The purpose of this publication is to track sectoral developments and to assess the competitiveness of EU industries by building a set of sectoral competitiveness indicators.

Chapter II presents information on the industrial structure of the EU. The main topic of the chapter is sectoral specialization in EU countries and its development over time. The rest of the chapter presents information on the cost structure of sectors and the distribution of value added by size classes.

Chapter III deals with industrial growth from various angles. Growth in EU, vis-à-vis industrialized countries and the World is analyzed in terms of output, and employment. Furthermore, productivity and Unit labour Costs are used to assess developments of competitiveness across sectors. To gain insight into EU countries’ growth, this is broken down into three components, two of which, namely industry structure and competitiveness, explain the growth differential of each country relative to the EU average. In order to provide a framework for the analysis of short and medium term developments, the cyclical profile of manufacturing sectors is also described in this chapter. The second main topic in Chapter III is the analysis of growth factors (Gross Fixed Capital Formation, human capital, and technology), for which a set of indicators is presented and discussed.

Chapter IV looks at sectoral structure and developments from the demand-side, with special attention to the product composition and developments of private consumption and capital formation. Furthermore, the demand orientation of sector and the geographical origin of goods in the various segments of demand are presented and discussed.

Chapter V presents indicators pertaining to sectoral performance in international trade. Along with indicators of Revealed Comparative Advantage (RCA) and IIT, FDI at sectoral level, albeit highly aggregated, is presented as an indicator of international movement of factors. The RCA index is presented for EU, and Member States separately, US, Japan, China and India in terms of a standard sectoral classification, as well as in terms of technology and labour skills sectoral groups.

Finally, to provide a comprehensive view of the sectoral desegregation used along the publication, the annex presents a comparative table of the nomenclatures and lists of sectors used.