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Research-intensive industries drive EU industrial growth

Growth in R&D-intensive manufacturing outperformed overall manufacturing growth in Europe between 2005 and 2012, according to a report from Eurostat.

The figures show that high-tech manufacturing production grew by 26 per cent from 2005 to 2012, while the manufacturing industry as a whole remained about the same over that period. Medium-high-tech manufacturing production increased by 7 per cent from 2005-2012.

Meanwhile, manufacturing with medium-low and low spending on R&D decreased by 5 and 6 per cent in the same time frame, the report states.

Technological sophistication is determined by research intensity, Eurostat says, which it defines as the amount of spending on R&D relative to the industry’s profit minus production costs. It is separated into four levels: high, medium-high, medium-low, and low.

During the start of the financial crisis the better performance of high-R&D manufacturing was particularly obvious, the report says. From the first quarter of 2008 to the second quarter of 2009 total industrial production dropped by nearly 20 per cent, while high-tech industrial production dropped by less than 10 per cent.

A large drop in production of computers and related products, which represents 48 per cent of high-tech manufacturing, drove the general decline in production in that area for 2008-2009, the report states.

The other two high-technology areas are pharmaceutical manufacturing, making up 40 per cent of high-tech production, and air and space machinery, making up 12 per cent. Production in both areas stayed strong during the peak of the crisis, with pharmaceutical production increasing in that period. All three areas showed an overall increase from 2005-2012.

Manufacturing in most areas within medium-high-technology production also grew during 2005-2011. In contrast, areas within the lower-technology industries such as recorded media, mineral and metal products, food, textiles, and wood products showed a decrease in production.