This report aims at assessing whether the economic structure of Europe is becoming more knowledge-intensive, in comparison with other countries (EU, EFTA and non-European benchmarks US, Japan, China). This entails the measurement of key dimension of structural change with a simple policy tool. The present work builds on and updates the results of the previous Feasibility Study on the development of composite indicators of structural change (Vertesy et al., 2012). It also builds on a previous study by Malerba et al. (2011) that identified indicators measuring changes in the actual sectoral composition of the economy.
In this study we construct a composite indicator on structural change at the country level, including indicators on R&D, skills, sectoral specialization, international specialization and internationalization. This composite is a supply-oriented indicator that is largely based on past performance (the outcomes of past efforts that are already measurable in terms of actual value added and employment levels in knowledge-based activities, revealed competitive advantages, supply of skilled human resources, etc.). All these indicators are related to the overall structure of the economy and are slow to change. In order to capture short-term characteristics of structural change related to the dynamics of smaller and younger firms, future research should focus on the development of a longitudinal database collecting indicators on the share of gazelles and the share of high-growth firms in terms of employment and turnover.JRC.G.3-Econometrics and applied statistic
