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ICT sector Business Expenditures (ICT BERD)

comparison with the USA

 

ICT Business Expenditure on Research and Development (BERD), like ICT Value Added, was higher in the US than in the EU, with even more pronounced differences. In 2009, US ICT BERD amounted to € 62.7 billion, more than 2.5 times the EU figure (€ 24.5 billion) with a slight increase from 2008 when this ratio was 2.3 times (€ 61.2 billion vs. € 26.5 billion).[1]

US ICT BERD was higher than the EU ICT BERD in almost all ICT sub-sectors with three exceptions: the Manufacturing sub-sectors Manufacture of consumer electronics (NACE 264), € 176 million vs. € 514 million, and Manufacture of magnetic and optical media (NACE 268), € 2 million vs. € 6 million, and the Telecommunications (NACE 61) Services sub-sector, € 0.9 billion vs. € 4.3 billion. The biggest US lead in ICT BERD was in Software publishing (NACE 5820), € 18.9 billion vs. € 1 billion, and also in Manufacture of electronic components and boards (NACE 261), € 16 billion vs. € 3.4 billion.

The US increase from 2008 to 2009 originated in the Manufacturing sector. ICT BERD in Manufacturing increased from € 30.6 billion in 2008 to € 32.2 billion in 2009, in contrast to ICT BERD in Services sub-sectors, which remained stable (€ 30.6 billion and € 30.5 billion). All the US Manufacturing sub-sectors have experienced an increase in ICT BERD. The reason why US ICT BERD in Services industries remained stable was that in two sub-sectors (Software publishing [NACE 5820] and Telecommunications [NACE 61]) it decreased and in another two (Computer programming, consultancy and related activities [NACE 62] and Data processing, hosting and related activities; web portals [NACE 631]) it increased, making the overall change negligible.

In contrast, ICT BERD in the EU in Manufacturing dropped between 2008 and 2009 (from € 13.6 to € 11.3 billion). The sub-sector with the biggest drop was Manufacture of communication equipment (NACE 263), more than € 1.5 billion (from € 7.9 billion to € 6.3 billion). However, ICT BERD in Services sectors experienced a slight increase (from € 12.9 to € 13.2 billion), due mostly to Computer programming and consultancy (NACE 62) and its € 400 million ICT BERD increase.

[1] => We did not consider ICT Trade and Repair sub-sectors in this comparison between the US and the EU, since data on value added and BERD in these sub-sectors are not available for the US. These two sub-sectors perform very little R&D, although together, they produced 11% of the total EU ICT sector value added in 2009.

 

Comparison of ICT BERD between the EU and US by sub-sectors (bn. EUR, 2008-2009)

 

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

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The figure below compares the importance of ICT sub-sectors in the EU and the US in terms of ICT BERD by looking at their contributions to the total ICT BERD. In 2009 in the EU, ICT BERD was concentrated mainly in two sub-sectors: the ICT Services sub-sector Computer programming, consultancy and related activities (NACE 62) and the ICT Manufacturing sub-sector Manufacture of communication equipment (NACE 263). These two sub-sectors produced almost 60% of the total ICT BERD in the EU. On the other hand, in the US in 2009, ICT BERD was concentrated mainly in Manufacture of electronic components and boards (NACE 261) and Software publishing (NACE 5820). It is interesting that there are big differences in the relevance of ICT sub-sectors between the EU and US. Sub-sectors that are important in the EU have at least 10% lower shares in the US, and vice versa. The most striking differences can be seen in Computer programming, consultancy and related activities and Telecommunications (NACE 61), 49% joint share of the total EU ICT BERD vs. 16% share in the US, and in Software publishing (4% vs. 30%).

 

Distribution of ICT BERD by Manufacturing and Services sub-sectors (2009)

 

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

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ICT sector R&D intensity (ICT BERD/ICT Value Added)

Between 2008 and 2009, ICT BERD intensity (measured by the ratio of ICT BERD in ICT Value Added) maintained similar levels in both the US and the EU. In 2008, ICT BERD intensity was 12.4% in the US, more than twice as much as it was in the EU (5.93%). In 2009, both regions experienced a slight decrease (to 12.3% and 5.89%). In the US, this was because ICT BERD intensity fell from 7.6% in 2008 to 7.3% in 2009 in the Services sector. Even though it increased in the Manufacturing sector from 33.1% to 34.4%, this rise did not offset the overall fall. In the EU, interestingly, although ICT BERD intensity increased both in the Manufacturing sector (from 25.1% in 2008 to 29.7% in 2009) as well as in the Services sector (from 3.3% in 2008 to 3.5% in 2009), the change in corresponding sectoral weights caused again an overall fall.

Regarding sub-sectoral comparison, US ICT sub-sectors were systematically more R&D intensive than their EU counterparts, by about 5-10 percentage points (pp). The most profound difference was in Software publishing (NACE 5820) with more than 25pp difference. There were only two ICT sub-sectors with higher BERD intensity in the EU – Manufacture of magnetic and optical media (NACE 268) and Telecommunications (NACE 61).

 

Comparison of R&D intensity (ICT BERD/VA) between the EU and US by sub-sectors (2009)

 

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

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