International Review of Applied Economics, Vol. 13, No.

1, 1999

On the Limits of the Post-Industrial Society

Structural Change and Service Sector
Employment in Spain

DANIEL DIÂAZ FUENTES

ABSTRACT The purpose of this paper is to examine the growth and the structure of
employment in the service sector in the Spanish Economy from 1958 to 1989 and to draw
comparisons with the trends exhibited by other European countries. In contrast to the
explanation offered by the theory of stages, which assumes that growth in services is
associated with the pattern of ® nal demand, this research argues that, since the middle of
the 1970s, the growth of market service employment is due to an increase in intermediate
demand of services. In order to demonstrate this, an intersectoral analysis is applied to
input output data which was homogenised for this research. This methodological approach
enables employment in the service sector to be connected to the other sectors. Rejecting the
idea that services are replacing manufacturing as the new engine of growth, the results
show an increased dependence on market services by industrial production. The ® nal part
of the paper presents explanations for this trend.

1. Introduction
In the light of Fisher (1935) and Clark’ s (1940) division of the economy into three
sectors (agriculture, industry and services), it could be argued that the `service or
tertiary society’ is the stage towards which all countries are moving. In Spain, as
in all OECD countries, one of the main structural changes has been a shift in
employment towards services. A computed regression of 24 countries between
1960 and 1990 shows that there was a signi® cant positive correlation between
GDP per capita and the share of employment in the service sector.
The primary interpretation of the `tertiary process’ was the `theory of stages’
(Kindleberger, 1958; Rostow, 1960) whose explanation was based mainly on the
patterns of ® nal consumption (Petty’ s Law and, speci® cally, Engel’ s Law: as GDP
per capita increases, ® nal demand shifts towards superior goods including ser-
vices). Furthermore, the growth of the service sector generated diverse
interpretations about the `post-industrial societies’ (Bell, 1974), according to
which the service sector is gradually taking the place of industry as the new engine
of growth.
However, different questions were raised about the growth in services with
Baumol’s (1967) theory of unbalanced growth. Amongst the most important

Daniel DõÂ az Fuentes, Universidad de Cantabria, Department of Economics, Av. de los Castros s.n.
E 39005 Santander, Spain.

0269-2171/99/010111-13 Ó 1999 Carfax Publishing Ltd

112 D. DõÂ az Fuentes

questions posed were those relating to the de® nition of the role of the pattern of
consumption and the role of productivity differentials in relation to service output
and employment growth. Fuchs & Leveson (1968) showed that the pattern of
consumption had a less important role than that of productivity differentials.
As a consequence of the lower productivity growth of the service sector as a
whole compared with the manufacturing sector, plus the labour intensive charac-
teristics of many services (`cost disease of personal service’), a secondary set of
questions appeared when the intersectoral comparisons are made in constant or
current prices (Gershuny & Miles, 1983; Kravis et al., 1983). In general, the
increase in the contribution of services to GDP during the last three decades has
stemmed more from changes in relative prices than from an increase in output. In
order to understand this trend, however, it is necessary to distinguish between
different services.
One of the problems encountered when examining the `tertiary process’ is
how services can be most accurately de® ned. Since the service sector is highly
heterogeneous, it must be broken down into different categories according to the
functions performed and to the market served: producer and consumer, distribu-
tive, social, personal, and business services, and market and non-market
(Gershuny & Miles, 1983). Most of these branches have been incorporated
gradually into the Systems of National Accounts (EUROSTAT, 1985; United
Nations et al., 1993). In order to understand the shift towards the service
economy, it is necessary to analyse what is being produced in the economic system
and how it is being produced.
One advantage of macroeconomic analysis based on input± output techniques
is that it enables overall production to be disaggregated by sector and by sub-
system. It then becomes possible to examine the growth of different services and
industries in relation to the process of structural change of the economic system.
Furthermore, since the evolution of a sector or sub-system is not independent of
the rest of the economy, it is necessary to evaluate the links between sectors
(intersectoral relations) in terms of exogenous changes of domestic ® nal demand,
foreign demand and technical change.
With these general premises in mind, and with a speci® c methodological
approach, the following sections of this paper aim to explore a number of key
questions about the Spanish economy during the period 1958± 89.
(1) Can the growth of employment in market services be explained solely by the
relative increase in the ® nal consumption of those services, or is it also
necessary to consider the growth of intermediate demand of service (i.e.
services which are used by ® rms in the productive system)?
(2) Has the growth of services been caused by a greater demand for their use in
the production of manufactured goods?
(3) Does the relative decline in employment in the manufacturing sector imply
that services are replacing industry as the new engine of growth?
While accepting that there is a positive correlation between GDP per capita
and the share of employment in services, this research seeks to analyse if this
relationship can be explained by the shift of ® nal demand, as the stages of growth
theory proposes, or whether it can be understood as a result of an increasing
integration between manufacturing and services.
The paper is organised into four parts. Section 2 considers the evolution of
employment and structural change in the main industrialised countries (OECD,
 Service Sector Employment in Spain 113

1992b). Section 3 presents the main trends of the Spanish economy and sum-
maries the principal results obtained. These results have been obtained through
the use of intersectoral analysis; the analysis being founded on the notion of
vertical integration of the sub-systems (Sraffa, 1956; Pasinetti, 1981). Some
implications of the results are drawn in part four.

2. Employment and Structural Change

During the last three decades the world economy has exhibited extensive economic
structural changes. At the same time, economic performance has varied
signi® cantly; the real increase in OECD GDP and productivity during the period
from 1973 to 1990 was half that experienced between 1960 and 1973. The
slow-down of economic growth in OECD countries since 1973 has been ac-
companied by three signi® cant recessions, two oil shocks, growth of international
trade, globalisation of ® nancial markets and the diffusion of a set of new technolo-
gies (Freeman & Soete, 1994). As a consequence of these changes, the economic
structures of these countries have been transformed markedly, re¯ ecting structural,
as opposed to cyclical, shifts in the composition of employment and production.1
Notable economists consider that the reasons for this slow-down and higher
unemployment are structural and are either caused by restrictions in markets
(labour),2 or by the lack of technological innovative capabilities.3
Certainly, despite the considerable economic growth in the postwar period
(GDP growth rates for OECD countries averaged 3.8% between 1960 and 1973
and 2% between 1973 and 1990), labour absorption has been limited throughout
the three decades, since employment average growth rates were 1.08% from 1960
to 1973 and 1.16% from 1973 to 1990. This trend has been even more signi® cant
for EEC countries, whose GDP growth averaged 3.95% (1960± 73) and 1.97%
(1973± 90) while total employment growth rates were only 0.25 and 0.46 per cent
for the respective periods. Considering the problems of labour absorption during
the `golden age’ , it is interesting to explore the employment trends since the
turning point of the middle of the 1970s (OECD, 1987, 1992b).
Taking a global measure of the extent of structural change of the major sectors
for the main industrialised countries including Spain (Table 1), it is clear that
there are basic similarities in the patterns of structural change among countries
during the whole period: agriculture is declining while services are increasing as a
share of overall employment and GDP. However, countries differ widely in the
sectoral composition of employment, in the proportion of structural adjustment,
and in the degree of ¯ exibility which work organisation displays in response to
changes. On the one hand, from 1960 to 1973, some countries showed an increase
in structural changes and industrial employment (Japan, Spain, Italy and France)
and GDP shares (Japan and Spain), implying a signi® cant catching-up in compari-
son with the leader country (US). On the other hand, from 1973 to 1990, the
contribution of services to GDP has declined in the two countries with higher
productivity growth (Japan and Germany). Furthermore, structural change can be
considered as a source of growth. This applies, in particular, to countries in which
employment is high in agriculture and productivity is low, since labour can be
reallocated to other sectors of higher productivity.4
The classi® cation of the main sectors into three parts is a conventional but
limited method of measuring the extent of structural change. A more accurate
approach would be to disaggregate the three-sector evolution of GDP and employ-
114 D. DõÂ az Fuentes

Table 1. Changes in sectoral composition of employment: 1960± 73 and 1973± 90

(percentages)

Agriculture Industry Services

1960± 73 1973± 90 1960± 73 1973± 90 1960± 73 1973± 90

Spain 2 15.5 2 11.4 6.9 2 3.8 8.6 15.2

Italy 2 15.1 2 8.5 5.4 2 6.9 9.7 15.4
France 2 11.9 2 4.5 1.8 2 9.5 10.1 14.0
Germany 2 7.0 2 3.6 2 0.8 2 6.9 7.3 10.5
United Kingdom 2 1.9 2 0.7 2 5.7 2 13.0 7.6 13.7
EU 12 2 9.4 2 5.2 0.7 2 8.1 8.7 13.3
United States 2 4.3 2 1.4 2 2.8 2 6.3 7.1 7.7
Canada 2 6.9 2 2.1 2 2.2 2 5.9 9.1 8.0
Japan 2 17.3 2 5.7 8.5 2 2.9 8.8 8.6
Australia 2 4.1 2 1.3 2 3.8 2 9.7 7.9 11.0

Source: Elaborated by the author based on OECD (1982, 1987 and 1992a).

ment in relation to the different trends in each individual sector, so it would

become possible to distinguish growing, medium and declining growth activities.5
A complementary measurement of structural change in terms of direction could be
obtained by classifying the branches according to their R&D intensity as: high,
medium and low technology.6
The latter approach would be useful in helping to evaluate the direction of
structural change, but would fail to identify the transformations taking place
between industries below the aggregate levels. Additionally, it could not connect
the change in the structure to other factors such as shifts in domestic demand,
foreign trade, technical change or input productivity.
A more precise de® nition of compositional structural change considers
changes in the sectoral composition of an economy output, value-added or
employment shares reported for different sectors, and the changes in the inputs
used by them. It implies a disaggregated examination by sector of the capital and
labour used, and the interrelations among sectors (intermediate inputs), both
domestic and imported. The advantage of this method is that it provides a detailed
image of how the structure of an economic system and its linkages are at one
moment, and how they have unfolded over time. However, its weakness is that it
does not allow the examination of the institutional factors behind the composi-
tional change. The evaluation of both the extent and direction is connected to the
broad sources of change for each sector, namely: domestic demand, exports,
import substitution and pattern of inter-industry linkages in the economy (referred
to as technical change), and this represents the path of change followed to reach
a speci® c sectoral structure.
The input± output (IO) technique enables changes in output and employment
to be estimated, and is also useful in helping to evaluate the relationship between
employment and technical change. The temporal variations of IO intermediate
coef® cients reveal signi® cant information about the technical change that operates
in an economic system. In doing so, they represent an extension of previous
measurements of structural change, and complement institutional analysis.
An alternative analysis is based on the concept of the sub-system and the
notion of a vertically integrated sector, which was introduced by Sraffa (1960) and
 Service Sector Employment in Spain 115

Pasinetti (1967, 1981) for theoretical purposes, but can also be used in applied
terms (Siniscalco, 1988).

3. The Case of Spain

Spain’s overall economic performance was outstanding during the 1960s and the
beginning of the 1970s, but from 1973 to 1985 it deteriorated substantially. Its
integration into the EC in 1986 was accompanied by a new boost which lasted
until 1990, when another recession started. From 1964 to 1973, both the labour
force and employment increased consistently and in practically the same manner,
with a gap between them of about 2 percentage points. After 1973, however, while
the labour force remained more or less constant, employment fell very rapidly,
showing in 1984± 87 and 1991± 97 a gap of over 20 percentage points with respect
to the labour force. The high level of unemployment is the worst feature of the
recent evolution of the Spanish economy (Dolado et al., 1987; Bentolila &
Blanchard, 1990; Layard et al., 1994).
The Spanish occupational structure has undergone substantial changes during
the last three decades. While the share of industry (building and manufacturing)
in overall employment has remained more or less constant, that of agriculture has
fallen dramatically, the decline having being completely absorbed by services. In
1960, agricultural employment represented 38.7 per cent of total employment,
while employment in services totalled 31%. By 1990, the respective shares were
11.8 and 54.8%. This represents, by any standard, a major structural change,
differentiating Spain from the other more advanced European countries, and
possibly in¯ uencing the overall unemployment rate.
In Table 2 the vectors of employment are illustrated by seven sectors (rows).
Since the EUROSTAT (1992) input± output tables (IOTs) are broken down into
the periods: 1959, 1965, 1970, 1975, 1980, 1985, the research selected the periods
which corresponded most accurately to the data on Spain and the last INE (1994)
IOT: 1989. The task of homogenising this information was complex, given the
different methodologies and aggregations used. The main dif® culty experienced in
completing this research was associated with these data. The IOTs have been
revised ® ve times (1958, 1962, 1970, 1975 and 1985) in different ways according
to the various institutions that assembled them (OrganizacioÂn Sindical EspanÄola
1958 and 1962, Ministerio de Plani® cacioÂn 1970, the revision of FIES 1975 to
EUROSTAT criteria, and INE since 1980 with the same criteria). EUROSTAT
(1992) has revised and homogenised its methodology with the IOT database from
1959 to 1985. Many revisions involved substantial changes, and the data cannot
be compared in their entirety. For these reasons the results must be taken to
indicate general tendencies rather than to yield precise measures.
In order to understand the shift towards the service economy it is important
to examine the principal factors affecting both what is produced in the whole
economy and how it is produced. This means that, when examining the service
sector, it is not enough to look at this sector alone, since structural changes in the
pattern of ® nal demand, the intermediate demand and the technical change must
also be considered.
Services form a network through which economic activity takes place. The
process of structural change can in¯ uence the degree to which services are required
throughout the whole economic system. The supply of services, in turn, makes it
 116
D. DõÂ az Fuentes

Table 2. Employment by sector of activity (thousands of employees)

1958 1966 1970 1975 1980 1985 1989

1. Agriculture, Forestry & Fishery 4 929 4 364 3 757 2 978 2 243 1 954 1 616
2. Energy products 292 169 146 153 153 159 143
3. Manufacturing 2 566 2 702 2 898 3 312 3 038 2 487 2 772
4. Building 838 1 068 1 161 1 222 1 073 805 1 173
5. Wholesale & Retail Trade 804 1 033 1 227 1 558 1 507 1 433 1 764
6. Market services 1 825 2 133 2 367 2 635 2 536 2 773 3 311
7. Non-market services 521 730 824 974 1 225 1 439 1 648
Occupied Population 11 775 12 199 12 380 12 832 11 774 11 049 12 427

Sources: Elaborated by author based on CPDES (1964), Treadway (1988), GarciÂa & GoÂmez (1994), and INE (1995).
 Service Sector Employment in Spain 117

possible to attain greater specialisation and division of labour. These factors are
essential in reinforcing the observed shift towards service employment.
In order to present the methodology, a sector will be de® ned as a cluster of
branches (® rms) producing commodities in agreement with a standard
classi® cation (NACE, CLIO), and a sub-system de® ned as a group of different
activities that are required in the economic system to produce a speci® c com-
modity (goods or service). In the context of intersectoral relations, a sub-system
consists of activities of different branches, all of which directly and indirectly
contribute to the production of a speci® c ® nal output.
The intersectoral relationships between branches and sub-systems from an
IOT will be represented in a single table as matrix operator B, so:

x5 Ax 1 f (1)

x5 L f (2)

B5 XLF (3)

where x is the vector of output by branch, A is the technical coef® cient matrix
whose typical elements aij 5 xij /S xij represent the value of the ith input needed to
produce one unit of industry j’ s output; L, known as the Leontief inverse,
represents the total requirements per unit of ® nal output in terms of gross output;
X is the inverse of the diagonalised vector x; and F is the diagonalised vector f of
the ® nal demand by industry.
The last two terms on the right-hand side of Equation (3), LF, correspond to
the actual amount of all domestic input that is directly and indirectly required for
the production of a ® nal commodity (columnj). When X is multiplied by the
matrix LF the operator B is obtained (matrix of shares of production), the
elements of which, (bij), show the share of total output (xi), which is required in
the sub-systemj.
The general results that have been extracted are as follows.
First, Table 3 shows the indices of forward and backward linkages that have
been obtained by summing the row and column elements of L. On the one hand,
the backward linkages have increased through time in agriculture and market
service, and have decreased in manufacturing and building. The overall evolution
can be explained by a higher integration among activities, a diminished intersec-
toral heterogeneity of agriculture (more integrated with the rest of the economy).
On the other hand, the forward linkages are decreasing in agriculture (less
dependence on the rest of the economy), energy (in particular with the oil shocks
of 1970s) and manufacturing since 1970. They are increasing in building and, in
particular, in the market services sector, which shows the increasing role of this
sector in relation to the rest of the economy. As might be expected, backward and
forward linkages fell as result of the liberalisation of trade.
Second, the matrix of B operators shows, in each row (of which the sum of
elements is one), the percentage contribution of each sector to each sub-system.
The computed matrices re¯ ect that, with the exception of the diagonal elements
of self requirements, the Industrial Sector has maintained the key clusters.
Third, the results of matrix operator B can be utilised to re-analyse variables
associated to the production by a branch, such as employment, energy and R&D.
This can be disaggregated to the highest level (Greenhalgh et al., 1988; Barker,
1990; Van der Linden & Oaterhaven, 1993). In this case, the diagonalised vector
118 D. DõÂ az Fuentes

Table 3. Indices of backward and forward linkages by sector 1958± 89

Backward linkage by sector

1 2 3 4 5 6 7
1958 1011 0860 1477 1314 0828 0856 0655
1966 1106 0869 1370 1323 0816 0878 0638
1970 1080 0808 1280 1271 0778 0905 0878
1975 1148 0811 1210 1227 0803 0908 0892
1980 1136 0833 1212 1124 0828 1030 0838
1985 1176 0807 1171 1104 0815 1063 0864
1989 1189 0825 1129 1055 0818 1075 0910

Forward linkage by sector

1958 1966 1970 1975 1980 1985 1989
1 1208 1203 1111 1078 0942 0951 0933
2 0895 0833 0887 0991 1015 0990 0943
3 1659 1778 1914 1748 1755 1697 1656
4 0673 0678 0667 0701 0731 0700 0722
5 0763 0763 0739 0784 0726 0727 0752
6 1146 1089 1050 1021 1206 1314 1351
7 0655 0656 0632 0677 0624 0622 0643

this case, the diagonalised vector of employment uà by branch (Table 2) has been
used to calculate the matrix of employment U:

U5 uÃB

U shows, by rows, the amount of employment that each branch contributes to each
sub-system (and of which the sums are the same total of u), and the columns of
U show the employment of each sub-system.
These matrices B and U disclose the direct and indirect shares of output and
employment by sector and sub-system, and the indirect shares of output can be
separated by replacing the Leontief inverse in Equation (3) and (4) by L 2 I. With
this methodology, the employment in intermediate market service (Trade and
others) can be separated by ® nal and intermediate requirements.

4. Conclusions
The results can be summarised by the following three main points.

(1) The growth of market service employment in Spain was due mainly to an
increase in the ® nal demand and distributive services in the early period of
development (1958± 75); and this can be explained by the stages of growth
theory (Table 4). This is in marked contrast to the trends exhibited by the
main advanced European countries which experienced constant growth in the
share of employment due to intermediate market services between 1959 and
1990 (Table 5). However, in the recent period (1975± 90) the Spanish
economy has exhibited trends similar to those of the other European coun-
tries. Therefore, the growth of market service employment in the Spanish
(after 1975) and main European economies is not directly, nor mainly, due to
an increase in ® nal consumption of services, but rather to an increase in the
intermediate demand of services.
 Table 4. Employment in intermediate and ® nal demand market services (thousands of employees and percentages)

1958 1966 1970 1975 1980 1985 1989

Intermediate market services 896 976 969 1089 1213 1408 1721
% 34.1 30.8 27.0 20.0 30.0 33.4 33.9
Final domestic trade services 632 859 944 1182 1228 1136 1414
% 24.0 27.1 26.3 28.2 30.3 26.9 27.9
Final demand services 1101 1331 1681 1921 1608 1674 1940
% 41.9 42.0 46.8 45.8 39.7 39.7 38.2
Total market services 2629 3166 3594 4192 4049 4217 5075
Service Sector Employment in Spain
119
120 D. DõÂ az Fuentes

Table 5. Employment in intermediate market services as a percentage of total

market services

1959 1965 1970 1975 1980 1985

Germany 38.6 41.4 45.4 46.7 49.8 50.6

France 32.8 33.1 38.1 36.9 38.9 40.3
Italy 28.8 31.9 32.7 36.2 39.5 42.4
UK n.a. n.a. 33.9 40.4 43.4 46.5

Source: Computed from EUROSTAT (1992).

Table 6. Employment in intermediate market services in industry as a sub-system (thousands

of employees and %)

1958 1966 1970 1975 1980 1985 1989

Intermediate services for industry 399 383 333 402 390 378 406
% of industrial sub-system 10.9 11.4 10.9 16.1 18.0 19.1 22.2

Although the positive relationship between GDP per capita and service shares of
employment is accepted in this paper, the explanation for this relation as proposed
in the theory of the stages is rejected.
(2) The expansion in intermediate demand for services is accompanied by their
increasing use in the production of manufactured goods in Spain, particularly
after 1970 (Table 6), and in the principal European countries throughout the
considered period (Table 7). This implies that the production of industrial
goods goes beyond the industrial sector and requires increasing services.
(3) The decline in employment in manufacturing does not imply that services are
replacing industry as the `new engine of growth’. Manufacturing is the sector
with higher productivity and the more signi® cant forward and backward
linkages. Moreover, the more dynamic and R&D intensive manufacturing
branches, such as computers and of® ce machinery, aerospace, pharmaceutical,
and telecommunications equipment, are linked strongly with the more dy-
namic service branches.
Growth in service employment must be explained by considering the increas-
ing integration between services and industry. This relationship can be explained
(Diaz-Fuentes, 1993) by the following four factors. First, the growing division of
labour among sectors, which requires a complex network of services such as
Transport, Communications, Bank and Insurance and Business Services to link
the different sub-systems. Second, the expansion in foreign trade which is another

Table 7. Employment in intermediate market services as a percentage of

industry as a sub-system

1959 1965 1970 1975 1980 1985

Germany 11.3 11.8 13.1 13.6 16.1 18.2

France 8.1 10.1 11.7 12.9 15.6 16.3
Italy 6.1 9.7 11.5 13.3 17.3 19.0
UK n.a. n.a. 12.4 16.9 22.2 23.6

Source: Computed from EUROSTAT (1992).

 Service Sector Employment in Spain 121

perspective of the division of labour. Third, the augmenting regulations (standards

of quality, environment, etc.) which require specialised services such as legal, tax,
engineering, publicity, training, ® nance, insurance and others. Fourth, the emerg-
ence of new economies of scale in the production of services, which induce a
process of externalisation of the service activities.
The application of intersectoral analysis in this research to Spain and other
European countries has generated a different conclusion from that derived by the
aggregated analysis, since the methodology allows the interpretation of the links
between industries: service and manufacturing, and the set of employment that is
directly and indirectly utilised to produce and distribute ® nal goods and services.
Moreover, the results show that the process of structural change is not restricted
to developing countries, but is an important phenomenon of semi-industrialised
and industrialised countries.

Notes
The author is grateful to E.V.K. FitzGerald, J. Foreman-Peck and J.A. van der Linden, and also to the
two anonymous referees for their helpful comments.
1. `Whilst economic theory has pointed to compensation mechanism generating new employment to
replace jobs which are lost through technical change, no one has claimed that this process is
instantaneous or painless. Economists differ however on the extent to which they would rely on
self-adjusting market-clearing mechanism or on active public investment and labour market policies’
(see Freeman & Soete, 1994, pp. 17± 38).
2. Over the last decade the European unemployment rate has averaged 10%, which is a much more
serious matter than the ¯ uctuations around the average. Conventional business cycles account for
relatively little of the history of unemployment. Most of the annual variations in unemployment
come from the long-frequency ¯ uctuations between half decades rather than from the short-fre-
quency ¯ uctuations within half decades. This is because there are long term changes in social
institutions, and the shocks (wars, oil or ® nancial crisis) have long-lasting effects, see Layard et al.
(1994, pp. 91± 109).
3. These Information and Communication Technologies, although they have a vast range of present
and future applications, do not yet easily match the inherited previous skill pro® le, management
organisation, industrial structure or institutional framework. See Freeman & Soete (1994, pp. 47±
66).
4. There is some evidence, based on 30 countries for the period 1960± 90, that the GDP growth rates
correspond negatively to increasing services shares. See Chenery (1986).
5. In OECD (1993, p. 18) the industries were classi® ed according to their annual growth rate
(1974± 90) in the main industrialised countries as: High-Growth: 1. Computers and of® ce machinery,
2. Aerospace, 3. Communications, 4. Finance and insurance, 5. Business service, 6. Government,
7. Rubber and plastic, 8. Pharmaceutical, 9. Social and personal service, 10. Instruments. Medium-
Growth: 11. Chemical, 12. Trade, 13. Transport, 14. Agriculture, 15. Electrical machinery, 16.
Paper and printing, 17. Electricity, gas and water, 18. Non-ferrous metals, 19. Food, drink and
tobacco, 20. Motor vehicles, 21. Hotels and restaurants. Low-Growth: 22. Mining, 23. Non-electrical
machinery, 24. Construction, 25. Fabricated metals, 26. Stone, clay and glass, 27. Textiles, 28.
Petroleum re® ning, 29. Wood and furnitures, 30. Ferrous metals, 31. Shipbuilding.
6. In OECD (1993) the 21 manufacturing branches across 11 industrialised countries are ranked
according to R&D expenditures to gross output as a proxy of technological sophistication, with the
following scheme: High-Tech: 1. Aerospace, 2. Computer and of® ce machinery, 3. Communication
equipment, 4. Pharmaceutical, 5. Instruments, 6. Electrical machinery. Medium-Tech: 7. Motor
vehicles, 8. Chemical, 9. Non-electrical machinery, 10. Rubber and plastic, 11. Non-ferrous metals,
12. Other transports. Low-Tech: 13. Stone, clay and glass, 14. Food, drink and tobacco, 15.
Shipbuilding, 16. Petroleum re® ning, 17. Ferrous metals, 18. Fabricated metals, 19. Paper and
printing, 20. Wood and furnitures, 21. Textiles, footwear and leather.
122 D. DõÂ az Fuentes

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