EU industrial structure - EU Bookshop - Europa

For countries as a whole, it should be noted that, in
principle, specialization is not necessarily a good or
bad thing per se. On one hand, specialization may
reflect a natural focus on what the country does better
relative to trade partners (comparative advantage), and
hence a gain of overall productivity. On the other hand,
diversification will always render a society more resilient
to external shocks; a downturn in a specific sector can be
compensated by other sectors still doing well and feeding
public finances that eventually help cushion the negative
impact of the shock (e.g., paying unemployment insurance).
Nevertheless, diversification can also be seen as reflecting
a society with a wider choice for its citizens; a high degree
of diversification is very likely reflecting a strong and
diverse human capital base that makes it possible to have
from artists to engineers producing from haut couture
to satellites. Given that by nature larger countries tend to
be more diversified, countries below the line in figure II.6
can be seen as reaping the benefits from having a more
diversified economy than the average country given its size.
In that reading, Belgium is a highly diversified country for
its size whereas Italy, despite its large size, is less diversified
and, in principle, more vulnerable to sectoral shocks or
to competition from emerging economies due to high
specialisation in low skill industries such as textiles and
leather products.
box II.2: Labour skills taxonomy
Chapter II — Changes in EU Industrial structure
The taxonomy of labour skills is presented and discussed in Chapter II of O’Mahony and van Ark (2003),
EU productivity and competitiveness — An industry perspective, European Commission. A measure of educational
attainment is the metric that has been used to reflect skill intensity. The sectors from the NACE Rev1. classification
were broken down in the following way:
II.2 Skill and technology
specialization
The sectors analysed are classified according to the statistical
nomenclature (NACE Rev. 2) presenting data on economic
activities. It is sometimes useful to use other ways to classify
sectors according to economic and technological criteria.
Such classification can be used to illustrate similarities
and differences between countries and sectors. Industry
taxonomies are used for this purpose to group industries
that have common characteristics. Once the taxonomies
are applied to EU member states, it is possible to compare
patterns across countries. The focus below is on two different
taxonomies: one on skills and one on technology. It is not
only the quantity of these inputs that matters for sectoral
performance but also their qualities. As in the previous
section, two different types of indicators are available:
a breakdown by value added share and specialisation.
ii21 changes in skills’ specialization
The types of education and training that contribute to
making a sector competitive can be very sector‑specific.
Similarly, different levels of skills are needed across sectors.
The measure of skill intensity, represented by the levels34 of education attainment that dominate in a sector, reflects
this heterogeneity. The sectors in which people reached
a similar level of educational attainment are classified
according to different levels of skills. This led to four
different categories, cf. Box II.2.
low skill: A Agriculture, hunting and forestry, B Fishing, C Mining and quarrying, DA15 Manufacture of food
products and beverages, DA16 Manufacture of tobacco products, DB Manufacture of textiles and textile products,
DC Manufacture of leather and leather products, DH Manufacture of rubber and plastic products, DI Manufacture
of other non‑metallic mineral products, DJ27 Manufacture of basic metals, DM34 Manufacture of motor vehicles,
trailers and semi‑trailers, DN36 Manufacture of furniture; manufacturing n.e.c., DN37 Recycling, H Hotels and
restaurants, O Other community, social, personal service activities.
34 A common measure is the one provided by International
Standard classification ISCED. The classification can be found on:
http://www.uis.unesco.org/Pages/default.aspx
45