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ICT Sector Business Expenditures in R&D (ICT BERD)

 

Analysing ICT Sector Business Expenditures in R&D (ICT BERD) across ICT sub-sectors provides a quite different perspective to the one resulting from a comparison of Value Added or employment across the sub-sectors, or from a look at recent evolution (see the figure below).

In 2009, ICT BERD amounted to € 25 billion, 7.4% less than it was in 2008 (€ 27 billion). This amount was almost equally divided between Manufacturing (€ 11.3 billion) and Services (€ 13.7 billion).

In 2009, more than half ICT Manufacturing BERD (56%) was invested in Manufacturing of communication equipment (NACE 263) (€ 6.3 billion, or 4.3% of total BERD in the EU economy), and 30% in Manufacturing of electronic components and boards (NACE 261) (€ 3.4 billion). More than half ICT Services BERD (55%) was invested in Computer programming, consultancy and related activities (NACE 62) (€ 7.5 billion), and 31% in Telecommunications (NACE 61) (€ 4.3 billion).

From 2008 to 2009, ICT BERD invested in ICT Manufacturing decreased by 17% (€ 2.3 billion). Manufacturing of communication equipment experienced the biggest drop (almost 20%). In ICT Services, however, it increased by 2.2% (€ 0.3 billion), mostly in Computer programming, consultancy and related activities (by € 0.4 billion) and Data processing, hosting and related activities; web portals (NACE 631), by 28%.

 

Share of ICT BERD in total BERD by sub-sectors (2008-2009)

 

Source: Eurostat, elaborated by Ivie and JRC-IPTS [Download full image]

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The figure below provides a comparison of the ICT Manufacturing and Services sub-sectors in terms of contributions to ICT BERD by Member States in 2009. ICT Manufacturing was dominated by Germany (24% of EU ICT Manufacturing BERD) and Finland (22%). France and Sweden then followed with 16% and 13%, respectively. These four countries represented 75% of the total EU ICT Manufacturing BERD. However, when looking at ICT Services BERD, Finland and Sweden contributed only 3% each, in sharp contrast to their contribution to ICT Manufacturing BERD, which was 35% in total. In contrast, Germany and France had leading positions in Services also (18% and 20%). The UK and Spain are among the Member States with larger ICT BERD contributions in Services than in Manufacturing – Spain (1% in Manufacturing vs. 7% in Services) and the UK (4% vs. 19%).

 

Comparison of ICT Manufacturing and Services:

distribution of ICT BERD among biggest Member States contributors (2009)

 

Source: Eurostat, elaborated by Ivie and JRC-IPTS [Download full image]

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The ICT sector is one of the most R&D-intensive sectors in the EU economy. In 2009, ICT BERD made up 17% of total BERD, while ICT VA represented only 4% of GDP. In the same year, ICT R&D intensity, measured by the ratio of ICT BERD over ICT VA, was 5.3%, very close to its 2008 value of 5.4%.

In 2009, though ICT Manufacturing sub-sectors produced only 8% of ICT Value Added, they accounted for 45% of ICT BERD. ICT Manufacturing sub-sectors are thus much more R&D intensive than ICT Services sub-sectors. In fact, ICT BERD intensity is almost ten times higher in ICT Manufacturing (29.6%) than it is in ICT Services (3.2%). 

The figure below provides a comparison of R&D intensity among ICT sub-sectors. R&D intensity (measured by the ratio of ICT BERD over ICT VA) was extremely high, especially in two Manufacturing sub-sectors: 38% in Manufacturing of communication equipment (NACE 263) and 29% in Manufacturing of electronic components and boards (NACE 261). From 2008 to 2009, ICT Manufacturing BERD decreased by 17%, and ICT Manufacturing VA decreased even more, by 30%. This difference resulted in an increase in R&D intensity.

In ICT services in 2009, more than half ICT Services BERD (55%) was invested in Computer programming, consultancy and related activities (NACE 62) (€ 7.5 billion), and 31% in Telecommunications (NACE 61) (€ 4.3 billion). In these two sub-sectors, R&D intensity was significantly lower than it was in most ICT manufacturing sub-sectors: 4.5% in Computer programming, consultancy and related activities (NACE 62) and 2.4% in Telecommunications (NACE 61).

From 2008 to 2009, unlike the evolution in ICT Manufacturing BERD, ICT Services BERD increased by 2.2% (while VA decreased by 4.3%), also resulting in an increase in R&D intensity. ICT BERD increased mostly in Computer programming, consultancy and related activities (by 5.6%) and remained stable in Telecommunications.

 

R&D intensity (ICT BERD/ICT VA) by sub-sectors (2008-2009)

 

Source: Eurostat, elaborated by Ivie and JRC-IPTS [Download full image]

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