Sector selection - First step: Comparison of industry sectors with respect to basic economic indicators and e-business importance

a) Economic importance

The e-Business W@tch has collected and processed macro-economic indicators about more than 20 sectors of the economy based on NACE Rev. 1 Divisions. In some cases, two or three NACE Divisions were grouped to form one "sector" for the purpose of this comparison. This was done for sectors with comparable business activities which would also be considered as one sector in case of selection for coverage by the e-Business W@tch.

All data were taken from the Eurostat New Cronos database and represent the latest available statistics. However, some gaps from official statistics (e.g. missing country data, or missing data for sub-sectors) had to be filled in order to obtain comparable sets of figures for all sectors. This task was carried out by DIW Berlin, using own estimates and computations (for example, making extrapolations from data available for previous years, based on the general GDP growth rate and indications). Thus, figures presented in the table below are a sound and close proxy to those from official statistics, but should not be quoted as being "official statistics".



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Sector selection criteria


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Sector selection - Second step

Table 1: Key economic indicators for manufacturing and service sectors of the economy

In order to come to an initial ranking of economic importance, the e-Business W@tch has computed a simple Index using two component indicators: the number of persons employed, and value added. The Index reflects the contribution of the sector to the total of all sectors compared. The computation method is explained in the table of the following exhibit. The Index shows the four economic "giants" among the 19 sectors compared: Business services, Health and social services, Retail and Construction. Financial services also ranks high, due to its disproportionally high value added (in relation to the number of persons employed).


Table 2: Ranking of sectors based on an Index of macro-economic size


b) E-business importance

As not all of these sectors were analysed by the e-Business W@tch during the initial period in 2002/03, information about the role and importance of ICT and electronic business is only available for 15 out of the 19 sectors. While e-business has many facets and practices vary widely across sectors, the e-Business W@tch has carried out a pilot to express the relative importance of electronic business in a single E-Business Index, using the respective index from eEurope 2005 as a model. The results of this pilot were found to reflect - by and large - very well the overall findings of the respective sector studies.

As this pilot is probably one of the best approximations currently available to express the overall importance of electronic business in a sector of the economy in only one figure, it is used here to establish a ranking of sectors. The Index was computed based on data from the e-Business Survey 2002 of the e-Business W@tch.


Table 3: Ranking of sectors based on an adapted eEurope E-Business Index


c) Combined ranking of economic and e-business importance

The next step in the selection process was an attempt to make a joint consideration of the sector's contribution to employment and value added together with the relative importance of ICT and e-business in the sector. For this purpose, the e-Business W@tch has computed an Index that combines the two components (cf. previous exhibits). The joint index is available only for those sectors that were part of the coverage during 2002/03. Both component indices were weighted equally.

In such a ranking, Business Services comes out on top, followed by Health, Retail, the Financial Services sector and ICT Services. The following five are Tourism, Electronics, The Chemical Industries, Machinery and Equipment Manufacturing and Publishing & Printing. The economically most important sector that is missing in this list because no data for e-business intensity were available is the Construction sector. It would definitely rank within the Top-10 otherwise.

It must be noted that, of course, the aggregation of different business activities into one sector has an impact on the results, as the size of the sector (and, subsequently, its share to employment and value added) increase. However, among the five sectors that come out as the Top-5 of the ranking, there are four sectors which include only one NACE Rev. 1 double digit Division: Business services, Health, Retail, and the ICT services (as defined in this context). Only the Financial Services, which are ranked on fourth position, "profit" from aggregation of two sub-sectors.


Table 4: Initial ranking of sectors considering economic and e-business importance