distance’: Australian manufacturing is
internationally competitive particularly in resource-intensive industries where Australia’s
remoteness is a major disadvantage; more recently ‘the weightless economy’ (i.e. products
and industries characterised by very large value to weight ratios, that make remoteness a more
limited constraint) have become more important in the export portfolio of Australian
manufacturing.

Australian manufacturers seem, compared to their German and US counterparts, less
successful in ‘quality’ competition (i.e. in specific product characteristics like e.g. reliability,
sustainability, differentiation, brand image, etc. that motivate customers to pay a higher
price), which could potentially compensate for Australia’s high-cost environment.
Australia finds itself well-positioned to benefit from the growing demand in Asian markets; Australian
manufacturers have been rather successful in developing new export activities and expanding current
exports to Asia but nevertheless could do (much) better in tapping into these growth markets.

The emergence of large consumer markets in Asia makes Australia a less remote location for
production and has contributed to rapidly growing demand for manufactured products; the
shift of the economic centre eastward will significantly decrease Australia’s traditional
disadvantage of remoteness and can be expected to positively affect the demand for
manufactured goods from Australia.

Asia is the largest export market for Australian manufactures where a clear re-orientation of
exports from slow growing countries (e.g. Japan) to fast growing countries (especially India
and China) within the region is taking place; Asia accounts for almost half of the export
growth along the intensive (i.e. growth of existing trade flows) as well as the extensive
margin (i.e. new trade flows: new products and/or new geographical destinations).

Although fast growing Asian markets occupy a central position in Australia’s export
portfolio, Australian manufacturers appear to miss out on important opportunities; the growth
in Australian exports has not kept up with the market growth in most Asian countries.

Australia’s participation in global value chains (GVCs) is rather limited and concentrated in
the upstream stages of production; Australian manufacturing can probably do more to better
benefit from the relative proximity of large GVCs in Asia based on a careful assessment of
the structural diversity and complementarity between manufacturing in Australia and Asia
(given that Asian countries display strong complementarities across industries among
themselves).
The changes in global manufacturing create important challenges but also increased opportunities
for Australian manufacturing; the business sector has a paramount role to play in addressing the
weaknesses, reinforcing existing and developing further strengths of Australian manufacturing but
will benefit from supportive public policy.

As the demand for Australian commodities is expected to remain high in the near future,
Australian manufacturing will need to adapt to the shifting comparative advantage of
94
Australia; in addition, competitive conditions within global manufacturing change rapidly and
profoundly, further stressing the importance of structural adjustment and flexibility.

Innovation and knowledge are crucial to compensate for the strength of the Australian dollar;
more broadly, successful innovation will also be key to reversing the current productivity
slump and to build long-term competitiveness for Australian manufacturing; companies will
need to enhance their capabilities to remain/become internationally competitive while
government policies should address the shortcomings of Australia’s innovation performance.

Australian manufacturing would benefit from the broadening of the number of international
competitive industries; some higher technology industries in ICT and medical technologies
are growing in strength but are still limited in size; adding more advanced activities on top of
existing resource-based activities might be another way to develop new competitive activities
while nurturing the resource-based strengths of Australian manufacturing; other resourceintensive countries seem to have been more successful in developing high technology
activities that complement their advantage in resource-intensive industries.

The emergence of Asia creates huge opportunities for Australian manufacturing if captured
effectively; Australian manufacturers will have to devote greater efforts (to tap into
international ideas and technologies, access specific skills and competencies abroad) targeted
at this region; the recent initiatives by the Australian government to conclude agreements with
major trading partners in the region such as China and India supports this development;
nevertheless, the risk of becoming overly dependent on one country or region should be born
in mind.
Manufacturing is still important for OECD economies; a broader discussion/consultation on the
future of manufacturing in Australia should help to identify the strategic directions that have the
greatest chance to bring success for Australia in global manufacturing.

Manufacturing still has an important role to play in OECD economies because of its
importance for innovation, productivity and exports and its economy-wide linkages with other
sectors; a balanced economy with a strong manufacturing sector has proven to be instrumental
in creating long term prosperity; re-balancing will also be important for Australia in
preparation for a time beyond the current the mining boom.

Certain manufacturing activities in Australia can be expected to decline (including through
offshoring) in the process of structural adjustment, hence the need for government policies to
address the inevitable adjustment costs;

Notwithstanding the strong performance of the Australian economy, there is an urgent need
for planning for the future; a broad discussion and consultation among stakeholders (business
sector, research sector, government, etc.) should identify the strategic directions for
manufacturing in Australia; innovation will have to play a key role in this, in particular to
develop new growth opportunities in green manufacturing, energy, etc;

The discussion of the long-term future of Australian manufacturing should explicitly take into
account the strong linkages between manufacturing and services; a narrow definition of
manufacturing will ignore the important interplay between these sectors;
The various stakeholders have different roles to play in the future of manufacturing with the
business sector being the first responsible for firm performance and government responsible
for improving the necessary business conditions (e.g. in reducing regulatory barriers,
supporting the development of capabilities, etc.).

95
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100
ANNEX 1 ADDITIONAL FIGURES
Figure A.2.1:
Employment by industry, 2010
(in percentage of total employment)
Source: OECD Structural Analysis Database (STAN); Australian Bureau of Statistics (ABS) for data on Australia
101
Figure A.2.2:
Value added by industry, 2010
(in percentage of total value added)
Source: OECD Structural Analysis Database (STAN); Australian Bureau of Statistics (ABS) for data on Australia.
Figure A.2.3: Structural change (value added in constant prices) Australia, Norway and
Canada
Structural change Index in terms of employment (Finger-Kreinin dissimilarity index)
Australia
Norway
Canada
12
10
8
6
4
2
0
1975
1980
1985
1990
1995
Source: OECD Economics Department.
102
2000
2005
2010
Figure A.2.4:
Growth in labour productivity, manufacturing, 2010
(percentage annual growth)
AUSTRALIA
%
20
15
1990-2000
2000-2007
10
5
0
-5
-10
-15
-20
GERMANY
%
20
15
1991-2000
2000-2007
10
5
0
-5
-10
-15
-20
103
UNITED STATES
%
20
15
1990-2000
2000-2007
10
5
0
-5
-10
-15
-20
Source: EUKLEMS.
Figure A.2.5:
R&D intensity in manufacturing, 2009
(Business R&D in percentage of manufacturing value added)
%
14
12
10
8
6
4
2
0
Source: OECD Analytical Business Enterprise Research and Development Database (ANBERD).
104
Figure A.2.6: Patent applications in manufacturing
(PCT filings, average 2007-2009)
Source: OECD Patent Statistics Database (PATSTAT).
105
Figure A.3.1:
Sectoral composition of Australia’s export of goods, 1995 and 2010
(in percentage of total goods exports)
Source: OECD Bilateral Trade Database.
106
Figure A.3.2: Manufacturing
exports by quality/price and technology class, Australia, 2010
Source: Calculations based on CEPII BACI database
107
ANNEX 2 ADDITIONAL TABLES
Table A.3.1: Australian exports by destination, for selected industries, 2010 and 1995
Industry
Year
Value of
exports
(USD
million)
Share in
total
exports
(%)
By country of destination (%)
New
Zealand
Japan
Korea
China
Other SE
Asia
India
United
States
United
Kingdom Other EU
Rest of
the
World
Mining of metal ores
(ISIC 13)
2010
1995
57 116
2 987
27.0
5.5
0.0
0.0
17.0
43.1
10.3
15.2
64.1
16.7
3.3
5.3
2.6
0.7
0.0
0.7
0.0
3.3
1.9
13.6
0.8
1.6
Mining of coal and lignite; extraction of peat
(ISIC 10)
2010
1995
39 530
5 074
18.7
9.4
0.0
0.0
35.2
46.2
12.7
13.4
12.3
0.8
9.2
9.0
16.0
8.5
0.1
0.1
1.5
3.0
7.7
11.6
5.3
7.4
Non-Ferrous Metals
(ISIC 272)
2010
1995
27 623
7 545
13.0
14.0
0.8
1.9
7.4
22.7
7.2
20.5
7.4
0.8
27.2
43.3
22.5
0.8
1.9
0.6
22.4
2.2
1.7
3.0
1.6
4.1
Extraction of crude petroleum and natural gas
(ISIC 11)
2010
1995
18 323
1 791
8.6
3.3
0.8
3.9
8.9
49.7
22.8
3.4
15.9
0.8
36.1
31.3
8.9
0.0
2.4
8.8
0.0
0.0
0.0
1.5
4.1
0.5
Food products, Beverages and Tobacco
(ISIC 15 to 16)
2010
1995
14 912
6 339
7.0
11.7
7.2
5.0
19.2
33.7
6.4
3.4
9.3
2.2
20.2
22.8
0.5
0.1
13.3
9.9
4.4
3.9
3.1
5.2
16.4
13.9
Agriculture, Hunting, Forestry and Fishing
(ISIC 01 to 05)
2010
1995
11 546
3 820
5.5
7.1
1.7
1.3
8.4
13.8
3.5
4.6
22.3
11.1
29.4
31.8
3.6
2.0
0.8
3.8
0.3
1.9
4.5
19.6
25.6
10.1
Machinery and Equipment, not elsewhere
classified (ISIC 29)
2010
1995
4 108
1 811
1.9
3.4
12.3
17.9
1.9
3.3
1.2
2.2
8.6
4.4
20.7
30.0
1.8
2.6
11.8
10.5
2.3
5.4
5.9
6.2
33.5
17.5
Pharmaceuticals
(ISIC 2423)
2010
1995
3 679
596
1.7
1.1
10.2
29.6
3.5
3.0
10.6
0.5
8.6
2.5
29.4
31.9
0.7
0.2
8.9
4.1
3.0
12.4
9.9
7.7
15.3
8.3
Coke, Refined Petroleum Products and Nuclear
Fuel (ISIC 23)
2010
1995
3 391
1 176
1.6
2.2
9.8
17.0
37.9
15.4
4.3
0.7
7.6
0.0
30.6
28.6
1.8
0.0
0.6
0.5
0.0
0.1
2.8
1.1
4.6
36.7
Medical, Precision and Optical Instruments
(ISIC 33)
2010
1995
2 613
579
1.2
1.1
13.7
17.0
5.2
4.0
2.2
2.5
4.4
3.7
9.8
17.1
1.2
1.3
31.2
18.2
9.2
6.7
12.8
14.1
10.4
15.4
Iron and Steel
(ISIC 271)
2010
1995
1 294
1 310
0.6
2.4
10.6
7.1
1.3
7.4
10.0
9.9
0.9
2.2
24.0
51.3
0.3
2.3
22.8
10.3
1.1
0.6
7.4
0.6
21.6
8.4
Wood and Products of Wood and Cork
(ISIC 20)
2010
1995
1 120
530
0.5
1.0
2.5
2.0
66.0
83.1
0.8
2.2
12.3
0.3
13.2
7.5
0.2
0.2
1.8
1.7
0.2
0.2
1.1
2.0
1.8
0.9
108
Source: OECD Bilateral Trade database 2012.
109
Table A.3.2: Growth-Share matrix, Australian manufacturing
Performance of Australia on importing markets, 2010
Markets
Industry
Total Manufacturing
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
Chemical, Rubber, Plastics and Fuel Products
Coke, Refined Petroleum Products and Nuclear Fuel
Chemicals and Chemical Products
Chemicals excluding Pharmaceuticals
Pharmaceuticals
Rubber and Plastics Products
Other Non-Metallic Mineral Products
Basic Metals and Fabricated Metal Products
Basic Metals
Iron and Steel
Non-Ferrous Metals
Fabricated Metal Products
Machinery and Equipment
Machinery and Equipment, n.e.c.
Electrical and Optical Equipment
Office, Accounting and Computing Machinery
Electrical Machinery and Apparatus, n.e.c.
Radio, Television and Communication Equipment
Medical, Precision and Optical Instruments
Transport Equipment
Motor Vehicles, Trailers and Semi-Trailers
Other Transport Equipment
Building and Repairing of Ships and Boats
Aircraft and Spacecraft
Railroad and Transport Equipment, n.e.c
Manufacturing not elsewhere classified; Recycling
High Technology Industries
Medium-High Technology Industries
Medium-Low Technology Industries
Low-Technology Industries
All
United States
EU27
SE Asia
1
Japan
Korea
China
India
New Zealand
Germany
Canada
Share
Share
Share
Share
Share
Share
Share
Share
Share
Share
Share
Market
Market
Market
Market
Market
Market
Market
Market
Market
Market
of Ausof Ausof Ausof Ausof Ausof Ausof Ausof Ausof Ausof Ausof Aus2
size
size
size
size
size
size
size
size
size
size
3
3
3
3
3
3
3
3
3
3
3
tralia
tralia
tralia
tralia
tralia
tralia
tralia
tralia
tralia
tralia
tralia
0.3
3.1
0.1
8.3
19.2
0.2
2.0
1.5
0.8
9.3
1.8
2.7
1.8
4.1
1.1
12.5
0.1
39.5
0.5
14.4
0.6
1.8
3.1
0.2
8.3
42.8
0.4
2.4
1.0
4.5
4.4
11.9
2.0
6.9
7.1
6.1
8.4
0.4
50.3
3.3
10.7
2.4
0.1
2.3
0.0
8.9
7.1
0.3
1.1
0.4
0.4
3.9
0.4
1.8
0.1
6.6
0.3
9.4
0.1
44.3
0.0
20.4
0.1
0.0
3.3
0.0
7.4
18.6
0.2
0.4
0.3
3.5
6.1
0.6
1.8
10.3
11.3
4.1
4.2
0.1
46.7
0.2
15.0
1.7
0.1
4.3
0.1
10.2
39.4
0.5
0.4
1.3
0.5
7.2
0.5
1.9
0.2
2.8
0.9
7.8
0.1
49.9
0.4
10.7
0.4
0.3
2.6
0.1
8.1
18.7
0.2
0.8
1.6
0.4
8.0
1.4
2.9
1.4
4.1
1.0
11.4
0.1
43.6
0.3
12.0
0.4
0.7
1.9
0.0
5.3
12.8
0.3
1.1
1.3
1.0
5.1
2.9
3.9
3.3
5.1
1.1
19.7
0.1
36.3
0.0
13.4
0.7
0.3
2.5
0.1
8.7
21.9
0.2
0.7
1.9
0.4
9.4
0.7
2.6
0.6
3.9
1.0
9.0
0.1
45.7
0.5
11.1
0.4
0.1
2.4
0.1
7.6
21.4
0.2
0.8
2.5
0.3
12.8
0.6
3.3
0.5
3.8
0.7
11.8
0.1
40.3
0.2
9.2
0.3
0.5
2.8
0.2
10.9
23.1
0.2
0.4
0.5
1.3
1.9
1.5
1.0
0.7
4.0
3.7
2.7
0.2
57.6
0.7
15.5
0.5
0.0
3.9
0.0
9.0
18.4
0.3
0.2
0.7
0.3
7.1
0.2
2.3
0.2
3.2
0.5
7.7
0.1
45.7
0.1
14.0
0.2
0.0
3.8
0.0
8.8
22.3
0.3
0.2
1.0
0.1
5.7
0.1
4.5
0.5
3.9
0.2
9.4
0.0
44.4
0.4
13.0
0.2
0.7
3.4
0.1
9.3
39.3
0.2
6.1
4.1
4.7
8.7
5.0
4.2
5.6
3.8
5.0
12.2
0.3
39.4
1.1
10.9
2.2
0.9
3.3
0.2
8.6
50.9
0.1
6.5
5.2
5.5
10.1
6.0
4.8
7.1
4.0
5.9
13.6
0.5
36.7
1.5
10.2
2.8
0.3
3.0
0.0
8.9
27.2
0.1
0.3
2.2
0.1
7.2
2.1
6.5
0.9
2.5
1.2
12.2
0.1
42.7
1.2
8.8
0.6
1.3
3.4
0.3
8.4
70.9
0.1
7.9
7.6
8.0
12.4
12.1
3.4
9.5
5.2
9.0
14.6
0.9
31.9
1.7
11.2
4.7
0.1
4.0
0.0
9.6
23.2
0.3
0.3
1.0
0.2
4.9
0.1
2.7
0.2
3.3
1.1
8.7
0.0
45.9
0.1
13.4
0.2
0.2
2.6
0.1
6.7
9.7
0.2
0.3
1.1
0.1
14.6
0.2
3.1
0.1
4.1
0.2
17.8
0.1
30.4
0.2
14.7
0.2
0.3
3.9
0.1
7.4
9.3
0.3
0.4
1.6
0.4
11.0
0.2
3.7
0.1
3.2
0.7
11.5
0.1
35.2
0.3
13.8
0.3
0.2
2.2
0.1
6.4
9.9
0.2
0.2
0.9
0.1
15.9
0.2
2.9
0.1
4.5
0.2
20.1
0.1
28.6
0.2
15.0
0.2
0.0
2.3
0.0
6.9
7.4
0.2
0.1
0.7
0.0
10.7
0.0
1.8
0.0
4.4
0.2
16.8
0.0
32.0
0.0
22.0
0.1
0.1
3.0
0.1
8.5
14.7
0.2
0.2
1.0
0.1
11.3
0.3
3.2
0.0
3.8
0.3
13.9
0.1
35.2
0.1
14.7
0.2
0.1
1.6
0.1
5.1
3.7
0.1
0.2
1.0
0.0
18.6
0.0
3.2
0.0
4.5
0.1
27.0
0.1
23.2
0.1
12.6
0.1
0.7
2.6
0.4
6.8
16.3
0.2
0.6
0.9
0.1
19.5
0.3
3.3
0.5
5.3
0.4
11.7
0.5
32.0
1.1
14.2
0.5
0.0
5.5
0.1
11.1
12.8
0.3
0.2
0.7
0.1
5.5
1.3
1.3
0.2
1.9
0.5
5.3
0.1
47.8
0.2
17.4
0.2
0.0
6.4
0.0
8.9
11.7
0.3
0.4
0.4
0.1
5.6
1.9
1.0
0.3
1.5
0.3
3.9
0.0
45.5
0.0
19.7
0.2
0.1
3.2
0.1
17.5
15.6
0.3
0.1
1.8
0.2
5.2
0.6
2.1
0.0
2.8
0.6
9.3
0.2
54.0
0.8
10.9
0.3
0.4
1.6
0.0
23.5
56.1
0.4
0.1
4.1
0.2
1.5
1.0
5.4
0.2
0.7
1.2
9.4
0.3
61.4
4.8
2.6
0.7
0.0
3.7
0.1
14.9
1.8
0.3
0.1
1.4
0.0
6.5
0.1
1.6
0.0
3.2
0.5
9.9
0.2
51.1
0.5
13.7
0.3
0.1
2.8
0.0
20.7
9.4
0.3
0.1
0.9
1.2
3.8
0.8
0.8
0.1
3.2
0.3
7.0
0.0
57.3
1.1
8.8
0.2
0.3
3.2
0.3
10.0
13.1
0.2
0.1
4.0
0.3
2.0
0.3
1.0
0.4
3.8
0.6
11.7
0.1
37.4
0.9
25.4
0.4
0.3
2.2
0.1
7.3
10.3
0.2
0.2
0.9
0.1
13.8
0.2
2.5
0.2
4.4
0.2
17.7
0.2
33.7
0.4
15.0
0.2
0.1
4.0
0.1
8.3
13.8
0.3
0.6
1.4
0.3
10.0
0.6
2.7
0.3
3.0
0.6
9.8
0.1
39.8
0.2
14.1
0.2
0.5
3.0
0.1
8.5
25.7
0.2
4.8
2.6
3.1
7.1
3.5
3.9
3.8
4.0
2.8
13.4
0.2
40.4
0.5
12.0
1.3
0.7
3.0
0.1
9.0
28.4
0.3
0.7
1.4
2.0
4.2
4.8
1.7
3.5
6.0
2.2
9.1
0.2
45.7
1.0
16.8
1.0
1. South-East Asia: Chinese Taipei, Hong Kong (China), Indonesia, Malaysia, Philippines, Singapore, Thailand.
2. Market size : share of country in World imports of gpods for specified industry,
3. Share of Australia in imports of goods for specified industry.
Source: OECD, bilateral trade database, June 2012.
110
Table A.3.3: The export portfolio of Australian manufacturing – market growth versus Australia’s exports, 2005-2010
111
Percentage growth of imports of goods 2005-2010, from the World and from Australia
Country
Industry
Total Manufacturing
All
countries
United
States
SE Asia 1
EU27
Japan
Korea
China
New
Zealand
India
France
Germany
Canada
From From From From From From From From From From From From From From From From From From From From From From From From
Aus- the Aus- the Aus- the Aus- the Aus- the Aus- the
Austhe Aus- the Aus- the Aus- the Aus- the Aus- the
tralia World tralia World tralia World tralia World tralia World tralia World tralia World tralia World tralia World tralia World tralia World tralia World
24
36
14
11
0
27
41
51
13
25
56
56
46
87
23
93
1
10
26
26
1
39
-6
23
17
48
-7
29
-22
41
46
91
-9
16
61
61
127
139
89
93
52
61
-44
37
-21
44
0
62
-36
31
20
-5
-70
-48
5
-51
-45
-19
23
7
-27
60
5
4
-7
32
20
2
-41
-77
51
25
-31
91
23
109
-11
-20
26
149
-24
-12
21
-3
27
-40
20
22
-4
-47
34
17
-3
17
26
9
Pulp, Paper, Paper Products, Printing and Publishing
11
22
41
-5
8
16
31
55
101
25
-28
50
-8
86
31
31
-6
7
-44
13
231
24
-28
16
Chemical, Rubber, Plastics and Fuel Products
Coke, Refined Petroleum Products and Nuclear Fuel
45
47
51
33
71 -100
23
10
5
-15
41
60
78
159
85
151
54
48
51
43
230
399
80
130
17
-33
92
113
205
432
72
10
-11
-54
18
16
92
95
37
58
-41
-95
53
63
-8
-34
35
90
46
47
84
30
7
38
39
56
73
57
100
56
94
83
169
100
15
15
62
31
50
48
34
27
50
41
40
64
33
121
11
70
28
1
29
54
55
16
54
78
51
123
43
102
173
4
52
98
63
463
78
215
174
105
99
109
14
18
13
21
38
78
18
58
61
44
39
59
23
42
15
59
Food products, Beverages and Tobacco
Textiles, Textile Products, Leather and Footwear
Wood and Products of Wood and Cork
Chemicals and Chemical Products
Chemicals excluding Pharmaceuticals
Pharmaceuticals
Rubber and Plastics Products
Other Non-Metallic Mineral Products
Basic Metals and Fabricated Metal Products
Basic Metals
Iron and Steel
Non-Ferrous Metals
Fabricated Metal Products
Machinery and Equipment
Machinery and Equipment, not elsewhere classified
Electrical and Optical Equipment
27
42
-19
22
99
32
46
53
47
44
-25
104
71
144
17
122
13
34
221
33
130
44
-28
28
-13
23
-16
-18
-19
18
-14
55
-32
20
-38
69
-26
115
-23
95
3
11
26
21
-56
41
30
32
29
29
44
46
15
18
15
21
17
17
34
34
31
30
66
68
27
27
32
33
46
47
61
52
48
47
71
68
13
13
117
116
-5
-11
5
-6
55
68
21
17
425
643
56
52
-45
-45
40
48
23
22
28
2
159
18
8
25
5
21
46
51
-71
-4
104
79
-44
-23
-12
10
853
32
101
13
30
31
73
35
13
-19
37
4
11
6
56
28
32
69
119
60
28
19
38
30
47
-31
53
137
51
132
160
92
13
28
128
119
11
19
15
25
94
-23
28
28
633
-1
74
40
-51
-27
92
24
35
34
46
19
7
19
45
40
39
23
43
39
67
79
20
74
4
8
31
19
-22
27
109
22
36
35
36
34
17
61
17
20
-1
10
18
20
53
38
62
36
-18
73
39
19
75
28
80
26
70
63
88
77
64
-6
81
70
-3
9
3
11
15
37
17
19
-3
-25
34
25
135
84
21
22
Office, Accounting and Computing Machinery
-9
6
1
12
-5
-11
2
12
26
-18
-15
31
-37
53
-8
14
-21
-4
41
-17
-37
-9
-23
-2
Electrical Machinery and Apparatus, n.e.c.
Radio, Television and Communication Equipment
-5
37
42
41
34
36
24
22
-46
21
34
28
24
70
39
41
-64
5
28
42
92
-28
33
26
-1
113
90
78
4
-38
82
95
12
-23
27
0
-9
-25
31
27
-72
-1
36
30
10
68
34
28
Medical, Precision and Optical Instruments
72
43
76
27
54
35
50
42
142
16
21
20
122
85
47
60
52
38
51
38
74
46
121
29
-18
20
-42
-6
15
13
9
63
4
7
-27
105
-61
217
186
81
-22
-18
-54
26
88
29
17
4
-35
39
13
47
-79
22
-8
7
-27
33
2
53
-7
22
65
60
22
-68
8
4
-40
641
90
128
-74
634
276
115
333
35
184
49
-44
165
-20
-12
29
-60
7
78
-1
244
10
68
43
-35
4
7
Building and Repairing of Ships and Boats
69
84
63
-7
-17
102
327
105
-89
208 1843
195
173
119
-35
40
238
38
-76
-12 1125
316
33
23
Aircraft and Spacecraft
22
45
19
19
82
49
-17
59
-31
-5 1686
98
-40
102
345
44
3
-27
-39
97
220
36
-69
7
Railroad and Transport Equipment, n.e.c.
41
28
-1
-30
61
30
134
26
-26
32
13
56
1236
237
-20
187
55
18
187
15
184
59
-28
-4
Transport Equipment
Motor Vehicles, Trailers and Semi-Trailers
Other Transport Equipment
Manufacturing not elsewhere classified; Recycling
142
37
311
9
99
40
60
52
10
7
136
57
147
145
427
298
1
15
-16
33
814
113
21
32
High Technology Industries
Medium-High Technology Industries
44
9
37
31
73
-18
26
5
28
-15
28
17
24
45
37
54
117
23
23
33
5
21
30
60
160
22
78
99
4
127
67
96
11
-12
3
-1
31
18
39
15
54
-37
30
29
64
77
23
13
Medium-Low Technology Industries
31
49
2
11
10
40
43
91
32
37
75
84
37
89
16
87
-11
16
56
32
-30
62
-42
43
18
30
14
5
-19
29
41
39
1. South-East Asia: Chinese Taipei, Hong Kong (China), Indonesia, Malaysia, Philippines, Singapore, Thailand.
Source: OECD, bilateral trade database, June 2012.
-1
15
47
54
83
78
60
135
21
30
-37
26
41
46
1
34
Low-Technology Industries
112
Table A.3.4: Export market shares1 by country, for selected industries, 2010 and 1996
Industry
Share in
Exporting countries
Austotal
Hong
Russian
Other
Australian tralia's AustraChinese Kong, Indone- SingaSaudi United
Nor- Switzer- Fede- South CounYear exports (%) RCAs2
lia
Japan Korea China Taipei China
sia
pore India Arabia States Canada Brazil Chile EU27 way
land
ration Africa tries
Grand total
2010
1996
100.0
100.0
1.0
1.0
1.6
1.2
5.7
8.3
3.5
2.6
11.7
3.0
2.0
2.4
3.0
3.6
1.2
1.0
2.6
2.5
1.6
0.7
1.9
1.1
9.5
12.5
2.9
3.8
1.5
1.0
0.5 37.4
0.3 44.2
1.0
1.0
1.4
1.6
3.0
1.8
0.5
0.5
7.8
6.8
Agriculture, Hunting, Forestry and Fishing
(ISIC 01 to 05)
2010
1996
5.5
7.1
2.1
2.3
3.3
2.8
0.2
0.3
0.3
0.5
3.8
2.7
0.2
0.3
0.7
1.0
3.3
2.4
0.3
1.0
2.8
1.6
0.2
0.1
18.7
24.5
5.4
5.8
7.0
2.8
1.3 35.2
1.0 37.2
1.3
0.7
0.1
0.1
1.3
1.1
0.9
0.8
13.8
13.4
Mining of coal and lignite; extraction of peat
(ISIC 10)
2010
1996
2010
1996
2010
1996
2010
1996
2010
1996
2010
1996
2010
1996
2010
1996
2010
1996
2010
1996
2010
1996
2010
1996
18.7
9.4
8.6
3.3
27.0
5.5
35.1
53.7
7.0
11.7
0.5
1.0
1.6
2.2
1.7
1.1
0.6
2.4
13.0
14.0
1.9
3.4
1.2
1.1
26.1
25.1
1.7
0.7
23.3
15.3
0.4
0.6
3.3
2.9
2.0
1.2
0.9
2.1
1.2
1.1
0.5
1.3
10.1
8.5
0.5
0.6
0.8
0.6
41.0
31.0
2.6
0.8
36.6
19.0
0.6
0.7
2.1
2.1
1.2
0.9
0.5
1.5
0.7
0.8
0.3
0.9
6.4
6.4
0.3
0.4
0.5
0.5
0.0
0.0
0.0
0.0
0.0
0.0
6.1
9.0
0.6
0.6
0.1
0.2
2.0
1.7
1.0
3.1
10.9
11.3
5.0
3.8
10.2
13.0
8.1
13.8
0.0
0.0
0.0
0.0
0.1
0.0
3.9
2.8
0.6
0.8
0.1
0.2
5.2
3.5
0.3
0.6
6.4
3.9
2.7
5.3
3.2
1.8
7.3
1.1
2.3
5.8
0.3
1.8
0.3
0.3
13.2
3.2
4.8
3.1
12.3
3.4
3.3
1.7
2.9
2.0
10.3
2.7
4.4
1.4
12.3
1.4
11.0
2.8
0.0
0.0
0.0
0.0
0.0
0.0
2.3
2.6
0.3
1.1
0.2
1.2
2.3
0.9
0.1
0.3
2.9
1.9
1.7
1.2
1.4
2.1
4.7
1.6
0.0
0.0
0.0
0.0
0.0
0.2
3.3
4.0
0.7
1.6
0.4
1.9
0.1
1.8
0.4
1.3
0.5
2.0
3.9
2.0
1.2
2.2
4.1
6.9
19.2
5.9
3.4
6.1
5.2
10.1
0.8
0.8
3.0
1.2
3.2
8.9
0.7
1.9
0.2
0.2
0.5
0.2
1.9
0.8
0.3
0.1
0.1
0.2
0.0
0.0
0.0
0.0
0.0
0.1
2.8
2.7
0.9
1.2
0.1
0.6
9.1
9.2
1.5
1.3
0.7
0.6
1.6
1.7
2.0
1.5
2.2
2.1
0.1
0.1
0.0
0.0
4.3
3.2
1.7
0.7
1.7
1.4
0.2
0.1
5.9
0.5
1.5
1.0
2.8
0.7
2.0
0.3
0.6
0.1
0.3
0.1
0.0
0.0
27.1
26.3
0.0
0.1
0.5
0.3
0.3
0.1
0.0
0.0
3.9
7.8
0.0
0.0
0.3
0.2
0.1
0.1
0.1
0.0
0.0
0.0
10.2
19.3
0.9
0.5
3.4
6.5
9.5
12.5
8.5
10.8
5.8
8.7
10.3
7.7
9.5
9.9
4.5
3.9
7.8
11.7
11.9
14.7
14.7
19.8
6.3
10.4
9.3
8.3
3.6
9.9
2.3
3.6
2.9
2.5
9.0
20.3
3.3
4.9
1.2
0.8
1.8
2.3
7.7
9.4
1.7
2.0
1.1
1.3
0.0 0.0 5.3 0.0
0.0 0.0 13.7 0.0
2.3 0.0 9.4 10.6
0.0 0.0 10.9 15.3
19.7 10.2 4.7 0.1
16.2 12.7 10.0 0.4
1.1 0.4 39.7 0.4
0.9 0.3 45.8 0.5
5.4 1.0 49.1 0.7
3.3 0.9 54.1 0.9
2.1 2.0 46.4 0.4
1.8 1.1 37.0 0.7
0.5 0.0 34.1 1.4
0.4 0.0 41.0 2.4
0.4 0.0 66.8 0.3
0.4 0.0 64.9 0.5
2.3 0.1 42.0 0.4
3.1 0.1 52.2 0.9
1.5 6.6 28.2 1.8
2.0 4.2 34.3 2.6
0.7 0.1 44.9 0.5
0.6 0.0 52.9 0.4
0.2 0.0 34.0 0.3
0.1 0.0 38.7 0.3
0.0
0.0
0.0
0.0
0.0
0.0
1.6
1.8
1.0
0.8
0.7
0.6
0.1
0.1
10.7
10.4
0.5
0.6
1.8
1.5
2.0
3.3
5.7
6.8
9.5
5.5
24.9
18.3
1.4
2.4
1.5
0.9
0.8
0.4
4.8
1.6
11.8
7.8
0.1
0.2
5.0
5.7
4.2
6.3
0.4
0.3
0.3
0.3
5.7
7.9
0.0
0.1
6.2
5.1
0.4
0.3
0.5
0.6
0.4
0.3
0.3
0.9
0.0
0.1
2.0
1.8
2.8
1.3
0.4
0.2
0.1
0.1
0.3
0.4
9.0
11.6
4.1
3.6
7.8
6.6
14.9
12.5
10.5
10.5
5.2
4.3
2.4
2.2
6.0
4.9
8.0
3.8
5.4
2.8
5.2
3.7
Extraction of crude petroleum and natural gas
(ISIC 11)
Mining of metal ores
(ISIC 13)
Manufacturing industries
(ISIC 15 to 37)
Food products, Beverages and Tobacco
(ISIC 15 to 16)
Wood and Products of Wood and Cork
(ISIC 20)
Coke, Refined Petroleum Products and
Nuclear Fuel (ISIC 23)
Pharmaceuticals
(ISIC 2423)
Iron and Steel
(ISIC 271)
Non-Ferrous Metals
(ISIC 272)
Machinery and Equipment, not elsewhere
classified (ISIC 29)
Medical, Precision and Optical Instruments
(ISIC 33)
Notes
1. Based on 60 available countries.
2. Revealed comparative advantages for manufacturing industries are calculated on the basis of total manufacturing industries, while agriculture and mining (and total manufacturing) are based on Grand
total.
Source: OECD STAN Bilateral database
113
Table A.3.5: Import shares by country and manufacturing industry, 2010
EU27
excl. UK
United
Kingdom
Japan
Korea
New
Zealand
United
States
China
Other
Asia
Rest of
World
Total Manufacturing
17.4
3.1
9.6
3.7
2.9
12.4
20.9
19.5
10.3
Food products, Beverages and Tobacco
24.7
3.4
0.7
0.7
18.0
10.0
6.7
21.8
13.9
Textiles, Textile Products, Leather and Footwear
6.6
0.8
0.3
0.9
2.6
2.4
67.8
11.3
7.2
Wood
16.7
0.2
0.0
0.1
22.6
6.3
16.8
28.1
8.9
Pulp, Paper, Paper Products, Printing and Publishing
15.5
7.8
4.0
3.2
9.4
11.1
13.2
22.0
13.8
C oke, Refined Petroleum Products and Nuclear Fuel
0.4
0.3
10.2
11.4
0.0
2.7
1.1
62.0
11.9
C hemicals and C hemical Products
35.9
7.1
2.9
1.7
1.7
18.1
7.5
9.0
15.9
Pharmaceuticals
53.8
10.5
1.2
0.0
1.0
17.7
1.7
3.9
10.1
Rubber and Plastics Products
14.5
2.3
11.9
3.6
3.2
13.2
25.7
21.2
4.4
Other Non-Metallic Mineral Products
18.3
1.6
3.9
1.4
1.1
6.5
36.1
19.5
11.5
Basic Metals and Fabricated Metal Products
8.0
3.3
4.3
3.1
4.9
7.6
17.0
25.5
26.2
Fabricated Metal Products
14.7
2.8
2.4
1.4
3.1
10.0
40.3
19.5
5.6
Machinery and Equipment
17.6
2.6
7.2
2.7
1.3
17.6
29.2
15.6
6.1
Medical, Precision and Optical Instruments
25.4
5.5
4.9
0.5
0.8
31.9
9.5
8.8
12.6
Transport Equipment
19.5
2.9
32.7
8.2
0.4
10.2
3.9
16.7
5.4
Motor Vehicles, Trailers and Semi-Trailers
19.1
2.7
36.7
9.5
0.3
6.7
2.2
18.0
4.8
Other Transport Equipment
22.2
4.1
7.5
0.2
1.6
32.2
14.3
8.6
9.3
High Technology Industries
21.2
4.2
4.1
2.3
0.6
16.0
29.8
15.0
6.8
Medium-High Technology Industries
22.0
3.1
18.1
4.9
1.5
15.6
12.0
14.4
8.3
Medium-Low Technology Industries
7.6
2.3
7.1
5.4
3.1
7.5
14.9
34.5
17.6
Low-Technology Industries
14.5
2.6
1.2
1.0
8.8
6.8
36.1
18.7
10.2
Source: OECD STAN Bilateral database
114
ANNEX 3: TECHNOLOGY INTENSIVE CLASSIFICATION IN MANUFACTURING
(Based on International Standard Industrial Classification (ISIC) - Revision. 3)
HIGH
MEDIUM-HIGH
Aircraft and Spacecraft (353)
Pharmaceuticals (2423)
Office, accounting and computing machinery (30)
Radio, TV and communications equipment (32)
Medical, precision and optical instruments (33)
Electrical machinery and apparatus nec (31)
Motor vehicles, trailers and semi-trailers (34)
Chemicals excluding pharmaceuticals (24 less 2423)
Railroad equipment and transport equipment nec (352 + 359)
Machinery and equipment nec (29)
MEDIUM-LOW
LOW
Coke, refined petroleum products and nuclear fuel (23)
Rubber and plastic products (25)
Other non-metallic mineral products (26)
Building and repairing of ships and boats (351)
Basic metals (27)
Fabricated metal products, except machinery & equipment
(28)
115
Manufacturing nec ; Recycling (36-37)
Wood and products of wood and cork (20)
Pulp, paper, paper products, printing and publishing (21-22)
Food products, beverages and tobacco (15-16)
Textiles, textile products, leather and footwear (17-19)
ANNEX 4: SOURCE DATA FOR FIGURES IN THE REPORT
Figure 1.1 Source Data
Country
1980
1995
2009
Czech Republic
N/A
27.2
25.9
Slovak Republic
N/A
27.2
22.5
Slovenia
N/A
30.9
22.1
Hungary
N/A
22.3
21.4
Poland
N/A
23.2
20.9
Estonia
N/A
24.9
19.7
Italy
29.1
23.2
19.3
Germany
31.2
22.5
18.5
Portugal
25.3
22.6
18.1
Korea
22.7
23.6
16.3
Japan
23.2
20.7
16.3
Finland
24.7
20.2
16.0
Switzerland
N/A
19.3
15.8
Mexico
N/A
15.5
15.7
Austria
24.6
18.6
15.3
Sweden
23.7
19.0
14.6
New Zealand
N/A
19.4
13.8
Spain
23.0
17.9
13.5
Israel
N/A
19.1
13.0
Belgium
23.8
17.7
12.7
Denmark
20.3
18.4
12.7
France
22.8
16.4
12.3
Ireland
21.0
19.3
12.3
Canada
19.1
14.2
11.4
Norway
19.1
14.0
10.7
Greece
N/A
12.4
10.6
Netherlands
19.2
14.4
10.5
Iceland
N/A
16.9
9.9
Luxembourg
22.8
15.4
9.9
United Kingdom
24.7
15.9
9.8
Australia
16.6
12.8
9.2
United States
19.1
13.9
8.9
Source: OECD Structural Analysis Database (STAN)
116
Figure 1.2 Source Data
Country
1980
1995
2009
Korea
24.5
27.2
28.1
Ireland
N/A
30.2
24.2
Czech Republic
N/A
24.3
23.6
Hungary
N/A
21.3
21.3
Switzerland
N/A
20.4
20.1
Slovenia
N/A
25.7
19.6
Slovak Republic
N/A
26.8
19.6
Germany
31.0
22.6
19.1
Poland
N/A
21.1
18.7
Austria
23.5
19.6
18.6
Finland
27.6
25.4
18.2
Turkey
22.5
29.5
18.0
Mexico
20.7
21.3
17.7
Japan
27.2
22.4
17.6
Israel
N/A
N/A
16.5
Italy
28.9
22.2
16.1
Sweden
21.7
22.4
15.5
Iceland
22.5
16.7
15.3
Portugal
21.6
19.0
14.8
Canada
18.5
18.4
14.6
New Zealand
21.2
17.7
14.5
Estonia
N/A
21.0
14.3
Belgium
23.1
20.3
14.0
Denmark
18.9
17.1
13.2
Chile
12.5
17.3
12.7
Spain
27.0
19.2
12.7
Netherlands
18.1
17.4
12.6
United Kingdom
26.3
21.2
12.4
United States
20.8
16.8
12.3
France
21.6
16.7
10.6
Greece
17.3
12.0
10.3
Norway
15.6
13.2
9.6
Australia
19.0
14.3
9.0
Luxembourg
22.1
13.7
6.5
Source: OECD Structural Analysis Database (STAN)
117
Figure 1.3 Source Data
Country
Total economy
Manufacturing
Business services
Korea (1993-2006)
4.0
7.0
N/A
Czech Republic (1999-2008)
4.1
6.4
3.5
Poland (2001-06)
N/A
5.3
N/A
Ireland (1999-2007)
N/A
5.3
N/A
Sweden (1997-2008)
2.2
4.9
2.2
Finland
1.9
4.5
1.2
United Kingdom (2000-07)
N/A
4.1
3.7
United States
1.2
3.6
1.5
Iceland (1994-2008)
N/A
3.3
N/A
Netherlands (2002-08)
1.6
2.8
2.0
France (1990-2006)
1.3
2.8
0.9
Austria (1996-2009)
1.3
2.4
0.9
Denmark (1997-2007)
0.7
2.1
1.4
Canada (1998-2003)
1.2
2.0
1.3
Belgium (1996-2009)
N/A
1.8
N/A
Norway (1990-2007)
2.0
1.4
3.7
Germany (1995-2009)
1.2
1.3
1.1
Spain (2001-07)
0.3
0.9
0.4
Italy (1990-2007)
N/A
0.8
N/A
Source: OECD, Productivity database
Figure 1.4 Source Data
Country
2000
2010
Germany (2008)
91.3
89.0
Korea
83.7
87.7
Japan (2009)
90.4
87.1
China (2009)
84.6
84.0
France (2007)
85.0
83.6
United Kingdom (2009)
80.2
73.9
Italy
78.6
73.0
Mexico (2007)
50.5
69.3
United States (2008)
62.8
67.1
Turkey (2008)
83.3
64.1
Canada (2008)
68.5
46.5
New Zealand (2001,2009)
37.1
45.3
South Africa (2001,2008)
43.6
39.4
Australia (2008)
45.3
26.6
Russian Federation (2009)
39.1
12.0
118
Source: OECD Analytical Business Enterprise Research and Development Database (ANBERD)
Figure 1.5 Source Data
Country
Manufacturing
Services
Germany
86.3
73.6
Canada (2007-09)
81.1
72.5
South Africa (2005-07)
77.8
69.5
Brazil
75.2
80.5
Israel
74.2
68.1
Iceland
72.3
76.6
Luxembourg
63.6
65.1
Belgium
62.9
54.8
Ireland
62.2
54.1
Australia (2006-07)
61.6
55.6
Estonia
59.8
52.6
Austria
59.4
53.8
Sweden
57.9
50.8
Finland
57.1
48.6
Czech Republic
56.4
56.9
Italy
56.0
48.1
Slovenia
54.6
46.1
Portugal
54.1
63.9
Denmark
53.0
51.1
France
53.0
47.6
Norway
51.5
48.3
New Zealand (2008-09)
51.3
46.2
Netherlands
50.2
41.9
United Kingdom
49.5
43.0
Spain
44.7
42.6
Korea (2005-07)
38.3
N/A
Slovak Republic
37.2
35.0
Poland
29.2
26.1
Chile (2007-08)
29.1
27.2
Hungary
28.4
29.6
Russian Federation
13.5
..
Source: OECD, Science, Technology and Industry Scoreboard (2011)
119
Figure 1.6 Source Data
Exports
Goods
Agriculture
Mining and
Quarrying
Manufacturing
Waste
Confidential
and
Unallocated
Services
Australia
212,850,000
11,601,995
115,856,374
74,748,998
1,876,552
8,766,080
48,490,300
Austria
147,710,000
1,607,703
1,476,948
143,314,448
1,189,553
121,346
54,705,900
Belgium
280,040,000
5,713,350
14,210,601
255,966,575
2,151,099
1,998,375
90,705,000
Canada
393,183,000
19,031,650
82,192,061
275,720,509
4,108,406
12,130,373
69,166,000
Chile
71,028,400
4,741,358
16,412,804
48,915,347
958,890
0
10,797,400
Czech Republic
114,080,000
1,597,131
1,722,366
108,837,827
1,506,080
416,596
20,942,200
Denmark
95,770,800
4,612,477
4,471,171
82,583,487
1,121,070
2,982,597
60,405,000
Estonia
11,641,300
455,306
87,872
10,662,016
270,665
165,441
4,527,910
Finland
69,499,100
907,193
277,730
66,935,226
362,989
1,015,963
26,890,400
France
517,150,000
18,186,770
2,696,712
489,844,543
6,139,257
282,719
144,973,000
Country
Germany
1,315,000,000
12,672,707
7,341,824
1,248,340,559
12,147,906
34,497,002
243,762,000
Greece
22,628,400
2,676,456
241,510
18,803,845
274,704
631,885
37,465,100
Hungary
91,444,800
3,003,039
44,889
86,359,040
650,495
1,387,336
19,385,200
Iceland
4,603,430
125,788
7,407
4,423,738
25,559
18,785
2,464,030
Ireland
109,856,000
918,359
533,210
103,840,260
401,929
4,162,242
97,833,400
Israel
56,094,200
1,404,612
3,461,392
50,841,684
361,411
25,101
24,228,500
Italy
448,374,000
7,516,128
1,769,954
430,470,593
1,889,427
6,727,899
98,575,300
Japan
730,076,000
775,890
379,674
684,177,212
6,769,373
37,973,851
141,457,000
Korea
464,300,000
926,455
233,120
461,689,360
1,340,755
110,312
82,705,800
Luxembourg
16,661,600
710,634
24,990
15,570,839
88,786
266,350
66,767,100
Mexico
298,860,000
7,895,133
38,544,606
249,048,471
1,878,759
1,493,031
14,936,800
Netherlands
480,296,000
25,286,821
18,792,261
396,954,350
6,734,000
32,528,569
95,811,700
New Zealand
31,882,800
3,217,487
1,468,066
25,650,187
368,809
1,178,250
9,033,260
Norway
132,691,000
4,536,721
76,167,857
46,864,814
485,517
4,636,091
39,734,300
Poland
165,709,000
2,997,693
1,463,340
159,558,710
1,623,560
65,698
32,718,000
Portugal
48,904,900
1,277,992
859,541
46,007,009
560,925
199,433
23,228,600
Slovak Republic
64,665,300
1,205,226
662,155
62,190,377
553,673
53,871
5,828,510
Slovenia
24,359,400
464,768
42,901
23,552,480
289,195
10,056
6,129,140
Spain
256,806,000
15,465,157
1,851,838
230,496,365
1,882,289
7,110,351
124,116,000
Sweden
160,533,000
2,512,008
3,230,305
144,393,216
1,204,248
9,193,225
64,300,500
Switzerland
258,521,000
268,759
69,275
255,997,504
2,185,463
0
83,632,100
Thailand
193,610,000
10,159,056
1,377,660
181,266,392
806,892
0
34,298,400
Turkey
120,902,000
5,807,114
2,735,670
111,737,410
338,597
283,209
35,004,000
United Kingdom
410,891,000
4,070,624
35,614,011
360,023,088
7,771,605
3,411,672
256,705,000
Source: calculations based on OECD Bilateral Trade Database and IMF Balance of Payments
120
Figure 1.7 Source Data
Total demand
Country
1995
2000
2005
Australia
27.9%
26.1%
23.9%
Belgium
42.1%
43.3%
40.0%
Canada
35.8%
38.7%
34.4%
Denmark
33.8%
31.7%
30.1%
France
36.1%
35.4%
31.9%
Germany
38.4%
40.5%
41.0%
Italy
39.7%
38.0%
35.4%
Japan
35.2%
33.3%
35.7%
Korea
N/A
49.6%
49.5%
Netherlands
39.3%
39.5%
35.2%
New Zealand
32.3%
29.8%
N/A
Norway
30.7%
27.3%
24.8%
Poland
39.4%
37.5%
39.5%
Spain
37.1%
37.8%
33.4%
Sweden
39.4%
40.2%
37.7%
N/A
37.7%
37.9%
Turkey
39.3%
38.8%
40.0%
United Kingdom
34.6%
30.0%
26.3%
United States
30.2%
27.8%
25.3%
Brazil
37.5%
38.1%
36.6%
China
54.0%
53.0%
53.2%
India
34.0%
35.0%
38.9%
Russian Federation
38.4%
41.6%
N/A
Switzerland
Source: OECD Input-Output Database
121
Figure 1.8 Source Data
Employment
Year
Value-Added (Current Prices)
Value-Added (Constant Prices)
Country
AUS
CAN
FRA
GER
ITA
JPN
UK
USA
AUS
CAN
FRA
GER
ITA
JPN
UK
USA
AUS
CAN
FRA
GER
ITA
JPN
UK
USA
1970
N/A
22.9
24.2
35.8
27.6
26.0
N/A
22.4
24.4
21.2
23.6
36.5
27.6
33.5
32.1
23.5
N/A
18.7
20.2
34.2
17.2
22.6
27.8
N/A
1971
24.7
22.6
24.4
35.4
28.0
26.0
29.9
21.5
23.5
21.3
23.9
34.9
27.1
32.8
30.8
22.9
N/A
18.9
20.4
33.0
17.0
22.5
26.9
N/A
1972
23.7
22.6
24.6
34.5
27.9
25.8
28.9
21.5
22.5
21.4
23.1
33.8
26.5
32.0
30.1
22.9
N/A
19.4
19.9
32.6
17.5
22.2
26.5
N/A
1973
23.9
22.6
24.8
34.3
28.1
26.3
28.4
21.8
21.8
21.3
23.4
33.8
27.7
32.3
30.7
22.7
N/A
20.0
19.9
32.8
18.6
23.0
26.9
N/A
1974
23.4
22.0
24.8
33.8
28.6
26.2
28.5
21.4
21.3
21.0
23.4
33.9
29.5
31.0
32.1
22.0
N/A
19.9
20.2
32.7
19.0
22.6
26.9
N/A
1975
21.6
21.1
24.5
32.6
28.9
24.8
27.2
19.9
20.5
19.4
22.8
32.3
27.5
28.1
29.3
21.4
N/A
18.2
19.7
31.7
18.5
21.1
25.1
N/A
1976
21.5
20.8
24.2
31.9
28.7
24.4
26.6
20.2
20.2
18.9
22.8
32.4
29.9
28.4
29.5
22.0
N/A
18.6
20.3
32.2
19.9
21.9
25.0
N/A
1977
20.8
20.0
24.0
32.0
29.0
23.9
26.7
20.2
20.0
18.8
22.6
32.4
29.6
27.8
29.5
22.4
N/A
18.7
20.3
32.1
20.3
21.7
24.9
14.9
1978
19.9
20.0
23.7
31.6
29.0
23.3
26.4
20.1
18.9
19.2
22.5
32.2
28.6
27.6
29.2
22.1
N/A
19.2
19.7
31.4
20.4
21.3
24.4
14.8
1979
20.0
19.8
23.2
31.4
29.1
23.0
25.9
20.0
18.8
19.5
22.2
31.7
28.9
27.2
28.9
22.0
N/A
19.2
19.6
31.5
21.1
21.6
23.9
14.9
1980
19.6
19.1
22.8
31.2
29.1
23.2
24.7
19.1
19.0
18.5
21.6
31.0
28.9
27.2
26.3
20.8
N/A
18.0
19.2
31.1
21.7
21.3
22.3
14.2
1981
19.4
18.5
22.1
30.7
28.4
23.3
23.3
18.9
18.7
18.0
21.0
30.1
27.8
27.1
24.8
20.6
N/A
17.9
18.8
30.4
21.2
21.4
21.1
14.5
1982
18.4
17.3
21.7
30.1
27.9
23.0
22.3
17.8
17.7
16.1
20.3
29.9
26.9
27.0
24.2
19.4
N/A
16.4
18.2
30.0
20.8
21.5
20.6
13.7
1983
17.8
16.8
21.3
29.4
27.1
23.0
21.3
17.2
17.4
16.7
20.3
29.6
25.6
26.9
23.7
19.4
N/A
16.8
18.2
29.8
20.6
21.4
20.3
14.1
1984
16.6
16.8
20.8
29.1
26.0
23.5
20.5
17.3
17.3
17.8
20.0
29.5
25.6
27.7
23.9
19.4
N/A
18.0
17.7
29.9
20.6
21.8
20.5
14.4
1985
16.0
16.7
20.3
29.1
25.3
23.6
20.2
16.8
17.3
17.9
20.0
30.3
25.2
27.6
23.6
18.7
N/A
18.0
17.4
30.5
20.7
22.8
20.3
14.3
1986
15.3
16.7
19.8
29.1
25.0
23.3
19.7
16.3
16.5
18.3
19.5
30.7
24.8
26.8
23.6
18.3
N/A
17.7
16.8
29.8
20.6
22.1
19.9
13.8
1987
15.3
16.7
19.2
28.8
24.6
22.9
19.2
15.8
16.1
18.4
19.0
30.0
24.6
26.1
23.8
18.2
N/A
17.8
16.4
28.9
20.7
21.9
20.0
14.4
1988
15.2
16.7
18.8
28.5
24.7
23.2
18.8
15.7
15.6
18.9
18.8
29.9
24.4
26.1
23.9
18.5
N/A
18.2
16.4
29.0
21.2
22.2
20.5
14.7
1989
14.7
16.5
18.5
28.4
24.8
23.3
18.4
15.4
15.3
18.2
18.4
29.6
24.5
25.9
23.5
18.2
15.3
18.1
16.3
29.3
21.4
22.4
20.8
14.4
1990
14.0
15.6
18.4
28.3
24.7
23.3
17.8
14.9
14.0
16.9
18.3
29.2
23.3
26.1
22.5
17.5
14.9
17.3
16.2
29.1
21.2
22.8
20.6
14.0
1991
13.6
14.6
18.1
27.4
24.1
23.4
16.8
14.5
14.1
15.8
18.0
27.5
22.2
25.9
21.0
17.1
14.5
16.3
16.1
26.4
20.9
23.0
19.8
13.8
1992
13.6
14.1
17.6
25.8
23.4
23.1
16.3
14.3
14.3
15.4
17.4
25.9
21.7
24.9
20.6
16.9
14.3
16.3
15.7
25.3
20.7
22.2
19.8
13.8
1993
13.6
13.9
17.0
24.3
23.2
22.3
15.8
14.0
14.7
15.9
16.8
23.6
21.4
23.5
20.4
16.7
14.4
16.8
15.4
23.5
20.3
21.4
19.6
14.0
122
Employment
Year
Value-Added (Current Prices)
Value-Added (Constant Prices)
Country
AUS
CAN
FRA
GER
ITA
JPN
UK
USA
AUS
CAN
FRA
GER
ITA
JPN
UK
USA
AUS
CAN
FRA
GER
ITA
JPN
UK
USA
1994
13.3
13.9
16.5
23.1
23.3
21.6
15.8
13.9
14.7
17.1
16.5
23.1
21.7
22.4
20.8
16.8
14.1
17.2
15.6
23.6
21.2
20.8
19.6
14.3
1995
12.8
14.2
16.4
22.5
23.2
20.7
15.9
13.9
14.3
18.4
16.7
22.6
22.2
22.4
21.2
16.8
13.9
17.6
15.8
22.9
21.6
21.2
19.4
14.6
1996
13.0
14.2
16.1
21.9
22.8
20.5
16.0
13.6
13.8
18.0
16.3
22.2
21.8
22.3
20.6
16.4
13.5
17.5
15.6
22.1
21.3
21.4
19.0
14.5
1997
12.6
14.4
15.9
21.6
22.6
20.3
15.8
13.5
14.0
18.4
16.5
22.4
21.7
22.2
20.3
16.3
13.3
18.3
15.9
22.7
21.2
21.6
18.7
14.8
1998
11.9
14.3
15.6
21.4
22.8
19.7
15.7
13.3
13.3
18.7
16.4
22.7
21.7
21.6
19.4
16.2
12.9
18.5
16.1
22.5
21.2
20.8
18.1
15.0
1999
12.0
14.4
15.3
20.9
22.4
19.4
15.0
13.0
12.9
19.8
16.1
22.4
21.1
21.2
18.4
16.0
12.6
19.0
16.1
22.3
20.9
20.7
17.6
15.3
2000
11.9
14.6
15.0
20.7
21.8
19.1
14.3
12.7
12.3
19.7
16.0
22.9
21.0
21.3
17.4
15.2
12.5
19.7
16.2
22.9
21.0
21.3
17.4
15.2
2001
11.4
14.2
14.8
20.7
21.3
18.8
13.6
12.1
11.9
18.4
15.4
22.8
20.4
20.1
16.4
14.0
12.3
18.8
16.1
23.0
20.5
20.1
16.8
14.4
2002
11.4
13.9
14.4
20.4
21.2
18.1
12.8
11.3
12.3
18.1
14.7
22.4
19.9
19.7
15.3
13.9
12.5
18.4
15.9
22.5
20.2
19.7
16.1
14.7
2003
10.9
13.5
14.1
20.0
21.0
17.8
12.1
10.8
12.3
17.0
14.1
22.4
19.0
20.1
14.3
13.5
12.1
17.9
16.1
22.7
19.7
20.4
15.6
14.7
2004
10.7
13.3
13.6
19.6
20.7
17.4
11.5
10.5
11.7
16.6
13.6
22.6
18.8
20.4
13.6
13.7
11.6
17.8
15.8
23.1
19.5
21.2
15.5
15.5
2005
10.2
13.0
13.2
19.4
20.5
17.2
10.8
10.3
11.2
15.5
13.2
22.7
18.5
20.6
13.3
13.6
11.2
17.6
15.8
23.4
19.3
21.8
15.1
15.5
2006
9.9
12.4
12.9
19.1
20.2
17.4
10.4
10.1
10.5
14.6
12.6
23.3
18.7
20.5
12.9
13.3
11.0
16.9
15.5
24.2
19.6
22.2
15.0
15.6
2007
10.0
11.8
12.6
19.0
20.1
17.4
10.1
9.9
10.3
N/A
12.5
23.8
19.0
20.6
12.4
13.2
11.0
16.3
15.2
24.4
19.7
22.7
14.6
15.9
2008
9.4
11.4
12.3
19.0
19.9
17.1
9.8
9.6
9.3
N/A
11.9
22.7
18.1
19.9
12.4
12.5
10.2
15.4
14.7
23.1
18.9
22.9
14.1
15.2
2009
9.2
N/A
N/A
18.5
19.3
16.3
N/A
8.9
9.0
N/A
10.6
18.5
19.3
16.3
N/A
8.9
10.0
N/A
N/A
20.0
16.8
19.9
N/A
14.3
Source: OECD Structural Analysis Database (STAN), Australian Bureau of Statistics (ABS) for data on Australia
Figure 1.9 Source Data
Country
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Australia
100
102.1
106.7
109.0
111.4
113.2
116.3
118.6
119.5
122.0
124.6
129.7
131.1
129.5
129.0
131.5
136.8
128.7
130.3
130.5
Canada
100
101.2
106.4
114.2
119.8
121.1
131.5
138.3
149.8
164.1
158.3
159.8
158.7
162.3
165.0
162.9
161.6
153.3
N/A
N/A
France
100
99.3
96.5
99.6
103.4
103.3
107.7
112.5
116.2
121.4
123.3
122.7
125.1
126.0
128.7
128.7
129.6
126.0
N/A
N/A
Germany
100
97.1
89.5
92.7
92.5
89.9
93.6
94.8
95.9
102.8
104.7
102.2
103.6
107.8
110.4
120.3
126.3
122.7
95.4
106.2
Italy
100
99.8
97.1
103.8
108.9
108.1
109.2
110.2
109.9
114.0
113.1
112.3
109.5
111.1
112.0
116.8
120.6
116.3
97.7
103.0
Japan
100
97.9
94.4
92.9
96.6
100.7
103.2
97.8
97.4
102.4
96.8
95.4
100.4
106.3
111.8
115.6
120.3
119.7
96.1
N/A
123
Country
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
United Kingdom
100
100.0
101.4
105.5
107.0
107.6
109.6
110.2
111.1
113.8
112.3
109.9
109.6
112.0
111.9
113.9
114.3
111.3
N/A
N/A
United States
100
103.6
107.7
115.0
119.7
124.1
132.0
139.2
149.0
154.6
147.6
153.1
157.8
171.3
177.5
182.5
189.9
181.8
166.4
N/A
Source: OECD Structural Analysis Database (STAN), Australian Bureau of Statistics (ABS) for data on Australia
124
Figure 1.10 Source Data
OECD EU
21.9
China
18.9
United States
18.2
Other Asia & Oceania
9.5
Japan
10.7
Other OECD
10.4
South & Central America
5.6
Other Europe
3.1
Africa
1.6
Source: United Nations Statistical Division, National Accounts Main Aggregates Database
Figure 1.11 Source Data
Value-Added
Country Blocs1
Employment
Exports
1990
2000
2010
1990
2000
2009
2000
2007
2010
East Asia excl. China
1.8
2.5
2.8
3.3
3.0
2.5
8.3
7.0
7.7
China
3.2
8.3
18.9
28.0
25.5
38.1
3.9
8.8
10.7
South Asia
1.6
1.8
3.2
5.4
5.7
6.4
1.4
2.0
2.1
South East Asia
1.8
2.9
4.7
3.7
6.3
8.2
6.7
6.2
7.1
Latin America excl. Mexico
3.5
3.8
5.2
3.7
5.3
5.8
2.9
3.6
3.8
Mexico
1.4
2.3
1.8
3.0
4.2
3.4
2.6
2.0
2.0
Middle East and North Africa
2.2
2.2
3.0
2.1
2.5
3.1
4.8
6.5
6.2
Sub-Saharan Africa excl. South
Africa
0.5
0.3
0.4
0.5
0.5
0.5
1.1
1.4
1.5
South Africa
0.5
0.4
0.5
0.8
0.7
0.6
0.4
0.5
0.5
100.0
100.0
100.0
World
N/A
N/A
N/A
N/A
N/A
N/A
Source: United Nations Statistics Division, UNIDO and UN Comtrade Database
Note: 1. For the list of countries comprising the country blocs (see table below)
East Asia excl. China
Middle East and North Africa (cont'd)
China, Hong Kong Special Administrative Region
Kuwait
China, Macao Special Administrative Region
Lebanon
Mongolia
Occupied Palestinian Territory
Republic of Korea
Oman
Blank cell
Qatar
South Asia
Saudi Arabia
Afghanistan
Syrian Arab Republic
Bangladesh
Turkey
Bhutan
United Arab Emirates
India
Yemen
Iran (Islamic Republic of)
Blank cell
Maldives
Sub-Saharan Africa excl. South Africa
Nepal
Angola
Pakistan
Benin
Sri Lanka
Botswana
125
East Asia excl. China
Middle East and North Africa (cont'd)
Blank cell
Burkina Faso
South East Asia
Burundi
Brunei Darussalam
Cameroon
Cambodia
Cape Verde
Indonesia
Central African Rep
Lao People's Democratic Republic
Chad
Malaysia
Comoros
Myanmar
Congo
Philippines
Cote d'Ivoire
Singapore
Dem Rep of the Congo
Thailand
Djibouti
Timor-Leste
Equatorial Guinea
Viet Nam
Eritrea
Blank cell
Ethiopia
Latin America excl. Mexico
Gabon
Argentina
Gambia
Bolivia (Plurinational State of)
Ghana
Brazil
Guinea
Chile
Guinea-Bissau
Colombia
Kenya
Ecuador
Lesotho
Guyana
Liberia
Paraguay
Madagascar
Peru
Malawi
Suriname
Mali
Uruguay
Mauritania
Venezuela (Bolivarian Republic of)
Mauritius
Belize
Mozambique
Costa Rica
Namibia
El Salvador
Niger
Guatemala
Nigeria
Honduras
Rwanda
Nicaragua
Sao Tome & Principe
Panama
Senegal
Middle East and North Africa
Seychelles
Algeria
Sierra Leone
Egypt
Somalia
Morocco
Swaziland
Sudan
Togo
Tunisia
Uganda
Bahrain
United Rep of Tanzania
Iraq
Zambia
Jordan
Zimbabwe
126
Figure 1.12 Source Data
Country
1995
2005
Luxembourg
41%
60%
Hungary
48%
56%
Estonia
48%
51%
Ireland
47%
51%
Slovak Republic
35%
49%
Czech Republic
N/A
48%
Slovenia
N/A
46%
Belgium
41%
40%
Portugal
36%
39%
Korea
30%
39%
Mexico
N/A
37%
Finland
29%
36%
Netherlands
33%
35%
Denmark
27%
35%
Austria
30%
35%
Spain
27%
34%
Sweden
29%
33%
Poland
17%
31%
Italy
23%
29%
Romania
N/A
29%
China
16%
28%
Canada
31%
27%
Germany
20%
27%
Greece
16%
26%
France
20%
26%
Turkey
14%
22%
Chile
19%
22%
United Kingdom
22%
19%
New Zealand
18%
N/A
Israel
17%
N/A
Indonesia
15%
18%
South Africa
10%
17%
Norway
22%
16%
Japan
8%
15%
Brazil
11%
14%
Australia
14%
14%
Russian Federation
11%
N/A
India
10%
13%
United States
9%
13%
Note: The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities.
The use of West Bank under the terms of international law.
Source: De Backer and Yamano (2012)
127
Figure 1.13 Source Data
Industry
OECD average 1995
OECD average 2005
Coke, refined petroleum
47%
59%
Radio, TV and communication equip.
22%
47%
Manufacturing nec
24%
40%
Office machinery and computers
34%
37%
Basic metals
31%
37%
Motor vehicles
30%
34%
Rubber and plastics
26%
33%
Chemicals
26%
31%
Electrical machinery nec
21%
30%
Scientific instruments
16%
30%
Fabricated metal products
22%
29%
Machinery and equipment, nec
19%
27%
Wood and wood products
18%
27%
Utility
12%
26%
Textiles, leather and footwear
28%
26%
Paper, printing and publishing
20%
25%
Other transport equipment
25%
25%
Non-metallic mineral products
16%
17%
Construction
15%
17%
Computer and related activities
12%
15%
Food, beverages and tobacco
22%
14%
Hotels and restaurants
11%
13%
Research and development
14%
12%
Transport and storage
13%
11%
Post and telecommunications
8%
11%
Mining and quarrying
10%
10%
Other business activities
9%
9%
Wholesale and retail trade
8%
8%
Finance and insurance
10%
7%
Agriculture, forestry and fishing
12%
7%
Renting of machinery and equipment
7%
7%
Real estate activities
1%
5%
Source: De Backer and Yamano (2012)
128
Figure 1.14 Source Data
USD millions, at current prices
Other
OECD
CHN
Other
East
& SouthEast Asia
2,364
1,628
3,734
26,587
891
68,808
4,627
31,692
2,632
19,211
9,749
117,409
37,695
21,193
2,476
1,359
11,049
2,393
110,205
2,290
524
1,209
2,352
9,758
1,037
29,357
1,112
N/A
798
840
296
1,156
519
21,973
180
2,498
N/A
238
37
317
230
8,816
1,859
1,209
2,135
278
N/A
260
2,956
1,792
29,821
2,688
1,876
2,128
613
185
365
N/A
12,037
361
22,082
10,635
11,733
7,776
7,836
3,253
1,994
2,788
9,586
N/A
1,810
57,411
Rest of the
World
7,238
29,559
8,998
8,559
3,159
1,717
11,925
3,280
13,215
N/A
87,650
Total import
content of
exports
41,600
101,147
65,935
49,705
69,700
33,680
53,161
23,536
96,286
18,782
553,532
8.4
10.2
9.5
23.5
31.6
42.5
19.0
15.2
19.5
3.2
13.2
Origin\
Destination
JPN
EU15
JPN
N/A
10,286
9,284
EU15
9,173
N/A
15,902
USA
5,635
20,124
N/A
AUS/KOR/
NZL
4,534
4,158
CAN
1,063
MEX
194
Other OECD
AUS/
KOR/
NZL
CAN
MEX
9,945
4,089
10,455
13,968
8,281
3,495
N/A
3,652
12,537
914
4,208
1,299
18,033
CHN
1,829
Other East &
South-East
Asia
As a
percentage of
total exports
USA
Rest of
the
world
Notes:
EU15 includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy,
Luxembourg, the Netherlands, Portugal, Spain, Sweden, the United Kingdom.
Other OECD includes the Czech Republic, Estonia, Hungary, Iceland, Norway, Poland, the Slovak
Republic, Slovenia, Switzerland, Chile, Turkey, Israel.
Other East and South-East Asia includes Chinese Taipei, Indonesia, Singapore, Hong Kong SAR of
China, Malaysia, Philippines, Thailand, Viet Nam, Brunei Darussalam and Cambodia.
Rest of the world estimated using input-output tables and bilateral trade data for Argentina, Brazil,
India, South Africa, Saudi Arabia, the Russian Federation, selected non-OECD European economies
and a residual aggregate covering all other economies.
The percentage under the economy names shows the import content share of an economy's or region's
total exports.
Economy/region bubble size is proportional to the total value of the import content of exports in USD.
Bilateral trade flows are highlighted by arrows if they represent more than 1.5% of the world total
import content of exports.
Source: Science, Technology and Industry Scoreboard, (OECD, 2011).
129
Total
Figure 1.15 Source Data
Destination countries (USD billion, at current exchange rates)
Origin countries
Brazil
China
India
Russian Federation
South Africa
9.2
6.5
3.2
13.8
5.3
United States
2.3
3.7
1.8
1.7
0.4
Japan
2.0
5.7
1.6
0.2
0.2
EU
2
Notes:
1. BRICS: Brazil, the Russian Federation, India, China and South Africa
2. EU includes OECD EU countries except Slovenia.
Source: Science, Technology and Industry Scoreboard (OECD, 2011).
Figure 1.18 Source Data
Machinery and
equipment
Software and
databases
R&D and other intellectual
property products
Brand equity, firm-specific human
capital, organisational capital
Slovak Republic
19.8
0.4
1.8
2.4
Italy
16.9
0.6
2.2
2.2
Czech Republic
16.2
0.7
2.8
2.9
Japan (2005)
15.3
2.2
6.1
2.8
Australia
13.2
0.8
2.2
2.9
Spain
11.9
0.8
2.8
1.9
Canada (2005)
11.0
1.0
5.0
3.8
Portugal (2005)
10.7
0.8
3.3
3.5
Austria
10.0
0.9
3.1
2.4
Sweden (2005)
9.6
2.0
5.5
4.4
France
8.9
1.4
3.2
3.3
Denmark
8.8
1.9
3.0
3.0
Germany
8.3
0.7
3.6
2.8
Finland (2005)
7.5
1.0
4.0
4.1
United States
7.5
1.4
4.7
5.9
United Kingdom
5.9
1.4
2.9
5.4
Netherlands
5.5
1.4
1.9
5.7
Country
Source: Science, Technology and Industry Scoreboard (OECD, 2011)
Figure 1.19 Source Data
Country
High technology
Medium-high technology
Ireland
52.4
33.4
Switzerland (2008)
44.0
32.0
Hungary
35.9
39.4
United States
33.9
37.2
Mexico
31.8
42.6
Korea
31.0
33.0
Netherlands
30.7
27.4
Israel (2008)
29.8
26.5
United Kingdom (2008)
27.9
40.0
130
Country
High technology
Medium-high technology
France
26.6
36.9
Japan
23.1
51.5
Belgium
23.0
37.7
Sweden
22.3
34.4
Germany
19.7
49.6
Slovak Republic (2008)
19.5
43.0
Czech Republic
19.4
46.1
Denmark
19.3
30.6
Finland
17.2
33.4
Slovenia
15.3
45.8
Greece
15.0
17.8
Austria
14.3
41.8
Canada (2008)
13.6
38.2
Portugal (2006)
11.7
30.7
Norway
11.3
34.0
Australia (2007)
11.2
16.2
Italy
10.8
40.4
Luxembourg
10.5
24.1
Spain (2008)
10.2
43.3
Poland (2008)
10.0
39.8
Iceland
9.0
5.3
Estonia
8.2
30.2
New Zealand (2008)
5.5
11.3
Turkey (2008)
3.2
30.6
Source: OECD Structural Analysis Database (STAN)
Figure 1.20 Source Data
Country
2000
2008
United States (2003,2008)
50.9
52.6
United Kingdom
43.2
50.1
France
35.9
45.3
Germany
40.2
43.7
Australia
36.9
42.2
Italy
30.0
35.5
Japan (2003,2008)
32.3
32.4
Canada
26.0
28.3
Turkey
#N/A
18.6
Note: Services related occupations correspond to ISCO-88 major groups 1: "Legislators, Senior Officials and
Managers"; 2, "Professionals"; 3, "Technicians and Associate Professionals", 4, "Clerks"; and 5, "Service workers
and shop and market sales workers".
Source: Science, Technology and Industry Scoreboard (OECD, 2011)
131
Figure 1.21 Source Data
Country
2005
1995
United States
30.4
24.3
France
28.6
26.5
Japan
27.6
27.7
Australia
26.8
24.6
South Africa
26.1
26.6
India
24.3
24.0
Germany
23.9
24.6
Italy
23.5
22.8
United Kingdom
22.9
20.8
Brazil
21.3
18.4
Turkey
20.9
16.0
Mexico
18.4
#N/A
Canada
17.2
18.8
China
16.4
14.9
Korea
16.1
16.0
Indonesia
13.0
14.2
Source: Science, Technology and Industry Scoreboard (OECD, 2011)
Figure 1.22 Source Data
Technology or Product
Next 3 years
Next 12 months
Green tech
43%
35%
Energy
42%
35%
High tech
42%
44%
Pharmaceuticals/biotech
37%
38%
Electronics
20%
24%
Construction
19%
10%
Chemicals and plastics
14%
14%
Food and beverages
11%
16%
Transportation
11%
8%
Metals
7%
6%
Machinery
6%
5%
Textiles
3%
3%
Wood, pulp and paper
3%
3%
Other
1%
1%
Source: Economist Intelligence Unit survey (2012)
132
Figure 2.1 Source Data
Country
1990
2000
2010
rank 2010
China
3.2
8.3
18.9
1
United States
22.8
26.0
18.2
2
Japan
17.7
17.7
10.7
3
Germany
9.6
6.7
6.0
4
Italy
5.3
3.5
3.0
5
Brazil
1.7
1.7
2.8
6
Korea
1.4
2.3
2.7
7
France
4.4
3.3
2.6
8
United Kingdom
4.5
3.9
2.3
9
India
1.1
1.2
2.2
10
Russian Federation
3.0
0.9
2.1
11
Mexico
1.4
2.3
1.8
12
Indonesia
0.6
0.8
1.7
13
Canada
2.0
2.2
1.6
15
Australia
0.9
0.8
1.2
16
Turkey
1.2
0.9
1.1
17
Argentina
0.8
0.8
0.7
22
South Africa
0.5
0.4
0.5
28
Saudi Arabia
0.2
0.3
0.4
32
New Zealand
0.2
0.1
0.2
52
Source: United Nations Statistical Division, National Accounts Main Aggregates Database, March 2012
133
Figure 2.2 Source Data
Australia
Performance
measure
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
R&D
22.0
N/A
26.1
N/A
25.9
N/A
25.8
N/A
22.7
N/A
21.7
N/A
21.7
N/A
21.4
N/A
18.5
N/A
15.9
N/A
N/A
Exports
38.9
40.1
42.2
42.8
43.4
43.8
41.8
42.0
42.2
41.4
39.5
39.6
39.6
42.9
41.6
38.7
38.6
39.7
33.7
32.2
N/A
GFCF
10.4
10.5
10.3
10.4
10.8
10.2
9.0
9.2
8.1
8.6
8.8
8.0
9.7
9.4
9.8
10.2
8.6
8.0
7.2
6.5
5.8
Value added
14.0
14.1
14.3
14.7
14.7
14.3
13.8
14.0
13.3
12.9
12.3
11.9
12.3
12.3
11.7
11.2
10.5
10.3
9.3
9.0
8.3
Employment
14.0
13.6
13.6
13.6
13.3
12.8
13.0
12.6
11.9
12.0
11.9
11.4
11.4
10.9
10.7
10.2
9.9
10.0
9.4
9.2
N/A
2008
2009
2010
G7 countries
Performance
measure
1990
1991
58.1
1992
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
55.4
55.7
57.6
58.0
55.5
53.0
52.5
50.9
48.8
49.2
53.3
53.1
53.5
53.8
N/A
N/A
N/A
74.0
73.0
73.1
73.5
73.3
73.4
72.9
72.6
71.9
71.7
71.9
71.9
70.5
69.9
68.5
69.7
N/A
Exports
N/A
GFCF
N/A
15.6
14.8
13.1
13.2
14.0
14.3
14.1
13.7
12.8
12.5
12.2
11.2
10.3
9.7
9.4
9.2
10.4
11.1
N/A
N/A
Value added
N/A
21.0
20.5
19.8
19.6
19.7
19.2
19.0
18.6
18.3
17.9
16.7
16.4
16.1
16.2
16.1
15.8
N/A
N/A
N/A
N/A
Employment
N/A
19.1
18.6
18.0
17.6
17.3
17.0
16.8
16.6
16.1
15.8
15.4
14.8
14.3
14.0
13.7
13.5
13.3
13.0
N/A
N/A
N/A
55.0
1994
R&D
N/A
57.1
1993
N/A
N/A
Note: 1. Japan excluded in GFCF.
Source: OECD Structural Analysis Database (STAN), OECD Main Indicators on Science and Technology (MSTI), OECD Bilateral Trade Database (BTD); Australian Bureau of
Statistics (ABS) for data on Australia.
134
Figure 2.3 2009 Share Source Data
Australia
United States
Manufacturing
Industry
Share of total
manufacturing
employment
Food,
beverages and
tobacco
products
22.5
Textile,
clothing,
leather,
footwear
4.4
Wood
4.9
Paper and
printing
Germany
Share of total
manufacturing
employment
Manufacturing
Industry
Share of total
manufacturing
employment
12.9
Food,
beverages and
tobacco
products
12.0
Textile,
clothing,
leather,
footwear
3.8
Textile,
clothing,
leather,
footwear
2.3
Wood
3.0
Wood
1.9
7.1
Paper and
printing
14.2
Paper and
printing
4.9
Petroleum and
coal products
0.8
Petroleum and
coal products
0.9
Petroleum and
coal products
6.4
Chemical and
rubber products
8.0
Chemical and
rubber products
11.0
Chemical and
rubber products
8.0
Non-metallic
mineral
products
3.7
Non-metallic
mineral
products
3.1
Non-metallic
mineral
products
16.0
Metal products
15.2
Metal products
13.1
Metal products
4.0
Transport
equipment
8.0
Transport
equipment
10.5
Transport
equipment
11.3
Machinery and
equipment
12.6
Machinery and
equipment
19.5
Machinery and
equipment
5.5
Furniture and
other
manufacturing
6.3
Furniture and
other
manufacturing
8.1
Furniture and
other
manufacturing
5.4
Manufacturing,
nfd
6.6
Manufacturing
Industry
Food,
beverages and
tobacco
products
Source: OECD Structural Analysis Database (STAN); Australian Bureau of Statistics (ABS) for data on Australia.
(Figure 2.3) Radar Chart Source Data
Wood
Paper,
printing
and
publishing
Chemical,
rubber and
plastics
products
Nonmetallic
mineral
products
Basic
metals
and
fabricated
metal
products
Machinery
and
equipment
Transport
equipment
Manufacturing
n.e.c. and
recycling
4.4
4.9
7.1
8.8
3.7
15.2
12.6
8.0
6.3
12.3
4.9
5.9
18.5
12.4
3.0
12.9
12.7
10.1
7.3
17.9
1.6
5.4
11.5
7.4
3.9
11.8
19.2
17.2
4.0
Country
Food,
beverages
and
tobacco
Textiles,
leather
and
footwear
Australia
22.5
Canada
Norway
Source: OECD Structural Analysis Database (STAN); Australian Bureau of Statistics (ABS) for data on Australia.
Figure 2.4 Source Data
Year
Manufacturing
Agriculture
1970-71
34.9
N/A
N/A
N/A
N/A
N/A
N/A
N/A
28.0
N/A
N/A
N/A
N/A
N/A
1971-72
34.2
N/A
N/A
N/A
N/A
N/A
N/A
N/A
21.0
N/A
N/A
N/A
N/A
N/A
135
Year
Manufacturing
1972-73
33.7
1973-74
26.6
1974-75
Agriculture
N/A
N/A
N/A
N/A
N/A
N/A
14.0
N/A
N/A
N/A
N/A
N/A
27.2
N/A
N/A
N/A
N/A
N/A
N/A
13.0
N/A
N/A
N/A
N/A
N/A
26.2
26.4
N/A
N/A
N/A
N/A
N/A
N/A
8.0
N/A
N/A
N/A
N/A
N/A
1975-76
N/A
27.8
N/A
N/A
N/A
N/A
N/A
N/A
9.0
N/A
N/A
N/A
N/A
N/A
1976-77
N/A
26.3
24.7
N/A
N/A
N/A
N/A
N/A
9.0
N/A
N/A
N/A
N/A
N/A
1977-78
N/A
24.8
22.5
N/A
N/A
N/A
N/A
N/A
13.0
N/A
N/A
N/A
N/A
N/A
1978-79
N/A
N/A
23.5
N/A
N/A
N/A
N/A
N/A
10.0
N/A
N/A
N/A
N/A
N/A
1979-80
N/A
N/A
23.3
N/A
N/A
N/A
N/A
N/A
7.0
N/A
N/A
N/A
N/A
N/A
1980-81
N/A
N/A
23.4
N/A
N/A
N/A
N/A
N/A
8.0
N/A
N/A
N/A
N/A
N/A
1981-82
N/A
N/A
24.8
N/A
N/A
N/A
N/A
N/A
9.0
N/A
N/A
N/A
N/A
N/A
1982-83
N/A
N/A
24.3
22.4
N/A
N/A
N/A
N/A
17.0
N/A
N/A
N/A
N/A
N/A
1983-84
N/A
N/A
24.0
22.7
N/A
N/A
N/A
N/A
11.0
12.0
N/A
N/A
N/A
N/A
1984-85
N/A
N/A
N/A
23.4
N/A
N/A
N/A
N/A
N/A
10.0
N/A
N/A
N/A
N/A
1985-86
N/A
N/A
N/A
21.0
N/A
N/A
N/A
N/A
N/A
12.0
N/A
N/A
N/A
N/A
1986-87
N/A
N/A
N/A
20.1
N/A
N/A
N/A
N/A
N/A
19.0
N/A
N/A
N/A
N/A
1987-88
N/A
N/A
N/A
20.0
N/A
N/A
N/A
N/A
N/A
11.0
N/A
N/A
N/A
N/A
1988-89
N/A
N/A
N/A
17.9
N/A
N/A
N/A
N/A
N/A
8.0
N/A
N/A
N/A
N/A
1989-90
N/A
N/A
N/A
16.7
16.3
N/A
N/A
N/A
N/A
7.0
N/A
N/A
N/A
N/A
1990-91
N/A
N/A
N/A
15.6
15.5
N/A
N/A
N/A
N/A
14.7
17.0
N/A
N/A
N/A
1991-92
N/A
N/A
N/A
N/A
13.8
N/A
N/A
N/A
N/A
N/A
13.8
N/A
N/A
N/A
1992-93
N/A
N/A
N/A
N/A
12.6
N/A
N/A
N/A
N/A
N/A
10.7
N/A
N/A
N/A
1993-94
N/A
N/A
N/A
N/A
10.8
N/A
N/A
N/A
N/A
N/A
9.9
N/A
N/A
N/A
1994-95
N/A
N/A
N/A
N/A
9.4
N/A
N/A
N/A
N/A
N/A
10.1
N/A
N/A
N/A
1995-96
N/A
N/A
N/A
N/A
8.1
N/A
N/A
N/A
N/A
N/A
10.1
N/A
N/A
N/A
1996-97
N/A
N/A
N/A
N/A
6.3
5.7
N/A
N/A
N/A
N/A
10.1
6.5
N/A
N/A
1997-98
N/A
N/A
N/A
N/A
N/A
5.3
N/A
N/A
N/A
N/A
8.6
5.8
N/A
N/A
1998-99
N/A
N/A
N/A
N/A
N/A
5.2
N/A
N/A
N/A
N/A
7.2
5.1
N/A
N/A
1999-00
N/A
N/A
N/A
N/A
N/A
4.8
N/A
N/A
N/A
N/A
6.2
4.7
N/A
N/A
2000-01
N/A
N/A
N/A
N/A
N/A
4.7
N/A
N/A
N/A
N/A
N/A
3.2
N/A
N/A
2001-02
N/A
N/A
N/A
N/A
N/A
4.8
5.1
N/A
N/A
N/A
N/A
3.6
3.6
N/A
2002-03
N/A
N/A
N/A
N/A
N/A
4.6
4.8
N/A
N/A
N/A
N/A
5.4
5.7
N/A
2003-04
N/A
N/A
N/A
N/A
N/A
N/A
4.8
5.1
N/A
N/A
N/A
N/A
4.8
4.9
2004-05
N/A
N/A
N/A
N/A
N/A
N/A
4.6
4.7
N/A
N/A
N/A
N/A
4.5
4.6
2005-06
N/A
N/A
N/A
N/A
N/A
N/A
N/A
4.6
N/A
N/A
N/A
N/A
N/A
4.9
2006-07
N/A
N/A
N/A
N/A
N/A
N/A
N/A
4.6
N/A
N/A
N/A
N/A
N/A
7.1
2007-08
N/A
N/A
N/A
N/A
N/A
N/A
N/A
4.6
N/A
N/A
N/A
N/A
N/A
7.6
2008-09
N/A
N/A
N/A
N/A
N/A
N/A
N/A
4.6
N/A
N/A
N/A
N/A
N/A
5.3
2009-10
N/A
N/A
N/A
N/A
N/A
N/A
N/A
4.4
N/A
N/A
N/A
N/A
N/A
4.7
Note: The effective rate of assistance is defined as the net assistance received per dollar of value added;
Overlapping observations arise from revisions to industry input and output measures used to estimate effective
rates.
Source: Productivity Commission (2011).
136
Figure 2.5 Source Data
Industry
Australia
Germany
United States
Textile, clothing and footwear
-47.4
-40.5
-61.1
Petroleum and coal products
-24.9
-11.8
-8.8
Furniture and other manufacturing
-23.9
-7.3
-29.7
Chemical and rubber products
-22.2
-7.9
-26.1
Non-metallic mineral products
-18.5
-26.2
-28.2
Metal products
-16.6
-3.5
-28.4
Paper and printing
-13.9
-22.5
-27.4
Transport equipment
-12.4
-5.8
-35.1
Total manufacturing
-4.5
-7.3
-30.4
Wood
0.0
-31.3
-40.6
Machinery and equipment
5.2
0.5
-33.6
Food, beverages and tobacco
14.5
0.2
-6.7
Source: OECD Structural Analysis Database (STAN); Australian Bureau of Statistics (ABS) for data on Australia.
Figure 2.6 Source Data
Terms and
exchange rate
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Terms of trade
(2005=100)
79.1
76.2
80.6
81.2
83.5
85.2
92.3
100
111.1
119.5
122.1
130.3
133.6
168.8
Nominal effective
exchange rate
(2005=100)
89.0
89.4
83.0
77.7
80.8
90.3
97.5
100
98.6
104.8
102.6
98.0
111.3
113.3
Source: OECD Economic Outlook Database.
Figure 2.7 Source Data
Year
Value added (current prices)
Value added (constant prices)
Employment
Investments
1970
4.04
1.82
3.35
8.31
1971
4.66
2.63
3.42
8.79
1972
5.54
3.43
3.28
8.84
1973
5.71
4.17
3.11
8.53
1974
5.91
4.09
3.06
7.51
1975
5.85
3.87
3.28
5.85
1976
5.74
3.85
3.69
4.89
1977
5.35
3.82
4.13
7.27
1978
5.33
3.39
4.50
7.10
1979
5.29
3.07
4.90
6.51
1980
4.22
2.70
4.85
5.13
1981
3.20
2.25
4.86
2.36
1982
2.56
2.23
4.39
4.13
1983
2.35
2.47
4.13
5.93
1984
2.16
2.48
3.93
6.73
1985
2.33
2.34
3.91
6.66
1986
2.66
2.93
3.83
6.15
1987
3.15
3.19
3.70
4.97
137
Year
Value added (current prices)
Value added (constant prices)
Employment
Investments
1988
3.03
3.64
3.43
6.81
1989
3.33
4.14
3.28
9.70
1990
3.69
4.27
3.25
10.25
1991
4.48
4.11
3.36
10.05
1992
4.55
3.52
3.27
8.38
1993
4.37
3.26
3.31
5.76
1994
4.13
2.79
3.32
5.17
1995
4.13
2.72
3.44
6.98
1996
3.40
2.46
3.43
6.94
1997
2.90
2.59
3.03
5.69
1998
2.38
2.51
2.82
3.39
1999
2.23
2.53
2.67
3.99
2000
2.54
2.70
2.48
5.69
2001
3.02
2.79
2.43
5.84
2002
3.32
2.68
2.48
5.20
2003
3.52
2.60
2.53
5.11
2004
3.54
2.36
2.59
5.37
2005
3.21
2.56
2.71
4.01
2006
3.22
2.65
3.00
3.56
2007
3.95
2.61
3.22
4.96
2008
4.75
2.48
3.21
5.89
2009
5.93
2.34
3.04
7.01
2010
6.60
2.04
3.07
7.94
2011
6.76
1.84
2.87
8.25
Source: OECD Economics Department.
138
Figure 2.8 Source Data
Value-Added (Current Prices)
Country
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Australia
100
107.6
116.1
122.5
126.9
129.4
138.1
139.2
143.1
145.3
149.8
164.2
176.2
180.0
186.7
192.1
209.4
203.5
200.8
201.3
Canada
100
99.6
106.7
122.0
137.3
138.8
149.5
158.1
179.1
196.5
189.8
193.1
191.6
198.9
198.1
197.3
Germany
100
101.2
94.5
96.9
99.2
98.1
101.1
105.0
105.1
110.7
112.7
111.5
112.9
117.4
119.2
128.2
135.6
132.8
111.7
124.8
Norway
100
103.1
110.8
117.9
131.6
134.3
145.1
155.4
161.7
168.8
176.4
175.9
181.9
194.0
207.0
234.2
255.8
257.7
255.6
United States
100
104.3
108.6
115.8
121.1
124.8
132.3
138.4
145.6
147.5
140.5
143.8
146.2
158.0
167.3
173.8
180.1
175.5
168.6
Value-Added (Constant Prices)
Country
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Australia
100
102.1
106.7
109.0
111.4
113.2
116.3
118.6
119.5
122.0
124.6
129.7
131.1
129.5
129.0
131.5
136.8
128.7
126.4
126.6
Canada
100
101.2
106.4
114.2
119.8
121.1
131.5
138.3
149.8
164.1
158.3
159.8
158.7
162.3
165.0
162.9
161.6
153.3
Germany
100
97.1
89.5
92.7
92.5
89.9
93.6
94.8
95.9
102.8
104.7
102.2
103.6
107.8
110.4
120.3
126.3
122.7
95.4
106.2
Norway
100
100.6
102.6
105.3
105.8
110.1
114.8
114.0
113.9
113.3
112.4
111.9
115.6
122.1
127.6
131.4
135.7
139.3
128.3
United States
100
103.6
107.7
115.0
119.7
124.1
132.0
139.2
149.0
154.6
147.6
153.1
157.8
171.3
177.5
182.5
189.9
181.8
166.4
Investments
Country
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Australia
100
105.9
114.1
134.0
129.7
120.2
135.2
125.8
145.9
141.4
142.3
194.1
206.4
239.9
279.5
251.8
263.8
253.4
217.9
205.4
Canada
100
78.9
77.0
94.5
108.0
115.3
131.0
137.4
138.9
144.0
117.5
112.4
122.0
116.4
122.6
120.6
124.9
123.9
Germany
100
94.8
76.9
72.0
74.7
76.1
77.7
84.0
87.5
90.5
95.3
85.3
83.2
82.3
78.3
83.9
95.6
102.5
81.2
85.5
Norway
100
99.3
79.4
90.4
128.2
149.2
153.9
187.4
162.5
147.6
155.1
183.6
144.9
165.6
174.9
195.1
249.3
285.7
176.3
United States
100
102.5
104.0
117.4
137.0
150.6
156.7
163.3
162.5
171.4
166.1
145.2
130.2
131.2
149.6
156.7
182.3
194.8
169.1
2001
2002
2003
2004
Employment
Country
1991
1992
1993
1994
1995
1996
1997
1998
1999
139
2000
2005
2006
2007
2008
2009
2010
Employment
Australia
100
99.2
101.3
104.1
102.3
104.7
103.1
99.2
102.4
103.2
100.6
104.2
99.8
101.6
99.5
99.1
104.3
99.1
Canada
100
96.1
95.3
97.0
100.7
102.3
105.4
106.9
110.6
114.9
113.0
112.9
112.5
112.6
111.6
108.8
105.7
103.3
Germany
100
92.5
86.0
81.6
79.7
77.6
76.2
76.6
76.2
76.7
77.0
75.4
73.4
72.4
71.0
70.5
71.5
73.0
70.6
Norway
100
98.2
100.1
102.5
105.2
106.8
111.4
113.2
108.8
106.0
102.8
101.1
96.9
93.5
93.6
98.3
101.6
103.5
96.0
United States
100
98.4
98.4
99.8
101.6
101.6
102.7
103.8
102.7
102.5
98.0
90.9
86.5
85.3
85.0
84.6
83.3
80.5
71.5
Source: OECD Structural Analysis Database (STAN); Australian Bureau of Statistics (ABS) for data on Australia.
140
93.9
69.3
Figure 2.9 Source Data
Productivity
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Multi-factor productivity
0.2
0.5
3.4
1.4
-0.1
1.6
2.5
2.4
3.1
0.3
0.9
3
0.2
1.4
-0.2
-0.1
0
0
-0.9
N/A
N/A
Labour productivity
1.8
1.5
4.2
1.4
-0.5
1.9
3.3
3.1
3.8
0.6
1.9
4
0.6
2.2
0.6
0.8
0.7
0.8
0.4
2.1
-0.7
Source: OECD Productivity Database.
Figure 2.10 Source Data
AAGR
Australia
Industry (ISIC Revision 3)
Germany
United States
1990-2000
2000-2007
1991-2000
2000-2007
1990-2000
2000-2007
Electrical & optical equipment (30t33)
2.68
2.33
3.35
5.69
13.93
12.61
Other manufacturing industries (15t37-30t33)
0.27
0.43
1.31
1.85
0.36
2.29
Food, beverages, tobacco (15t16)
0.02
-2.60
-0.30
-0.87
0.13
2.07
Textiles, clothing, footwear (17t19)
-0.93
-2.69
2.78
3.37
1.77
1.90
Wood and wood products (20)
0.20
-2.34
3.18
1.45
-2.57
2.39
Paper, printing, publishing (21t22)
-0.60
0.17
0.89
-0.53
-1.23
0.76
Coke, refined petr., nuclear fuel (23)
1.08
-0.91
-18.00
-9.27
5.16
-4.17
Chemicals (24)
-1.39
-0.05
4.68
4.46
-0.50
4.43
Rubber & plastics products (25)
2.21
1.78
0.90
3.08
2.60
0.65
Non-metallic mineral products (26)
1.92
3.81
2.26
2.68
2.01
0.11
Metals (27t28)
0.11
3.71
2.18
0.49
1.71
1.49
Machinery, n.e.c. (29)
2.33
1.14
1.78
1.29
-1.93
3.25
Transport equipment (34t35)
2.28
0.98
-0.42
5.15
0.95
6.05
Other manufacturing, n.e.c. (36t37)
-1.43
-0.17
0.46
-1.50
0.84
2.50
Source: EUKLEMS
141
Figure 2.11 Source Data
Country
1997
2010
Norway
114.4
165.6
Switzerland
130.2
153.1
Denmark
104.5
130.9
Sweden
108.3
126.1
Germany
126.5
126.0
Finland
97.0
121.8
Netherlands
101.5
117.8
Australia
82.9
116.9
France
108.0
116.7
Ireland
73.9
104.5
Canada
81.7
102.7
Italy
85.4
96.2
Japan
96.7
92.1
United Kingdom
80.3
84.8
Spain
60.4
76.6
New Zealand
53.7
59.2
Israel
53.5
57.9
Singapore
52.7
55.0
Korea
40.6
47.9
Argentina
32.2
36.4
Brazil
30.7
29.0
Hungary
13.2
24.2
Chinese Taipei
30.6
24.1
Mexico
15.1
17.9
Philippines
5.5
5.5
Note: Compensation costs relate to all employees in manufacturing and include (1) direct pay, (2) employer social
insurance expenditures and (3) labour-related taxes (see table 1). Direct pay includes all payments made directly
to the worker, before payroll deductions of any kind, consisting of pay for time worked and directly-paid benefits.
Social insurance expenditures refer to the value of social contributions (legally required as well as private and
contractual) incurred by employers in order to secure entitlement to social benefits for their employees; these
contributions often provide delayed, future income and benefits to employees. Labour-related taxes refer to taxes
on payrolls or employment (or reductions to reflect subsidies), even if they do not finance programs that directly
benefit workers.
Source: US Bureau of Labor Statistics.
142
Figure 2.12 Source Data
Country
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Australia
83.8
85.1
85.4
84.7
86.5
86.4
88.2
89.7
91.2
93.5
100
102.8
106.9
110.8
116.5
112.5
Germany
108.5
111.1
106.7
107.6
107.6
105.7
106.2
107.8
106.4
103.5
100
96.1
94.5
102.3
117.8
107.8
United States
118.8
117.4
116.2
114.9
112.5
114.9
117.3
110.5
109.9
101.5
100
100.1
98.4
103.1
103.4
100.2
G7
111.7
111.4
110.4
110.8
109.3
108.2
110.7
108.4
106.7
101.9
100
99.4
97.7
101.9
108.2
102.8
OECD - Total
89.2
92.3
94.9
98.1
100.3
101.4
105.3
105.0
104.2
100.9
100
99.5
98.5
102.4
108.3
103.2
Note: ULCs are calculated as Total Labour costs dived by real output (both expressed in national currency); hence changes in the exchange rate are not reflected in these results.
Source: OECD Labour Costs Database
Figure 2.13 Source Data
Product
Australia
Germany
United States (2006)
Total Manufacturing
14.2
37.0
31.5
Chemicals, rubber and plastics
23.2
81.4
78.6
Transport equipment
22.9
267.1
106.8
Machinery and equipment
16.2
46.0
19.1
Non-metallic mineral products
15.8
25.1
42.2
Metals and metal products
14.1
26.6
30.0
Manufacturing n.e.c. and recycling
13.9
16.9
24.6
Paper and printing
13.7
22.9
20.1
Food, beverages and tobacco
12.1
27.5
64.0
Textiles, clothing and footwear
11.1
21.7
26.2
Wood
8.7
11.2
36.3
Note: number of employees instead of number of persons engaged for the United States.
Source: OECD Structural Analysis Database (STAN); Australian Bureau of Statistics (ABS) for data on Australia.
143
Figure 2.14 Source Data
Country
Export share of production
Import penetration
Canada (2006)
N/A
50.9
United Kingdom (2007)
39.9
49.2
Germany
55.7
47.7
New Zealand (2006)
41.4
46.4
Mexico
40.9
43.9
France (2008)
41.9
43.0
Australia
22.9
38.3
Italy
34.0
30.1
Korea
34.3
24.7
United States
19.1
24.7
Japan
19.1
13.9
Note:
1) import penetration defined as imports in percentage of domestic apparent consumption.
2) export share defined as exports in percentage of production.
Source: OECD Structural Analysis Database (STAN); Australian Bureau of Statistics (ABS) for data on Australia.
Figure 2.15 Source Data
Country
Inward/Outward
Total FDI (% GDP)
Manufacturing (% GDP)
Inward
48.8
7.6
Outward
76.8
19.6
Inward
37.8
7.1
Outward
28.9
4.7
Inward
35.6
30.5
Outward
39.1
23.3
Inward
28.4
2.3
Outward
39.0
3.7
Inward
25.3
7.4
Outward
2.9
0.4
Inward
24.3
2.9
Outward
46.0
4.8
Inward
16.2
5.2
Outward
27.1
4.1
Inward
16.1
1.6
Outward
23.7
2.3
Inward
13.2
5.2
Outward
25.1
10.7
Inward
3.9
1.4
Outward
15.2
7.1
United Kingdom (2009)
Australia
Canada
Germany (2009)
Turkey
France
United States
Italy
Korea
Japan
Source: OECD International Direct Investment Database and OECD Annual National Accounts Database.
144
Figure 2.16 Source Data
Total trade in goods/
Country
2010
1995
Total trade in goods
86.64
88.47
Intermediate goods
87.68
88.30
Total trade in goods
81.21
87.42
Intermediate goods
85.27
84.65
Total trade in goods
80.23
75.81
Intermediate goods
63.91
77.33
Total trade in goods
77.32
76.79
Intermediate goods
82.87
81.65
Total trade in goods
75.42
68.50
Intermediate goods
71.24
68.18
Total trade in goods
75.09
76.01
Intermediate goods
83.40
85.23
Total trade in goods
73.63
71.77
Intermediate goods
71.52
62.21
Total trade in goods
70.97
63.85
Intermediate goods
78.29
65.70
Total trade in goods
65.63
61.67
Intermediate goods
70.69
73.61
Total trade in goods
65.58
48.39
Intermediate goods
64.56
58.75
Total trade in goods
58.57
52.78
Intermediate goods
51.57
54.92
Total trade in goods
56.71
33.62
Intermediate goods
60.04
42.69
Total trade in goods
55.34
58.44
Intermediate goods
53.37
54.41
Total trade in goods
54.78
45.35
Intermediate goods
53.74
49.76
Total trade in goods
54.05
42.27
Intermediate goods
59.87
45.94
Total trade in goods
40.94
46.68
Intermediate goods
46.63
54.46
Total trade in goods
33.10
N/A
Intermediate goods
32.78
N/A
Intermediate goods
France
United Kingdom
Mexico
Germany
Italy
United States
Canada
Korea
China
Turkey
South Africa
India
Brazil
Indonesia
Japan
Australia
Russian Federation
Source: OECD Bilateral Trade by End-Use Database.
Figure 2.17 Source Data
Country
High-technology
Medium-high technology
Medium-low technology
Low-technology
Finland (2007)
23.5
23.0
24.0
29.5
Korea (2006)
23.0
29.1
31.7
16.1
United States
19.7
21.7
25.4
33.2
145
Country
High-technology
Medium-high technology
Medium-low technology
Low-technology
Sweden (2007)
18.7
31.8
23.3
26.2
United Kingdom (2007)
17.1
24.2
21.9
36.7
Japan
15.4
33.5
27.3
23.7
France (2007)
14.0
25.6
29.6
30.8
Germany (2007)
12.8
45.1
22.8
19.3
Canada (2006)
9.2
22.3
26.0
42.5
Italy (2007)
9.0
27.0
30.9
33.2
Mexico (2007)
8.4
26.8
26.2
38.6
Norway (2007)
8.1
22.7
34.4
34.8
Netherlands (2007)
6.9
29.1
24.1
39.8
Australia (2005)
6.7
19.6
31.9
41.9
Source: OECD Structural Analysis Database (STAN); Australian Bureau of Statistics (ABS) for data on Australia.
Figure 2.18 Source Data
Medium-low
technology
Low technology
High-technology
Medium-high
technology
Japan
3.37
2.55
United States
36.84
9.82
France (2006)
3.34
1.49
France (2006)
32.63
14.92
Canada (2006)
N/A
2.02
Canada (2006)
29.82
#N/A
Australia (2005)
3.15
1.61
Japan
28.71
14.73
Germany
1.93
0.95
United Kingdom
27.53
8.67
United States
N/A
1.59
Korea (2006)
22.06
9.06
Korea
1.91
1.58
Germany
18.05
9.81
United Kingdom
1.79
0.75
Australia (2005)
14.18
6.56
Mexico
0.77
0.42
Italy
11.81
3.74
Italy
0.76
0.66
Mexico
0.96
0.85
Country
Country
Source: OECD Structural Analysis Database (STAN).
Figure 2.19 Source Data
Country
Product or process
innovation only
Product or process & marketing
or organisational innovation
Marketing or
organisational
innovation only
Germany
12.4
61.0
12.9
Canada (2007-09)
16.9
53.1
11.1
South Africa (2005-07)
19.6
49.5
8.7
Brazil
7.1
31.1
37.1
Australia (2006-07)
17.9
36.4
7.3
Italy
14.4
29.8
11.8
France
13.6
27.0
12.4
New Zealand (2008-09)
17.2
24.2
9.9
United Kingdom
17.3
23.7
8.5
Korea (2005-07)
21.2
16.0
1.1
Russian Federation
7.5
4.3
1.6
146
Source: OECD Science, Technology and Industry Scoreboard 2011 and Measuring Innovation: A New
perspective (OECD, 2010).
Figure 2.20 Source Data
Country
Product/Process
R&D active firms
Firms without R&D
Product
98.7
1.3
Process
97.2
2.8
Product
86.1
13.9
Process
79.2
20.8
Product
80.3
19.7
Process
65.3
34.7
Product
73.9
26.1
Process
76.8
23.2
Product
56.8
43.2
Process
53.3
46.7
Product
55.6
44.4
Process
46.6
53.4
Product
39.0
61.0
Process
33.0
67.0
Product
34.9
65.1
Process
27.1
72.9
Product
37.0
63.0
Process
35.0
65.0
Product
21.7
78.3
Process
17.3
82.7
Product
3.4
96.6
Process
2.5
97.5
Korea (2005-07)
Finland
France
United Kingdom
South Africa (2005-07)
Italy
Russian Federation
New Zealand (2008-09)
Australia (2006-07)
United States
Brazil
Note: data refer to manufacturing only for Korea and Russian Federation.
Source: OECD Science, Technology and Industry Scoreboard 2011.
Figure 2.21 Source Data
Country
National only
International
United Kingdom
37.3
32.2
Australia (2006-07)
35.9
4.5
France
24.5
18.0
Korea (2005-07, manufacturing)
21.4
1.3
Russian Federation (manufacturing)
21.1
10.1
China (2004-06)
19.2
1.6
New Zealand (2008-09)
18.6
17.3
South Africa (2005-07)
12.0
15.6
Germany
11.4
8.3
Turkey
10.5
5.5
Brazil
9.2
2.2
Italy
4.5
11.7
Source: OECD Science, Technology and Industry Scoreboard 2011.
147
Figure 2.22 Source Data
France
31.6
2.7
Germany
24.1
0.8
Italy
22.0
6.7
United Kingdom
21.2
-0.3
United States
18.7
0.3
Australia
11.7
2.3
Canada
11.5
1.0
Turkey
10.3
N/A
Japan
6.9
-1.3
Note: the growth rate is calculated for the period 2003-08 for Japan and the United States.
Source: OECD, Skills by Industry Database.
Figure 2.23 Source Data
Country
Manufacturing
Services
Other sectors
France
7.2
5.3
0.3
United States (2007)
6.7
3.7
0.1
Japan
8.3
1.0
0.1
Korea
7.5
1.6
0.3
Canada (2008)
2.9
3.4
0.2
Germany
4.9
1.2
0.0
United Kingdom
2.5
1.1
0.1
New Zealand
1.9
1.7
0.1
Australia
1.0
2.1
0.3
Italy
1.3
0.7
0.0
Turkey (2008)
0.5
0.5
0.0
South Africa (2008)
0.2
0.3
0.1
Source: OECD Research and Development Database.
Figure 2.24 Source Data
United States
3.32
Japan
3.19
Germany
3.18
Canada
3.15
Australia
3.02
France
3.01
United Kingdom
2.99
Italy
2.98
Brazil
2.68
India
2.67
China
2.64
Source: Australian Government, Department of Innovation, Industry, Science and Research. Report ‘Management
matters in Australia: Just how productive are we?' (2009).
148
Figure 3.1 Source Data
Industry
Country
1996
2010
TOTAL
100.00
100.00
China
3.20
13.34
Germany
10.94
10.35
United States
12.49
9.57
Japan
9.03
6.19
France
6.26
4.16
Korea
2.79
3.98
Italy
5.51
3.68
Netherlands
3.62
3.49
Hong Kong, China
3.99
3.38
Belgium
3.54
3.22
United Kingdom
5.28
3.05
Singapore
2.71
2.78
Canada
3.61
2.33
Chinese Taipei
2.63
2.32
Mexico
1.81
2.13
Spain
2.10
1.91
India
0.66
1.69
Switzerland
1.77
1.66
Thailand
1.15
1.57
Malaysia
1.57
1.46
Russian Federation
0.94
1.46
Poland
0.51
1.30
Sweden
1.70
1.22
Austria
1.26
1.21
Czech Republic
0.46
1.08
Brazil
0.89
1.07
Ireland
1.01
0.96
Turkey
0.46
0.90
Indonesia
0.75
0.82
Hungary
0.27
0.77
Denmark
1.01
0.72
Australia
0.75
0.64
Finland
0.89
0.57
Saudi Arabia
0.33
0.51
Israel
0.42
0.45
South Africa
0.34
0.43
Argentina
0.37
0.43
Philippines
0.44
0.42
Chile
0.25
0.41
Norway
0.47
0.40
Portugal
0.54
0.39
15T37: Total Manufacturing
149
Industry
Country
1996
2010
Romania
0.17
0.38
New Zealand
0.27
0.21
Slovenia
0.19
0.20
Lithuania
0.07
0.16
Greece
0.21
0.15
Bulgaria
0.10
0.15
Estonia
0.04
0.10
Croatia
0.10
0.09
Latvia
0.03
0.06
Malta
0.04
0.03
Cyprus
0.03
0.01
Albania
0.00
0.01
Moldova
0.02
0.01
Source: OECD STAN Bilateral Trade database, April 2012.
150
Figure 3.2 Source Data
Trade Flow
Export market share
End-use category
Total trade in goods
Time
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Australia
..
1.24
1.26
1.11
1.08
1.11
1.14
1.10
1.02
1.04
1.13
1.15
1.13
1.33
1.40
1.58
Agriculture, Hunting, Forestry and Fishing
Australia
..
2.80
3.38
3.00
3.20
3.59
3.61
3.42
3.50
4.67
3.74
3.62
2.58
2.88
3.41
3.34
Mining and Quarrying
Australia
..
4.86
6.41
6.42
5.31
4.65
5.13
5.04
5.25
5.29
6.01
6.38
6.17
7.94
9.92
11.45
Total Manufacturing
Australia
..
0.75
0.75
0.66
0.64
0.62
0.63
0.63
0.65
0.64
0.64
0.64
0.66
0.64
0.64
0.64
High Technology Industries
Australia
..
0.39
0.36
0.31
0.30
0.29
0.31
0.31
0.29
0.28
0.30
0.27
0.30
0.31
0.31
0.30
Medium-High Technology Industries
Australia
..
0.39
0.40
0.32
0.34
0.34
0.35
0.35
0.34
0.32
0.32
0.28
0.29
0.29
0.28
0.28
Medium-Low Technology Industries
Australia
..
1.72
1.70
1.68
1.53
1.45
1.37
1.35
1.56
1.38
1.36
1.48
1.54
1.38
1.53
1.46
Low-Technology Industries
Australia
..
0.99
1.05
0.93
0.98
0.97
1.00
1.01
1.01
1.09
1.05
0.97
0.92
0.87
0.84
0.89
Industry
GRAND TOTAL
Country
Source: OECD STAN Bilateral Trade database, April 2012.
151
Figure 3.3 Source Data
Trade Flow
Export market shares
Partners
World
Industry
Total Manufacturing
End-use category
Total trade in goods
Value
Values in thousand USD
Time
2003
2004
2005
2006
2007
2008
2009
2010
Australia
0.65
0.63
0.63
0.63
0.65
0.63
0.64
0.63
Austria
1.41
1.45
1.38
1.37
1.39
1.37
1.30
1.20
Belgium
3.83
3.76
3.65
3.54
3.62
3.55
3.49
3.20
Canada
3.39
3.30
3.23
3.02
2.80
2.46
2.24
2.31
Chile
0.24
0.29
0.32
0.40
0.40
0.38
0.39
0.41
Czech Republic
0.77
0.85
0.91
0.96
1.06
1.12
1.09
1.07
Denmark
0.91
0.87
0.85
0.81
0.79
0.85
0.82
0.71
Estonia
0.08
0.08
0.09
0.10
0.10
0.10
0.10
0.10
Finland
0.83
0.80
0.77
0.79
0.80
0.77
0.63
0.57
France
5.54
5.30
4.99
4.79
4.66
4.60
4.52
4.13
Germany
11.26
11.31
11.25
11.25
11.21
11.11
11.04
10.28
Greece
0.19
0.17
0.18
0.19
0.19
0.18
0.17
0.15
Hungary
0.67
0.72
0.72
0.75
0.82
0.84
0.81
0.76
Ireland
1.42
1.32
1.25
1.08
1.05
0.99
1.14
0.95
Israel
0.45
0.45
0.45
0.44
0.44
0.45
0.45
0.45
Italy
4.62
4.59
4.33
4.24
4.40
4.24
4.01
3.66
Japan
7.28
7.21
6.78
6.41
6.11
6.02
5.53
6.14
Korea
3.11
3.38
3.40
3.40
3.36
3.43
3.70
3.95
Luxembourg
0.15
0.16
0.15
0.14
0.14
0.14
0.12
0.11
Mexico
2.30
2.14
2.13
2.15
2.03
1.92
1.98
2.12
Netherlands
3.38
3.47
3.43
3.44
3.60
3.63
3.63
3.47
New Zealand
0.23
0.24
0.23
0.20
0.21
0.20
0.21
0.21
Norway
0.41
0.39
0.41
0.43
0.46
0.46
0.44
0.40
Poland
0.83
0.94
1.00
1.09
1.20
1.35
1.34
1.29
Portugal
0.50
0.46
0.44
0.43
0.44
0.43
0.42
0.39
Slovak Republic
0.35
0.36
0.37
0.42
0.51
0.56
0.55
0.52
Slovenia
0.20
0.21
0.21
0.21
0.24
0.23
0.22
0.20
Spain
2.30
2.24
2.12
2.06
2.11
2.14
2.06
1.89
Sweden
1.60
1.53
1.49
1.41
1.40
1.36
1.23
1.21
Switzerland
1.62
1.55
1.56
1.54
1.55
1.63
1.76
1.65
Turkey
0.72
0.80
0.82
0.84
0.92
1.02
0.97
0.90
United Kingdom
4.47
4.21
3.99
3.72
3.56
3.30
3.22
3.03
United States
10.53
9.85
9.83
9.84
9.42
9.33
9.56
9.50
Albania
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
Argentina
0.33
0.33
0.35
0.37
0.38
0.42
0.44
0.42
Bosnia & Herzegovina
0.02
0.02
0.03
0.03
0.03
0.04
0.04
0.04
152
Trade Flow
Export market shares
Partners
World
Industry
Total Manufacturing
End-use category
Total trade in goods
Value
Values in thousand USD
Time
2003
2004
2005
2006
2007
2008
2009
2010
Brazil
0.93
1.02
1.11
1.11
1.08
1.13
1.06
1.06
Bulgaria
0.11
0.12
0.12
0.14
0.15
0.16
0.15
0.15
Cambodia
0.03
0.04
0.04
0.04
0.03
0.03
0.05
0.05
China
6.85
7.75
8.92
9.96
10.91
11.50
12.12
13.24
Chinese Taipei
2.26
2.31
2.25
2.33
2.22
2.06
2.06
2.31
Croatia
0.09
0.10
0.10
0.10
0.10
0.11
0.10
0.09
Cyprus
0.01
0.01
0.02
0.01
0.01
0.01
0.01
0.01
Hong Kong, China
3.63
3.50
3.46
3.33
3.12
2.97
3.31
3.35
India
0.88
0.91
1.07
1.14
1.18
1.33
1.59
1.68
Indonesia
0.68
0.66
0.67
0.68
0.68
0.71
0.75
0.81
Latvia
0.04
0.05
0.06
0.06
0.06
0.06
0.06
0.06
Lithuania
0.11
0.12
0.14
0.14
0.14
0.18
0.15
0.16
Malaysia
1.51
1.50
1.47
1.45
1.38
1.36
1.40
1.45
Malta
0.04
0.03
0.03
0.03
0.03
0.02
0.02
0.03
Moldova
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
Philippines
0.57
0.51
0.48
0.48
0.44
0.38
0.38
0.42
Romania
0.27
0.30
0.32
0.32
0.34
0.37
0.38
0.38
Russian Federation
0.94
1.06
1.17
1.28
1.33
1.57
1.28
1.45
Saudi Arabia
0.36
0.44
0.51
0.49
0.47
0.44
0.41
0.50
Singapore
2.48
2.56
2.63
2.71
2.53
2.54
2.56
2.76
South Africa
0.41
0.44
0.44
0.43
0.44
0.45
0.40
0.43
Thailand
1.19
1.18
1.22
1.25
1.29
1.34
1.48
1.56
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
TOTAL
Source: OECD, STAN Bilateral Trade Database.
Figure 3.4 Source Data
Partners (2010)
Industry
EU
Japan
Korea
China
Other SE
Asia
India
New
Zealand
NAFTA
RoW
10T14: Mining
and Quarrying
4.5
23.0
12.4
40.2
8.5
8.2
0.1
0.9
2.3
15T37: Total
Manufacturing
14.3
10.0
5.6
7.4
22.6
8.4
9.2
10.2
12.3
153
Partners (1995)
Industry
EU
Japan
Korea
China
Other SE
Asia
India
New
Zealand
NAFTA
RoW
10T14: Mining
and Quarrying
13.2
45.4
12.0
5.5
12.0
4.5
0.8
2.1
4.4
15T37: Total
Manufacturing
9.7
18.0
8.6
2.5
30.9
0.9
11.6
8.3
9.4
Source: OECD STAN Bilateral Trade database, April 2012.
154
Figure 3.5 Source Data
Country
Net extensive tot
Net extensive
of which: China+India
of which: Other Asia
Intensive tot
Intensive
of which: China+India
of which: Other Asia
South Africa
72.7
54.7
10.7
7.3
27.3
20.5
3.5
3.2
Russian Federation
64.6
58.8
3.0
2.8
35.4
26.6
7.5
1.4
Turkey
52.9
51.0
1.1
0.8
47.1
46.6
0.1
0.3
Australia
51.3
26.8
15.0
9.4
48.7
28.1
7.1
13.5
India
49.7
39.6
3.3
6.8
50.3
43.4
2.3
4.5
Canada
48.7
44.9
2.7
1.1
51.3
47.3
4.2
-0.3
Indonesia
45.1
22.8
5.3
17.1
54.9
24.9
10.7
19.2
Brazil
37.7
34.2
1.7
1.9
62.3
52.1
5.1
5.1
United States
29.1
19.2
3.2
6.8
70.9
57.2
10.7
2.9
EU25
28.8
22.8
3.9
2.1
71.2
53.9
11.7
5.6
China
27.1
19.8
1.1
6.2
72.9
50.4
0.9
21.6
Italy
24.7
21.1
2.4
1.2
75.3
63.4
9.0
2.8
France
24.0
18.8
3.4
1.9
76.0
55.8
10.3
9.9
Korea
21.3
17.0
2.1
2.3
78.7
33.1
32.9
12.7
United Kingdom
21.0
18.3
3.8
-1.1
79.0
58.9
13.0
7.1
Mexico
14.6
11.7
1.4
1.5
85.4
84.2
0.5
0.7
Germany
12.3
8.6
2.5
1.2
87.7
60.3
20.6
6.8
Japan
9.6
2.2
4.3
3.1
90.4
33.4
35.7
21.3
Note. Other South-East Asian countries are: Brunei, Cambodia, Myanmar, Hong Kong (China), Indonesia, Japan, Korea, Laos, Malaysia, Philippines, Singapore, Thailand, Viet Nam.
Intra-area trade is included.
Source: OECD calculations based on CEPII, BACI database.
155
Figure 3.6 Source Data
Country
Growth imports from the World
Market size
Share of Australia in imports
Brazil
160
1.4
0.2
Indonesia
151
1.1
1.9
Russian Federation
132
1.8
0.4
Chile
105
0.4
0.4
Argentina
97
0.5
0.3
India
93
1.5
2.0
Cambodia
92
0.0
0.3
Slovak Republic
90
0.5
0.0
China
87
9.3
0.8
Saudi Arabia
76
0.9
1.4
Albania
73
0.0
0.0
Poland
71
1.4
0.0
Czech Republic
63
1.0
0.0
Moldova
60
0.0
0.0
Thailand
59
1.4
2.2
Romania
57
0.5
0.1
Korea
56
2.7
1.8
Singapore
55
2.5
0.9
Turkey
54
1.3
0.1
South Africa
48
0.6
2.1
Hong Kong, China
46
3.9
0.4
Netherlands
42
3.1
0.1
Malaysia
41
1.3
1.4
Germany
39
8.3
0.1
Switzerland
39
1.5
0.2
Norway
38
0.7
0.1
Mexico
35
2.6
0.1
Israel
35
0.4
0.2
Chinese Taipei
34
1.8
1.5
Cyprus
34
0.1
0.1
Serbia
34
0.1
0.0
Bulgaria
33
0.2
0.0
Slovenia
32
0.2
0.0
Lithuania
32
0.1
0.0
Sweden
30
1.1
0.1
Hungary
29
0.7
0.0
France
26
4.8
0.1
Japan
25
4.1
1.8
Canada
23
3.1
0.3
Italy
23
3.5
0.1
Austria
23
1.2
0.0
156
Country
Growth imports from the World
Market size
Share of Australia in imports
Portugal
21
0.6
0.0
Bosnia & Herzegovina
20
0.1
0.1
Belgium
20
2.9
0.1
Estonia
19
0.1
0.0
Latvia
18
0.1
0.0
Philippines
13
0.5
1.2
Luxembourg
13
0.2
0.0
United States
11
14.4
0.5
Denmark
11
0.7
0.1
United Kingdom
11
4.4
0.4
Malta
10
0.0
2.4
New Zealand
10
0.2
19.2
Greece
8
0.4
0.1
Finland
8
0.5
0.3
Spain
5
2.3
0.1
Croatia
5
0.2
0.0
Ireland
-19
0.5
0.3
Source: Calculations based on OECD Bilateral Trade Database
Figure 3.7 Source Data
Country
Growth imports from the World
Growth imports from Australia
Market size
Brazil
160
184
1.4
Indonesia
151
51
1.1
Russian Federation
132
212
1.8
Chile
105
146
0.4
Argentina
97
563
0.5
India
93
23
1.5
Cambodia
92
20
0.0
Slovak Republic
90
60
0.5
China
87
46
9.3
Saudi Arabia
76
1
0.9
Albania
73
8
0.0
Poland
71
-26
1.4
Czech Republic
63
-6
1.0
Moldova
60
86
0.0
Thailand
59
40
1.4
Romania
57
100
0.5
Korea
56
56
2.7
Singapore
55
35
2.5
Turkey
54
-12
1.3
South Africa
48
32
0.6
Hong Kong, China
46
24
3.9
Netherlands
42
31
3.1
157
Country
Growth imports from the World
Growth imports from Australia
Market size
Malaysia
41
45
1.3
Germany
39
1
8.3
Switzerland
39
134
1.5
Norway
38
5
0.7
Mexico
35
9
2.6
Israel
35
29
0.4
Chinese Taipei
34
52
1.8
Cyprus
34
24
0.1
Serbia
34
47
0.1
Bulgaria
33
-81
0.2
Slovenia
32
-37
0.2
Lithuania
32
-82
0.1
Sweden
30
6
1.1
Hungary
29
25
0.7
France
26
26
4.8
Japan
25
13
4.1
Canada
23
-6
3.1
Italy
23
-30
3.5
Austria
23
-5
1.2
Portugal
21
-41
0.6
Bosnia & Herzegovina
20
186
0.1
Belgium
20
37
2.9
Estonia
19
3
0.1
Latvia
18
-50
0.1
Philippines
13
37
0.5
Luxembourg
13
91
0.2
United States
11
14
14.4
Denmark
11
-13
0.7
United Kingdom
11
-9
4.4
Malta
10
2079
0.0
New Zealand
10
1
0.2
Greece
8
-2
0.4
Finland
8
-3
0.5
Spain
5
-15
2.3
Croatia
5
-26
0.2
Ireland
-19
11
0.5
Source: Calculations based on OECD Bilateral Trade Database
158
Figure 3.8 Source Data
Goods and manufacturing
Country
1996
2005
2009
2010
Australia
Australia
Australia
Australia
ALL GOODS
1.00
1.00
1.00
1.00
Total primary industries
3.23
4.79
5.77
5.96
Agriculture, hunting
2.29
3.46
2.47
2.17
Forestry, logging
0.35
0.53
0.72
0.84
Fishing
3.44
2.62
2.37
1.86
Total mining and quarrying
3.92
5.28
7.12
7.30
Mining of coal and lignite; peat
25.06
34.07
29.73
26.13
Crude petroleum, natural gas
0.68
1.35
1.54
1.66
Mining of metal ores
15.32
20.70
24.25
23.32
Other mining and quarrying
0.48
0.75
0.45
0.42
Total manufacturing
0.60
0.56
0.46
0.40
Total trade in goods
2.26
3.26
2.41
2.11
TOTAL MANUFACTURING
1.00
1.00
1.00
1.00
Non-ferrous metals
8.54
10.58
11.56
10.13
Food, beverages & tobacco
2.87
4.32
3.05
3.28
Wood and wood products
1.21
1.62
1.78
1.96
Pharmaceuticals
1.07
1.33
1.07
1.16
Ref. petroleum, coke, nuclear fuel
2.06
1.33
0.98
0.87
Scientific instruments
0.61
0.76
0.84
0.79
Paper, printing & publishing
0.49
0.65
0.57
0.66
Other machinery, n.e.c.
0.58
0.53
0.55
0.55
Iron and Steel
1.27
0.31
0.36
0.53
Fabricated metal products
0.69
0.49
0.51
0.53
Other chemical products
0.54
0.45
0.47
0.46
Aircraft & spacecraft
0.87
0.52
0.49
0.42
Motor vehicles
0.43
0.60
0.37
0.40
Other manufacturing ind.
0.46
0.54
0.40
0.39
Rubber & plastics products
0.43
0.42
0.42
0.37
Electrical machinery, n.e.c.
0.60
0.36
0.34
0.33
Other transport equipment
0.32
0.33
0.27
0.33
Office machinery, computers
0.69
0.29
0.27
0.31
Other non-metallic mineral prod.
0.56
0.43
0.29
0.28
Textiles, leather, footwear
0.75
0.35
0.22
0.23
Shipbuilding
1.49
0.77
0.31
0.22
Radio, TV, communication equip.
0.17
0.16
0.14
0.12
Medium-low technology
2.31
2.13
2.39
2.28
Low technology
1.32
1.63
1.30
1.39
High technology
0.52
0.47
0.48
0.47
Medium-high technology
0.53
0.50
0.44
0.45
Source: OECD STAN Bilateral Trade database, April 2012.
159
Figure 3.9 Source Data
Distance
coeff.
Exports
Distance coeff.
Vertical trade
RCAs
2010
Share
exports
2010
Value of
exports 2010
Rubber and plastic products
-1.22
-1.26
0.37
0.38
797,920
Motor vehicles
-1.20
-1.21
0.40
1.32
2,792,569
Wood, publishing and printing
-1.18
-1.21
0.98
1.08
2,287,889
Textiles and wearing apparel
-1.10
-1.09
0.23
0.47
990,897
Food products
-1.07
-1.09
3.28
7.04
14,911,624
Metal products
-1.04
-1.04
4.19
14.14
29,945,905
Other manufacturing
-0.98
-1.00
0.35
1.19
2,524,442
Chemical products
-0.93
-0.98
0.67
3.23
6,832,149
Refined petroleum & other treatments
-0.90
-0.98
0.87
1.60
3,390,903
Office machinery and computers
-0.87
-0.89
0.31
0.49
1,044,639
Mechanical products
-0.85
-0.85
0.55
1.94
4,108,425
Radio, TV, communication equipments
-0.78
-0.85
0.12
0.45
961,319
Medical, precision and optical instruments
-0.70
-0.74
0.79
1.23
2,613,358
Industry
Note: the size of the circles indicates the export value
Source: OECD Bilateral Trade Database and Miroudot and Ragoussis (2009)
Figure 3.10 Source Data
Country
Australia
Manufacturing Technology Class
Low price
Medium price
High price
Total Manufacturing
2,792,554
47,209,359
33,634,290
High technology
640,391
1,980,462
5,142,183
Medium-high tech
728,602
5,305,417
5,768,251
Medium-low tech.
428,125
25,801,659
13,900,878
Low technology
995,436
14,121,821
8,822,979
Total Manufacturing
57,945,577
533,926,054
568,054,947
High technology
17,344,975
90,029,615
103,997,242
Medium-high tech
26,889,745
274,593,542
294,254,852
Medium-low tech.
5,789,651
88,838,864
94,863,086
Germany
Low technology
7,921,206
80,464,033
74,939,767
Total Manufacturing
55,938,022
502,367,754
487,043,678
High technology
17,589,978
95,970,719
178,002,830
Medium-high tech
18,746,274
230,916,810
171,413,517
Medium-low tech.
6,634,710
93,498,027
78,572,753
Low technology
12,967,060
81,982,198
59,054,579
Total Manufacturing
344,190,901
932,610,196
445,892,203
High technology
95,443,398
329,682,285
179,071,005
Medium-high tech
103,600,262
201,730,396
115,112,495
Medium-low tech.
60,842,286
131,461,530
41,422,083
Low technology
84,304,954
269,735,986
110,286,619
United States
China
Source: OECD calculations based on CEPII, BACI database, April 2012.
160
Figure 3.11 Source Data
Participation of Australia in global value chains
1995
2009
GVC_part
GVC_part
Agriculture, forestry, fishing
0.204
0.282
Mining and quarrying
0.387
0.482
Food, beverages and tobacco
0.138
0.147
Textiles and textile products
0.325
0.285
Leather and footwear
0.302
0.272
Wood, products of wood, cork
0.192
0.286
Pulp, paper, printing, publ.
0.469
0.516
Coke, ref. petroleum, nucl. fuel
0.317
0.330
Chemicals and chemical products
0.375
0.326
Rubber and plastics products
0.437
0.413
Non-metallic mineral products
0.252
0.500
Basic metals; fabr. metal prod.
0.353
0.390
Machinery, nec
0.290
0.346
Electrical and optical equipment
0.309
0.343
Transport equipment
0.256
0.311
Manufacturing, nec; recycling
0.204
0.261
Industry
Source: Calculations based on World Input-Output Database (WIOD); see Miroudot and De Backer (2012) for
information on the calculation of the index.
Figure 3.12 Source Data
Distance to final demand index for Australia
1995
2009
Industry
Dfd
Dfd
Agriculture, forestry, fishing
2.339
2.285
Mining and quarrying
3.606
3.900
Food, beverages and tobacco
1.535
1.629
Textiles and textile products
1.771
1.881
Leather and footwear
2.247
1.879
Wood, products of wood, cork
2.542
2.802
Pulp, paper, printing, publ.
2.612
2.385
Coke, ref. petroleum, nucl. fuel
2.491
2.538
Chemicals and chemical products
2.466
2.402
Rubber and plastics products
2.427
2.479
Non-metallic mineral products
2.370
2.858
Basic metals; fabr. metal prod.
3.108
3.130
Machinery, nec
2.225
2.059
Electrical and optical equipment
2.157
2.058
Transport equipment
2.185
2.086
Manufacturing, nec; recycling
1.563
1.653
Note: The index takes the value of 1 if all production is sold to final consumers;
Source: Calculations based on World Input-Output Database (WIOD); see Miroudot and De Backer (2012) for
information on the calculation of the index.
161
Figure 3.13 Source Data
AUSTRALIA 2010
Value of exports
RCA index
Industry ISIC Rev.3 / Type of goods
All goods
Intermediates
Total exports
Imported intermediates
MANUFACTURING (D)
74,390,909
48,287,234
1.00
1.00
Non-ferrous metals
27,622,570
27,579,513
10.13
1.77
Food, beverages & tobacco
14,911,624
3,118,746
3.28
0.66
Wood and wood products
1,119,591
1,117,055
1.96
1.32
Pharmaceuticals
3,679,021
453,827
1.16
0.86
Ref. petroleum, coke, nuclear fuel
3,390,903
3,390,903
0.87
1.46
Scientific instruments
2,613,358
288,820
0.79
0.82
Paper, printing & publishing
1,168,298
727,259
0.66
1.26
Other machinery, n.e.c.
4,108,425
1,831,420
0.55
1.57
Iron and Steel
1,293,929
1,293,929
0.53
0.85
Fabricated metal products
1,029,405
842,242
0.53
1.46
Other chemical products
3,153,128
2,603,900
0.46
0.79
726,117
630,070
0.42
0.71
Motor vehicles
2,792,569
930,403
0.40
0.75
Other manufacturing ind.
1,032,137
33,959
0.39
0.73
Rubber & plastics products
797,920
643,999
0.37
1.69
Electrical machinery, n.e.c.
1,228,159
819,851
0.33
0.98
Other transport equipment
157,822
119,386
0.33
1.24
1,044,639
657,775
0.31
0.78
Other non-metallic mineral prod.
264,146
254,461
0.28
1.22
Textiles, leather, footwear
990,897
633,012
0.23
0.66
Radio, TV, communication equip.
961,319
307,656
0.12
0.28
Aircraft & spacecraft
Office machinery, computers
Note: The vertical axis represents the index of revealed comparative advantage (RCA) of total exports; the
horizontal axis represents the index of revealed comparative advantage (RCA) of imports of intermediates and is
calculated as RCA(M)int-i,c = (Mint-i,c/Mint-i, world)/(Mint-total, c /Mint-total, world) where Mint-i,c and Xint-i,
world are respectively the imported intermediates of industry i by country c and the world, while Xint-total, c. and
Xint-total, world refer to total intermediates imported by country c and the world.
Source: Calculations based on OECD Bilateral Trade Database
Figure 3.14 Source Data
2010
Exports
Imports
Agriculture
4%
1%
Mining
44%
7%
Manufacturing
33%
71%
Services
19%
21%
Source: OECD Bilateral Trade Database and IMF Balance of Payments
Figure 3.15 Source Data
Import penetration by industry
2005-2010 (Period average)
Machinery & equipment
73.9
Textile, leather, clothing & footwear
66.2
Transport equipment
53.7
162
Import penetration by industry
2005-2010 (Period average)
Chemicals
49.4
Furniture & other
48.8
Primary metal & metal
39.4
Total manufacturing
38.3
Polymer & rubber
32.1
Pulp, paper & converted paper
28.9
Petroleum & coal
26.7
Fabricated metal
18.2
Beverage & tobacco
14.1
Printing
13
Non-metallic mineral
11.5
Wood
10.9
Food
10.7
Source: ABS catalogue No 5368
163
Figure A.2.1 Source Data
Country
Mining
Manufacturing
Construction
Services
Other
Italy
0.1
18.2
7.8
68.8
5.1
Germany
0.2
17.2
5.9
73.9
2.8
Japan (2008)
0.1
17.1
8.2
68.7
5.9
Mexico (2008)
0.4
17.1
8.3
62.2
12.0
Korea (2009)
0.1
16.3
7.3
68.8
7.5
New Zealand (2008)
0.2
13.8
7.5
77.5
0.9
Brazil (2008)
0.3
13.0
7.2
61.3
18.2
France (2008)
N/A
12.4
7.1
76.7
3.8
Canada (2008)
1.3
11.4
7.3
77.1
2.9
United Kingdom (2008)
0.2
9.8
7.2
80.8
2.0
Australia
1.6
9.2
9.1
75.6
4.5
United States (2009)
0.4
8.9
5.4
83.4
1.8
Source: OECD Structural Analysis Database (STAN); Australian Bureau of Statistics (ABS) for data on Australia.
Figure A.2.2 Source Data
Country
Mining
Manufacturing
Construction
Services
Other
Germany
0.2
20.9
4.3
70.1
4.5
Mexico (2009)
7.8
17.7
7.1
62.6
4.8
Japan (2009)
0.1
17.6
6.1
71.5
4.7
Italy
0.4
16.0
6.1
73.2
4.3
Canada (2006)
8.6
14.6
6.5
66.2
4.1
New Zealand (2006)
1.3
14.5
5.5
70.6
8.2
United Kingdom (2007)
2.6
12.4
6.4
76.1
2.4
United States (2009)
1.7
12.3
3.8
79.4
2.8
France (2008)
0.2
12.1
6.7
77.6
3.5
Korea (2009)
7.8
11.2
6.9
69.0
5.1
Australia
8.0
8.3
8.0
61.7
14.0
Source: OECD Structural Analysis Database (STAN); Australian Bureau of Statistics (ABS) for data on Australia.
Figure A.2.4 Source Data
Industry
AUSTRALIA
AAGR
GERMANY
USA
1990-2000
2000-2007
1991-2000
2000-2007
1990-2000
2000-2007
Electrical & optical equipment (30t33)
4.56
3.31
4.72
6.53
17.10
14.55
Other manufacturing industries (15t37-30t33)
1.72
2.62
2.61
2.75
1.78
4.02
Food, beverages, tobacco (15t16)
2.17
-0.48
0.45
-0.39
0.71
3.30
Textiles, clothing, footwear (17t19)
-0.01
-0.63
4.41
4.43
3.77
3.98
Wood and wood products (20)
2.11
-2.45
4.19
2.80
-2.20
3.36
Paper, printing, publishing (21t22)
0.90
3.17
2.98
1.12
0.00
2.26
Coke, refined petroleum, nuclear fuel (23)
1.41
5.01
-16.35
-8.00
7.82
-0.60
Chemicals (24)
-0.50
4.40
6.80
5.67
2.52
6.89
Rubber & plastics products (25)
3.18
2.30
1.98
3.88
4.06
2.50
164
Industry
AAGR
Non-metallic mineral products (26)
3.96
7.53
3.75
3.35
2.62
1.46
Metals (27t28)
1.51
5.16
2.98
0.83
2.24
2.20
Machinery, n.e.c. (29)
3.02
2.34
2.45
1.79
0.26
5.32
Transport equipment (34t35)
3.46
3.59
1.20
6.23
2.13
7.11
Other manufacturing, n.e.c. (36t37)
-1.27
1.43
1.19
-1.40
2.07
3.96
Source: EUKLEMS
Figure A.2.5 Source Data
Japan
12.3
United States (2008)
10.5
France (2007)
9.8
Korea
9.1
Germany (2008)
8.1
United Kingdom (2008)
7.3
Canada (2006)
4.5
Australia (2008)
4.1
Italy
3.2
New Zealand (2005)
1.7
Mexico (2007)
0.7
Source: OECD Analytical Business Enterprise Research and Development Database (ANBERD).
Figure A.2.6 Source Data
United States
42,630
Japan
27,732
Germany
16,599
Korea
7,099
France
6,673
China
5,995
United Kingdom
4,623
Italy
2,700
Canada
2,189
Australia
1,702
India
954
Russian Federation
639
Brazil
450
Turkey
376
South Africa
325
New Zealand
308
Mexico
175
Argentina
20
Indonesia
12
Source: OECD Patent Statistics Database (PATSTAT).
165
Figure A.3.1 Source Data
Country
Australia
Australia
Trade Flow
Exports
Exports
%
%
1995
2010
Value
Time
Industry
Industry short label
13: Mining of metal ores
Mining of metal ores
5.53
26.96
10: Mining of coal and lignite; extraction of peat
Mining of coal & lignite
9.39
18.66
272T32: Non-Ferrous Metals
Non-ferrous metals
13.97
13.04
11: Extraction of crude petroleum and natural gas
Crude petroleum & gas
3.31
8.65
15T16: Food products, Beverages and Tobacco
Food, beverages, tobacco
11.74
7.04
01T05: Agriculture, Hunting, Forestry and Fishing
Agriculture
7.07
5.45
29: Machinery and Equipment, not elsewhere classified
Other non-electrical machinery
3.35
1.94
2423: Pharmaceuticals
Pharmaceuticals
1.10
1.74
23: Coke, Refined Petroleum Products and Nuclear Fuel
Coke, ref. petroleum, nuclear fuel
2.18
1.60
24X2423: Chemicals excluding Pharmaceuticals
Chemicals
2.98
1.49
34: Motor Vehicles, Trailers and Semi-Trailers
Motor vehicles
2.17
1.32
33: Medical, Precision and Optical Instruments
Instruments
1.07
1.23
271T31: Iron and Steel
Iron & steel
2.43
0.61
31: Electrical Machinery and Apparatus, not elsewhere
classified
Electrical machinery, nec
1.53
0.58
21T22: Pulp, Paper, Paper Products, Printing and Publishing
Paper, printing, publishing
0.90
0.55
20: Wood and Products of Wood and Cork
Wood
0.98
0.53
30: Office, Accounting and Computing Machinery
Office machinery, computers
2.41
0.49
36T37: Manufacturing not elsewhere classified; Recycling
Other manufacturing
0.77
0.49
28: Fabricated Metal Products
Fabricated metal products
1.00
0.49
17T19: Textiles, Textile Products, Leather and Footwear
Textiles, clothing, footwear
3.75
0.47
32: Radio, Television and Communication Equipment
Radio, TV, comm. equipment
1.10
0.45
25: Rubber and Plastics Products
Rubber & plastics products
0.68
0.38
353: Aircraft and Spacecraft
Aircraft & spacecraft
1.06
0.34
14: Other mining and quarrying
Other mininq & quarrying
0.32
0.16
26: Other Non-Metallic Mineral Products
Non-metallic mineral products
0.47
0.12
351: Building and Repairing of Ships and Boats
Shipbuilding
0.53
0.11
352A9: Railroad and Transport Equipment, not elsewhere
classified
Other transport equipment
0.28
0.07
41-72-74-92-93: Other Activities
Other activities
0.11
0.04
40: Electricity, Gas and Water Supply
Electricity, gas & water supply
0.00
0.00
Source: OECD STAN Bilateral Trade database, April 2012.
166
Figure A.3.2 Source Data
AUSTRALIA
2010
Industry ISIC Rev.3
Code
Nonferrous metals
As a % of total exports
Low price
Median price
High price
272+2732
0.5
62.1
37.4
Food, beverage and tobacco
15/16
3.5
67.3
29.2
Medium-low technology
N/A
1.1
64.3
34.6
Wood and wood products
20
0.6
23.2
76.2
Low technology
N/A
4.2
59.0
36.9
Recycling, other manuf.
36/37
6.0
48.0
45.9
Pharmaceutical products
2423
14.6
17.8
67.6
Coke, refined petroleum
23
0.2
92.0
7.8
Iron and steel
271+2731
4.9
74.5
20.5
Scientific instruments
33
1.7
22.4
75.9
Paper, publishing and printing
21/22
11.1
38.8
50.1
Machinery and equipment n.e.c.
29
6.7
39.2
54.1
Fabricated metal products
28
5.3
28.5
66.3
Other chemical products
24-2423
9.4
52.3
38.3
Shipbuilding and repairing
351
13.9
14.3
71.8
Aircraft and spacecraft
353
4.7
53.6
41.7
Medium-high technology
N/A
6.2
45.0
48.9
High technology
N/A
8.2
25.5
66.2
Motor vehicles
34
1.7
49.7
48.6
Other transport equipment
352+359
10.0
17.6
72.4
Rubber and plastic products
25
4.3
37.9
57.8
Non-metallic mineral products
26
4.8
33.7
61.5
Electrical machinery, n.e.c.
31
4.5
32.2
63.3
Textile, wearing app., leather
17/19
2.3
35.3
62.3
Office machinery, computers
30
2.1
25.2
72.8
Radio, TV & comm. equipment
32
9.4
40.7
49.9
Source: Calculations based on CEPII BACI database
Box 1 Figure 1 Source Data
European Countries
From Europe
From NAFTA
From East Asia
From Other Asia
From RoW
Luxembourg
53.4%
2.4%
1.1%
0.6%
2.8%
Hungary
39.6%
1.1%
8.5%
2.9%
3.7%
Ireland
31.3%
7.6%
7.1%
2.7%
2.1%
Estonia
34.3%
1.3%
7.0%
1.0%
7.1%
Slovak Republic
31.2%
0.6%
3.9%
0.7%
12.3%
Czech Republic
35.4%
1.5%
5.4%
1.2%
4.8%
Slovenia
38.4%
0.6%
1.1%
0.3%
5.2%
Belgium
30.9%
2.3%
2.3%
0.8%
4.0%
Portugal
30.1%
0.8%
1.3%
0.4%
6.3%
Finland
20.7%
1.7%
4.5%
1.0%
8.5%
Netherlands
19.7%
2.6%
2.8%
1.4%
8.4%
167
European Countries
From Europe
From NAFTA
From East Asia
From Other Asia
From RoW
Denmark
27.6%
1.1%
2.1%
0.9%
3.1%
Austria
27.5%
1.2%
1.8%
0.3%
3.9%
Spain
21.9%
1.6%
2.6%
0.7%
7.3%
Sweden
27.0%
1.2%
1.8%
0.5%
2.7%
Poland
21.4%
0.7%
2.6%
0.5%
5.4%
Italy
17.9%
1.2%
2.3%
0.6%
7.1%
Germany
17.9%
1.7%
2.7%
0.7%
4.2%
Greece
12.6%
0.8%
1.6%
0.4%
10.7%
France
17.4%
1.9%
2.1%
0.6%
3.6%
United Kingdom
11.5%
2.1%
1.8%
0.8%
2.4%
Norway
12.8%
1.2%
0.6%
0.2%
1.3%
From Europe
From NAFTA
From East Asia
From Other Asia
From RoW
Mexico
3.2%
20.6%
8.0%
3.2%
1.7%
Canada
4.0%
16.8%
3.4%
0.5%
2.6%
United States
2.4%
3.4%
3.4%
0.9%
2.6%
Korea
3.7%
4.8%
14.4%
4.9%
11.0%
China
2.7%
2.3%
12.9%
5.2%
4.9%
Turkey
11.9%
1.3%
1.6%
0.8%
6.9%
Indonesia
2.0%
1.5%
5.2%
4.4%
5.1%
South Africa
7.8%
2.4%
2.3%
0.8%
4.0%
Japan
1.9%
1.9%
4.3%
2.1%
5.2%
Brazil
3.5%
2.7%
1.9%
0.8%
5.5%
Chile
4.0%
3.6%
2.2%
0.4%
11.8%
Australia
3.1%
1.9%
2.9%
2.9%
3.1%
India
2.8%
0.8%
1.6%
1.5%
6.3%
Source: De Backer and Yamano (2012).
Box 1 Figure 2 Source Data
Other Countries
Source: De Backer and Yamano (2012).
168
Box 5 Figure 1 Source Data
2005-2010
COUNTRY
Shift-share analysis results (estimated)
Mkt sh. Growth
PERF contr.
GEO contr.
SECT contr.
Saudi Arabia
87.5
45.9
23.0
4.5
China
36.7
57.0
-6.7
-6.7
Argentina
32.3
-7.8
23.5
16.2
Indonesia
13.0
14.7
-1.7
0.2
Korea
9.9
8.6
7.4
-5.9
Turkey
6.7
14.9
-0.8
-6.5
India
4.3
-0.9
-0.3
5.6
Mexico
0.9
26.5
-18.3
-2.3
Germany
0.6
-5.8
5.9
0.7
Brazil
-5.0
-16.3
5.6
7.5
France
-7.5
-15.6
6.5
2.9
Italy
-7.8
-12.2
6.0
-0.9
South Africa
-8.9
-26.6
6.6
16.5
Russian Federation
-9.3
-22.9
9.8
7.1
Australia
-12.6
-25.6
-0.2
17.8
United States
-14.6
-15.9
-0.7
2.3
Japan
-19.3
-19.3
3.0
-2.9
United Kingdom
-19.8
-23.9
-0.4
5.9
Canada
-31.0
-17.1
-18.5
2.2
Source: OECD calculations based on CEPII, BACI database.
Box 5 Figure 2 Source Data
1995-2005
COUNTRY
Shift-share analysis results (estimated)
Mkt sh. Growth
PERF contr.
GEO contr.
SECT contr.
China
123.1
227.8
-15.1
-19.8
South Africa
100.2
71.4
-11.9
32.6
Turkey
63.2
106.7
2.8
-23.2
Mexico
18.9
9.6
3.3
4.9
Saudi Arabia
18.8
3.6
13.5
1.0
Brazil
6.2
35.2
-5.3
-17.1
Korea
5.8
0.2
1.2
4.4
Indonesia
-4.4
33.1
-4.0
-25.2
Canada
-8.7
-6.2
1.2
-3.9
Australia
-8.9
-3.7
-13.0
8.8
Germany
-14.6
-21.1
-0.2
8.4
United States
-19.0
-29.0
6.2
7.4
Italy
-23.5
-18.5
3.3
-9.1
Argentina
-24.7
7.5
-8.2
-23.7
United Kingdom
-27.5
-37.7
2.1
14.1
France
-28.6
-34.7
1.0
8.3
Japan
-34.0
-41.3
1.3
11.1
169
Source: OECD calculations based on CEPII, BACI database.
170