This annex presents country profiles combining infor-mation on the forces behind growth, as presented insection IV.2, with results indicating the impact ofresearch on productivity from section IV.3 and thespecialisation of national industries explored in pre-vious Competitiveness reports.64 A graph (“cobweb”)for each Member State summarises information onthese indicators and on innovation and performanceassessments by the European Commission65. Eachvariable is standardised, so that points outside theunit circle indicate a performance above the averageof the EU Member States (see Table A IV.1.2 for thedefinition of variables).

Drawing on the trends in the indicators used in thesecountry profiles in the 1990s, section 2 investigateswhether Member States have converged over thisperiod.

Belgium

Belgium's growth performance in total economy out-put is close to the EU average. Labour productivitygrew at a higher than average rate and its level is oneof the highest within the EU. These good perfor-mances have also been achieved in the manufactu-ring sector.

Belgium spends relatively less than the EU averageon research and close to the average on education.Innovation expenditure in manufacturing is also low.ICT expenditures are close to the EU average butICT-producing industries are less present than elsew-here. Patenting is low. The excellent productivity per-formance can probably be explained by intense com-petitive pressure due to the high degree of trade inte-gration. The presence of enabling capabilities inm a nu fa c t u ring and a well-educated labour fo r c econtribute too.

At manufacturing level, the industrial structure israther traditional in the sense that capital intensiveand low-skill industries have high shares. Belgiummaintained its position in the textile sectors. The che-mical sector provides 17 % of value added and is thelargest industrial sector. Exports in pharmaceuticalsare booming and its market share in Europe hasincreased from 6.3 % to 9.6 %. Food is the secondlargest sector, vehicles the third. Significant inroads intechnology-driven industries can be observed in theproduction of audio and video apparatus.

Belgium is one of the countries in which researchintensity and growth across sectors appear to be rela-ted66. The two sectors leading in research intensity -

other transport and electronic equipment - are gro-wing fast; the same is true for instruments and officemachinery. Food, textiles, and pulp and paper, on theother hand, are industries with low research and lowgrowth. Publishing and printing is an industry with lowresearch intensity and high growth; this may be dueto embodied technology in inputs and equipment.Leather and footwear have high and increasing levelsof research in Belgium – in contrast to other countries- but productivity growth did not increase.

Denmark

Both total economy and manufacturing growth inDenmark were above average, specifically in the firsthalf of the 1990s.Denmark displays a good research and educationperformance, especially in terms of lifelong learning.

However, the supply of new Science and Technologygraduates is low. ICT expenditures indicate a diffu-sion of these technologies in the economy, a factc o n f i rmed by the level of Internet penetra t i o n .I n n ovation expenditures are high and innova t i o ncapabilities are well developed; SMEs capabilities arethe highest in the EU.

Denmark has a rather small industrial sector but pre-sents a strong development of high-technology ser-vices. At manufacturing level, the share of skill-inten-sive and marketing-driven industries is high. Theimportance of marketing-driven industries is due tothe food sector, which accounts for 19 % of outputand 23 % of exports. The second largest sector ismachinery. A specialisation in wood products and fur-niture is also apparent. Denmark has a rather lowshare of capital-intensive and technology-dri ve n

industries. High tech industries with relatively largeex p o rt shares are pharmaceuticals and medicalequipment. The fastest growing industries are woodproducts, tobacco and motor vehicles.

In Denmark, research intensity and production or pro-ductivity growth across industries do not appear to berelated. Instruments, chemicals (specifically, the phar-maceutical industry) and electronic equipment areresearch intensive and fast growing. Food and pulpand paper are low on both accounts. Office machine-ry and the other industries (including furniture) areresearch intensive, but post low growth. On thecontrary, wood, publications, and motor vehicles havehigh growth rates, but are not research intensive.

Germany

Germany's growth pattern reflects the problems andprogress of unification. Growth was above average inthe first half of the nineties, but fell below the EU ave-rage during the second half. Productivity in manufac-turing accelerated, reflecting restructuring and inter-nationalisation of firms.

G e rm a ny scores high in research indicators.However, its R&D ratio has decreased in the 1990s.The presence of innovation capabilities in SMEs isanother strong point. Germany has a good supply ofhuman capital but lifelong learning is lagging behind.The diffusion of information and communication tech-nology is slower than average.

Germany accounts for 30 % of the value added ofEuropean manufacturing.The trade balance amountsto more than three quarters of the EU trade surplus.

Employment in medium-high and high technologyindustries is strong but it is below the EU average inhigh technology services. Germany's strength is inskill-intensive and mainstream industries. The largestsectors in production and exports are machinery,vehicles, and chemicals, which together provide 50 %of exports. In some of the technology-driven indus-tries, Germany's export shares are below averageand have declined in the telecom industries. Aircraftand spacecraft, instruments, and electronic compo-nents increased their shares. A p a r t from motorvehicles, the highest degree of specialisation is inmachine tools, electrical apparatus, and measuringand musical instruments.

Research intensity and production or productivitygrowth across industries do not appear to be relatedin Germany67. This may be due to the fact that restruc-turing affected productivity more than research activi-ty. Many firms began to outsource and became multi-nationals. For all five industries that lead in research,production growth is not above average. Electronicequipment and chemicals have high research intensi-ty but low production growth. Vehicles, which ranksixth in research intensity, increased production, butdo not rank high in productivity growth. On the otherhand, food and printing are growing fast – with vir-tually no research activity – though with low producti-vity growth.

Greece

Greece is catching up, albeit slowly and not withoutsome turbulence. Production, as well as labour pro-ductivity, increased in the 1990s slightly faster thanthe EU average. Productivity in manufacturing grewfaster despite slow output gr owth, reflecting theincreased competitive pressure.

Greece is below the EU average in most indicators ofresearch and ICT. It has a relatively high share ofhigher educated population of working age and itseducation expenditure is increasing though it is stillbelow average.

Greece has the smallest share of manufacturing inGDP of all European countries. The highest rate ofgrowth (in capital-intensive sectors like petroleum,basic metals, textiles and wood) was achieved with

e m p l oyment decreasing by about 5 % p. a .Productivity growth was low in two sectors which arelarge in Greece, namely food and wearing apparel.The share of low-skill industries is by far the largestand is still increasing, as is the share of marketing-driven industries.

Greece has less capital inflow and higher extra-EUexports than any other Member state.68 The break-down of Yugoslavia has increased transport and tran-saction costs with core European countries. Thet ra n s fo rmation of fo rmer socialist countr ies hasincreased competitive pressure but also providednew market opportunities, bringing faster than avera-ge structural change.

Spain

Spain’s GDP grew faster than the EU average whilegrowth in manufacturing was approximately at par.This coincided with a significant reduction in unem-ployment with, as a consequence, low to negativeproductivity growth rates.

Spain is among the weaker countries with respect toindicators for research and human capital and dis-plays low ICT use. Exports are growing by 10 % p.a.,led by intra-EU exports. The share of industry in GDPis now below average. Productivity and wages arelow.

In manufacturing, three well represented sectors –food, apparel and leather – exhibited a sluggish per-formance in productivity. Two capital intensive (basicmetals and chemicals), and two high tech industries(computers and medical equipment) increased pro-ductivity sharply.

The car industry doubled its production share and isnow the second largest industry in terms of bothexports and production. Food is also an importantsector for exports: fish, fruits and vegetables havedouble-digit shares in European exports. Chemicalsare now third in production and exports. The highshares of pharmaceutical, audio and video apparatusand medical equipment industries reflect successfulclusters of high-tech industries, often around subsi-diaries of multinational firms, which supply leadingtechnologies.

There appears to be no relation between researchintensity and production or productivity gr ow t h .6 9

Among the research-intensive sectors only office andelectrical machinery posts high growth; in chemicals,other transport and electronic equipment, neither pro-duction nor productivity grew fast. Food and apparelcombine low research intensity with low productivitygrowth. Textiles and basic metals combine high pro-ductivity growth with low research activity.

France

Production growth was below the EU average in thefirst half of the 1990s and about average during thesecond half. Labour productivity growth was wellbelow average. Manufacturing growth was slightlylower than the EU average - as is the case for mostlarge countries. The share of manufacturing in totalproduction declined to 18.5 %.

France is strong in research and innovation outlays,but the trend of research expenditure relative to GDPis downward. Indicators of human capital show aposition slightly above the European average. Newgraduates in Science and Engineering are far abovethe EU average but efforts in life-long learning arelower than average. The ICT producing sectors aswell as high technology services are well developed.

In general, the industrial structure of France is closerto the European structure as a whole than to that ofother large countries. The share of technology-drivenindustries is high in France, as is the share of indus-tries characterised by high inputs from knowledge-based services. France’s two largest industrial sec-

tors - chemicals and food – are growing fast. Motorvehicles and machinery are the third and fourth lar-gest sectors. Cars and other transport are well repre-sented in exports, and together account for more thanone quarter of total exports. The highest exportshares are in food and electrical machinery.

The specific success of France in aircraft and space-craft can be seen in the "other transport" sector:France accounts for 18 % of value added and 45 % oftotal European exports, reflecting trans-Europeanprojects in spacecraft and aircraft. Productivity isincreasing in this sector, as it is in chemicals andplastics.

Research intensity and production, as well as pro-ductivity growth appear to be linked.70 Four of the fiveresearch-intensive sectors in France are also highgrowth sectors with rapidly increasing productivity(instruments, electrical equipment, other transportand chemicals); the exception is office machinery,where research is high but production is decreasing aprobable sign of delocalisation. Food is a low-resear-ch sector wi th small increases in productivity.Publishing and printing combines low research withabout average production growth, but has below ave-rage productivity increases.

Ireland

Growth of real GDP was 8 %, about half of which wasdue to productivity growth. Two thirds of the double-digit (11.2 %) growth in manufacturing resulted from

productivity growth. Both production and productivitygrowth in the manufacturing sector accelerated in thesecond half of the1990s. GDP per capita caught upwith the EU average in 1997.

Ireland still has low levels of public R&D and educa-tion expenditure. However, business R&D is movingcloser towards the EU average, even though multina-tional firms still perform a larger share of research intheir home country, as compared to production. Skillsare highly rated, due to an efficient education systemand the supply of new graduates in science & tech-nology is the third strongest. Ireland has a large shareof ICT-producing industri e s. Ave rage innova t i o nexpenditures (compared with a fast increasing turno-ver) are complemented by higher rates of innovationbased on co-operation and on continuous research atfirm level, as expressed by the capabilities indicators.

Ireland has built its remarkable catching up processon its attraction of foreign capital, but has ingenious-ly connected inward investments with local strengths.It has attracted dynamic high-tech industries, develo-ped programmes to upgrade qualifications and tocluster firms around the subsidiaries of multinationalfirms. The supply of skilled labour has been a contri-buting factor.

The share of manufacturing is rising and, at 32 %, isnow by far the highest in Europe. Exports, specifical-ly to the US, Japan and Switzerland, are rising but theshare of extra-EU exports is still below average.Ireland produces 1.7 % of total European manufactu-r ing, and export shares have doubled, now reaching3 %. The ratio of exports to production is the highest

of all the Member States. Value added per employeeis also the highest among EU countries. The share ofproduction in marketing-driven and technology-drivenindustries is high. Chemicals is the largest sector,with basic chemicals and pharmaceuticals eachaccounting for about 15 % of Irish ex p o rt s.Computers rank second in ex p o r ts and telecomequipment third. 15 % of EU computer exports and 10% of chemicals come from Ireland.

Italy

Despite sluggish overall growth, labour productivitygrew parallel to that of other EU countries. In manu-facturing, productivity growth was lower than the EUaverage during the1990s, specifically in the secondhalf, when production fell by one percentage pointand productivity by two percentage points below theEU average. Italy is one of the four European coun-tries with a deceleration in productivity growth.

With respect to almost all the variables that are belie-ved to facilitate innovation and growth, Italy is consis-tently below the European average. This is specifical-ly the case for indicators of research, human capitaland new technologies. An exception is ICT produc-tion. The share of the economically active populationhaving higher education is particularly low relative tothe EU average.

Italy produces about 12 % of European manufactu-ring output. The export ratio and openness are belowave ra g e, reflecting strong domestic demand fo rconsumption and investment goods. Italy has a two-tier industrial structure. On the one hand, the share oflabour-intensive and low-skill industries is larger than

in most other Member States; on the other hand,high-skill and mainstream industries are also strong.Technology-driven and marketing-driven industriesare under-represented. Italy has a large textile sector,with high export unit values indicating high fashionproducts.71 Machinery - a skill-intensive, mainstreamsector - is the largest single sector, followed by che-micals in production and by cars in exports.

Productivity rose in electronics and computers, aswell as in basic metals, paper and metal products. Inthe textile industries, productivity actually decreased,but real term figures underestimate the upgrade inquality. In machinery, productivity increased slightly.T h u s, though the pattern for productivity gr ow t hacross industries is similar to that of other countries,average growth is lower. Employment in Italian manu-facturing remained fairly stable, despite the very slowgrowth in output. Italy has the slowest speed of chan-ge of industrial structure.

Three of the five leading research-intensive sectors inItaly do not translate high research into productivitygrowth. Other transport has a particularly low level ofproductivity growth; motor vehicles have increasedproduction at a below-average rate of growth in pro-ductivity. Research activity and productivity are highin electronic equipment and in office machinery. Thefood industry and the textile industries rank low inboth areas, with the exception of apparel, where pro-duction growth is about average. Publishing has lowgrowth in productivity and production - the latter in

contrast to other countries. High growth, despite lowresearch intensity, characterises the wood, pulp andpaper and fabricated metal sectors.

Luxembourg

Data availability is a recurrent problem when asses-sing Luxe m b o u r g ’s perfo rm a n c e.7 2 L u xe m b o u r g ’sGDP per capita is almost double the EU average andthe highest in the OECD area. Production and pro-ductivity growth were more than twice the EU avera-ge.

Capabilities in manufacturing are above the EU ave-rage. Luxembourg has the highest contribution from

the services sector to the economy among OECDcountries. Financial services and communicationswere the main engines of growth.

Luxembourg traditionally has a strong position inbasic metals, but the share of this formerly dominantsector is declining. The steel industry accounts nowfor 13 % of total value added, down from 41 % in1985. Rubber and plastic are the second strongestsector with a fairly constant share of value added ofabout 14 %. Fabricated metals and chemicals grew atannual rates of around 10 %. Machinery is the mostimportant engineering industry; several food indus-tries and printing have increased their shares, thusbroadening the industrial base. The overall share inEuropean manu fa c t u ring increased slightly.Employment in manufacturing remained stable overthe period 1995- 2000, while it declined in most other

Member States. The jobs lost in the steel industrywere partly compensated for by job creation in che-mical industry, metal products, food and investmentindustries.

The Netherlands

In the 1990s, production grew above the EU average,while productivity growth was slightly lower than ave-rage.

Research and development expenditures are close tothe EU average and patenting is very strong. There isa mixed picture as far as human capital is concerned,with below average numbers of graduates in scienceand engineering, average public outlays, and wellabove average performance in lifelong learning prac-tice. The development of ICT-producing sectors isabove average and the diffusion of these technolo-gies in the economy is strong.

The share of capital-intensive and low-skill industriesis somewhat higher than the average, and so is theshare of marketing-driven industries. Technology-dri-ven industries have a lower than average share, asdo skill-intensive industries, while industr ies charac-terised by high inputs from knowledge-based ser-vices are very important. The largest sectors are che-micals and food. Food accounts for 14 % of totalEuropean exports, although this share is declining.The publishing industry is in third place and has rai-sed its share of value added. The tobacco industryaccounts for the highest share in EU exports - forwhich the Netherlands provides one third ofEuropean exports - and the petroleum industry contri-butes one fifth.

At the manufacturing level, research intensity is ratherlow. However, it is complemented by higher than ave-rage innovation expenditure and a strong presence ofinnovation capabilities. Office machinery posts highlevels of research and high growth in production and productivity. High rankings in both research andgrowth can also be seen in the car industry and inelectronics. On the other hand, electrical machineryand chemicals do not translate research intensity intoproduction growth - in the case of chemicals; this isperhaps due to the lower share of pharmaceuticals.Tobacco and pulp and paper are capital-intensiveindustries with high productivity growth.

Austria

Following a period of above average growth, Austria'sperformance drew closer to EU average during the1990s. The manufacturing sector increased its sharein European production and ranks fourth among EUcountries in growth of output and productivity.

Austria traditionally has a deficit in R&D but has nowcome close to the EU level. Innovation capabilities areabove average. Austria is moderately well placed withrespect to most human capital and ICT indicators.

The privatisation of manufacturing firms speeded upin the mid-1990s, after a period of heavy losses. Thel i b e ralisation of telecom and pri vatisation start e drather late.The share of manufacturing in total production israther large; its share in European value added rosefrom 2.2 % to 2.8 % Productivity growth is specifical-ly high, partly in the wake of privatisation and therestructuring of formerly nationalised or bank-owned

firms, and partly due to the successful positioning ofmedium-sized firms in market niches. The export ratiois high, becoming more dynamic owing to the increa-sing trade surpluses with the accession countries inCentral and Eastern Europe, as well as to exports tothe US. The degree of openness is high, even whencompared to other small countries.

The production structure remains centred around tra-ditional positions and the share of technology-drivenindustries is rather low. The largest sector is machi-nery. Motor vehicles are second in exports; Austriasupplies parts to European and US car manufactu-rers. Above average market shares are posted by tra-ditional strongholds such as the pulp and paperindustry, the leather industry, metal products, andbasic metals. In none of the technology-driven indus-tries does Austria have significantly above averages h a r e s, possibly reflecting insufficient researchefforts.

Portugal

The Portuguese economy is catching up, especiallysince the second half of the 1990s. Productivity is thelowest among Member States, but is increasing fast.Research efforts, both public and at business level,are still very low in comparison with the EU average.Expenditure on education is above average. Thesame applies to ICT, with relatively high expendituresbut low penetration levels.

The industrial sector is large, accounting for 23 % ofGDP. The development is driven by European inte-gration; the intra-EU share of exports is the largestamong Member States, and is growing faster than

extra-EU exports. Despite Portugal's rising share inEuropean exports, the trade deficit doubled over thelast decade and amounts to nearly one half ofexports.

In the sectors with larger shares than in the EU, suchas food and textiles, there has been virtually noincrease in productivity. By contrast, productivityincreased at double-digit annual rates in basic metalsand pulp and paper. Motor vehicles and other trans-port are catching up in productivity and display stableemployment. A high productivity increase was alsoapparent in office machinery, albeit from a very lowlevel.

The share of Portugal's textile sectors - textiles, appa-rel, and leather - decreased from 24 % to 19 %;nevertheless, this share is still the second largestafter that of Greece. Cars are now the largest exportindustry. Telecom equipment has attained the fifth lar-gest export share; tobacco, wood (specifically cork),and made-up textiles are industries with high exports h a r e s. In general, low-skill and labour-intensiveindustries still dominate. The structure is adaptingtowards European demand, specifically by increasingshares of skill-intensive and mainstream industries.Portugal attracts foreign investments amounting to upto 3 % of GDP.

Finland

In the early 1990s, Finland was hit by a financial cri-sis and by the collapse of its export markets in theSoviet Union. As a result, GDP growth was negativefor three consecutive years. In the second half of the1990s, growth accelerated rapidly, making up for lost

ground. Productivity growth for the entire decade isfar above the European average. Finland’s perfor-mance with respect to research, formation of humancapital, development of ICT-producing sectors andinnovative capabilities is consistently above average.Finland gave priority to research - even during its cri-sis years- and is now one of the countries with thebest perfo rmance in research and ICT. F i n l a n dfocuses on academic research at a limited number oflocations and has reinforced engineering-orienteddisciplines. The liberalisation of telecommunicationsstarted early, with competition in long-distance tele-phony introduced in the 1980s. Early and well opera-ted programmes brought the information society intoschools, the government and institutions.

The share of manufacturing in GDP in Finland is thesecond largest (26 %) and, in contrast to other coun-tries, it did not decline between 1985 and 1998.Productivity increased fastest in electronics, basicmetals, and paper and wood industries. Electronicequipment jumped from 15th to 2nd place in produc-tion. Finland increased market shares in electricalmachinery and in printing and publishing, while main-taining strongholds in capital-intensive industr i e s ;pulp and paper is still the most important sector, andaccounts for one third of exports. The "forestry clus-ter" has increased its share in value added, partlythrough complementary services and technologycentres.

Research intensity and production growth appear tobe related across sectors73; this relation is less clearwith respect to productivity gr owth, conceiva bl ybecause of the role of capital-intensive industries

where, typically, productivity improvements do notrely on own research but rather on embodied techno-logy. Research is concentrated in the high tech sec-tors. In electronics, electr ical machinery, and instru-ments, high levels of research effort coincide withhigh productivity growth; in chemicals and in officemachinery, high levels of research did not result infast growing production and productivity. Productivityhas also increased in Finland’s traditional areas ofstrength: pulp and paper, the wood industry and basicmetals are all among the top five sectors with regardto productivity growth. In these sectors, researchintensity is lower than in other Finnish industries, buthigher in Finland than in the EU.

Sweden

Sweden faced a severe financial crisis in the early1990s that led to a long period of contraction of theeconomy. Production growth fell below the EU avera-ge, although, over the decade, productivity growthwas higher than the EU average. Growth of manufac-turing is above average and the productivity increaseis the third highest.

Sweden is among the top countries for most of thefactors facilitating innovation and growth and hasimproved in most of them, even though high perfor-mances had already been achieved at the beginningof the 1990s in research, education and ICT use.

The highest increase in productivity occurred in twotraditionally strong sectors. In electronic equipment,where the Swedish share of production is 10 percen-tage points above the EU ave ra g e, productivityincreased by 10.3 %. This sector now accounts for

15 % of exports, which is as much as wood and papertogether. In motor vehicles, productivity rose by 4.3%. In both sectors, productivity rose faster than theEU ave ra g e. In other industri e s, productivityincreases guaranteed continued competitiveness intough markets: basic metals, apparel and tobacco.Machinery and motor vehicles are the largest sectorsin Sweden. Pulp and paper is third, but its productionshare decreased (in contrast to Finland). B a s i cmetals have high market shares, and the trend is onthe rise. Extra-EU exports have grown faster thanintra-EU exports. Sweden has a large share of capi-tal-intensive industries and the share of technology-driven industries is increasing fast, as is that of indus-tries characterised by high inputs from knowledge-based services. Sweden has the lowest share of low-skill industries, reflecting its former high wage posi-tion.

In Sweden, research intensity and production as wellas productivity growth, across sectors, are clearlyrelated.74 Other transport and cars are research-intensive sectors. For motor vehicles, as well as forelectronic equipment and for office machinery, highlevels of research are combined with high growth inproductivity. Productivity growth in traditional stron-gholds is apparent in basic metals, but not in pulp andpaper or in wood.

United Kingdom

In the 1990s, the United Kingdom reversed its gro-wing productivity gap in manufacturing vis-à-vis otheradvanced countries, though output growth remainedlower.

In the United Kingdom, research indicators are com-parable to the EU average, but as in other large coun-tries R&D expenditures relative to GDP have decli-ned. The United Kingdom ranks high in both the pro-duction and use of ICT. Public expenditures on edu-cation are below average but the supply of skills isamong the best.

The United Kingdom produces 15 % of Europeanmanufacturing output, the second largest productionshare among Member States. The United Kingdomenjoys the second highest unit value of exports,reflecting structural change towards industries cha-racterised by high inputs from knowledge-based ser-vices. It also takes advantage of its position as theheadquarters and export hub for high-technology pro-ducts. Marketing-driven industries have a significant-ly higher share in the United Kingdom than in the EU.Food is still the largest sector in production; followedby chemicals, machinery, and vehicles. A clear andincreasing specialisation of the United Kingdom canbe observed in printing and publishing, which nowamounts to 8 % of production; more than 20 % ofEuropean production and exports in this sector comefrom the United Kingdom. High market shares havealso been attained in office machinery and telecomequipment.

In the United Kingdom, research intensity and pro-ductivity growth across sectors do not appear to berelated. Electronic equipment, chemicals and instru-ments are sectors with high research intensity, andhigh growth. Other transport has the highest researchintensity, but low growth in production and productivi-ty; electrical machinery has the fourth highest resear-ch intensity and the second lowest level of growth inproductivity. In general, capital-intensive industries

like oil, chemicals and food, have high productivitygrowth.

The trend in the 1990s in the va ri a bles used as proxies for the forces facilitating innovation andgrowth and presented in the country profiles gives arough idea of whether Member States have conver-ged in terms of these underlying forces. Indeed, in amajority of cases there is convergence, both as areduction of the dispersion of performances75 and asa reduction of the relative distance between the lea-ding and the “trailing” group of countr ies. Each groupis composed of five countries - not necessary thesame at either point in time. The points in time are notthe same for all indicators, depending on the length ofthe time series. In the case of Internet penetration,the period is just one year, yet the converging patternis very strong. Table A IV.1.1 summarises the infor-mation on convergence/divergence of the different

indicators across Member States.

The indicators relative to ICT penetration are conver-ging faster. Two of the three diverging indicators referto structural features that may be self-reinforcing(specialisation, concentration), while in the third case(patents) the leaders increased their advantage. Asfor the two measures of research intensity, there is astabilisation of relative distances, but greater disper-sion in the case of the R&D to GDP ratio and no clearpattern for R&D in manufacturing. Finally, spending ineducation behaves in the same way as total R&D.The lower performance group shows little tendency tovary; it consists mainly of the southern EU countries.Sweden, Denmark, Finland, and the Netherlandstend to share the top places, followed by the UK,Germany, France and Luxembourg76. Again, for mostof the indicators the (relative) distance between topand low performers tends to decrease over time. And,in balance, decreases in the coefficient of variationare much stronger than increases, underlining thedominant trend of convergence.

A comparison can be made with the US for some ofthe above indicators. The EU has improved its posi-tion in most of the cases, although not decisively. Thegap in ICT spending has been reduced substantially,as the improvements on Internet and PC penetrationconfirm. However, with regard to the development ofthe ICT-producing sector the situation has worsened.The EU is catching up with the US in publications, insecondary and tertiary education attainment and inpatents.

The picture is definitely better for the leading EUcountries. They have surpassed the US in patents,publications, ICT diffusion and total research anddevelopment spending.

Aiginger, K, Böheim, M., Gugler, K., Peneder, M.,Pfaffermayr, M. (1999), Specialisation and(Geographic) Concentration of EuropeanManufacturing, Working Paper n° 1, DG Enterprise,European Commission, Brussels.

Aiginger, K. (2000), Country profiles in manufactu-r ing, EUROSTAT.

European Commission (1999), The Competitivenessof European Industry, Brussels.

European Commission (2000A), EuropeanCompetitiveness Repor t, Brussels.

European Commission (2000B), Innovation in aknowledge driven economy, Annex: EuropeanInnovation Scoreboard, Brussels.

European Commission (2001A), The EuropeanInnovation Scoreboard 2001, doc.SEC n° 1414,Brussels.

European Commission (2001B), Realising theEuropean Union's Potential, Annex 2 to theStockholm Report, Brussels.