Priority Sector Report
Knowledge Intensive
Business Services
Executive summary
• Knowledge-Intensive Business Services (KIBS) is a sector based on parts of four European Cluster Observatory cluster categories: Education and Knowledge Creation, Business Services, Financial Services and IT. KIBS includes 25 industries in total.
• Regions with strong KIBS sectors exhibit the highest prosperity levels in Europe.
• The presence of a strong KIBS sector positively affects regional innovation performance (patenting).
• KIBS sectors are predominantly urban activities; however, some metropolitan cities in Europe perform better than others.
• Among the regions of Europe the following ten regions have a KIBS sector larger than expected: Zürich, Stockholm, Oxford, Inner London, Brighton, Frankfurt am Main, Berlin, München, Stuttgart and Athens.
• Among the 25 largest regions in Europe the following have a KIBS sector smaller than expected: Katowice, Palermo, Bari, Naples, Marseille, Valencia, Antwerpen, Sevilla and Venice.
• As a share of regional labour market employment, KIBS accounts for the largest shares in Brussels (16.0%), Inner London (15.2%) and Zürich (14.6%).
• Most growing KIBS regions are small. However, Ireland is a region with a large KIBS sector which is also growing rapidly.
• The largest growth in KIBS employment is found in Austria (Graz, Bregenz, Salzburg, Innsbruck), Estonia, Lithuania and Northern Spain/Southern France.
• Some leading innovation regions in Europe, such as Stockholm, Praha and Frankfurt am Main, are experiencing shrinking KIBS employment.
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This report has been produced as part of the Europe INNOVA initiative. The views expressed in this report, as well as the information included in it, do not necessarily reflect the opinion or position of the European Commission and in no way commits the institution.
KIBS,
innova-tion and
pros-perity
Knowledge intensive business services often accompany regional prosperity and innovation. The graphs on this page show the relationship between GDP per capita, Patent applications and Location Quotient*
representing the relative strength of the KIBS sector in the region†. The size of a bubble in the charts represents the
size of the population of the region.
The strength of the relationship between the concentration of KIBS in a region‡ and the region’s economic prosperity
is striking. It is evident that wealthy regions typically support disproportionally high concentrations of KIBS employment. In fact, with no other factors taken into account, regional KIBS specialisation explains 59% of variance in GDP per capita.
The pattern is similar, although less pronounced, when we look at innovation indicators. The trend is clear: regions with high concentrations of knowledge intensive business services exhibit superior patenting activity, and the opposite is true for regions with little KIBS. In the middle, however, there are regions with both extremely high as well as very low patenting. This suggests that there are many other factors influencing innovation, but the presence of KIBS makes a difference.
* Location Quotient (LQ) measures teh regional specialisation in the KIBS sector. † GDP, patenting and population data from Eurostat.
‡ Regions correspond to NUTS II regions across the 27 EU member states plus Iceland, Norway, Switzerland and Turkey. In Belgium,
0.5 1.0 1.5 2.0 2.5 10000 20000 30000 40000 50000 60000
Knowledge Intensive Business Services
Location Quotient GDP per capita PPP R2= 0.59 0.5 1.0 1.5 2.0 2.5 -6 -5 -4 -3 -2 -1
Knowledge Intensive Business Services
Location Quotient
Log of Patent applications to EPO per million inhabitants
Size and Focus
Regional size and KIBS rank
Knowledge intensive business services are in general a predominantly urban activity. This argument is confirmed upon examination of the regions which rank among the top 25 by either population or KIBS employment.
Region
Largest city
rank
Size
KIBS
rank
Île de France (FR) Paris 1 1 Lombardia (IT) Milan 2 4 Andalucía (ES) Sevilla 3 24 West-Nederland (NL) Amsterdam 4 3 Cataluña (ES) Barcelona 5 7 Vlaams Gewest (BE) Antwerpen 6 27 Rhône-Alpes (FR) Lyon 7 16 Campania (IT) Naples 8 47 Madrid (ES) Madrid 9 5 Danmark (DK) Danmark 10 10 Düsseldorf (DE) Düsseldorf 11 12 Lazio (IT) Rome 12 9 Mazowieckie (PL) Warszawa 13 19 Sicilia (IT) Palermo 14 60
Provence-Alpes-Côte d'Azur (FR) Marseille 15 43 Slaskie (PL) Katowice 16 69 Veneto (IT) Venice 17 29 Outer London (UK) Outer London 18 18 Valencia (ES) Valencia 19 45 Köln (DE) Köln 20 13 Piemonte (IT) Turin 21 26 Oberbayern (DE) München 22 8 Emilia-Romagna (IT) Bologna 23 22 Ireland (IE) Ireland 24 14
Region
Largest city
rank
Size
KIBS
rank
Puglia (IT) Bari 25 65 Stuttgart (DE) Stuttgart 27 15 Attiki (GR) Athens 28 17 Darmstadt (DE) Frankfurt am
Main 30 6 Berlin (DE) Berlin 39 23 Inner London (UK) Inner London 46 2 Surrey, E and W
Sussex (UK) Brighton 59 21 Berks, Bucks and
Oxon (UK) Oxford 82 11 Stockholm (SE) Stockholm 98 25 Zürich (CH) Zürich 160 20
However, the relationship of the size of the region and employment in KIBS is not always direct: some regions have a KIBS sector much larger than expected, while others score lower.
The following ten regions have a KIBS sector larger than expected: Zürich, Stockholm, Oxford, Inner London, Brighton, Frankfurt am Main, Berlin, München, Stuttgart and Athens.
Among the 25 largest regions in Europe the following have a KIBS sector smaller than expected: Katowice, Palermo, Bari, Naples, Marseille, Valencia, Antwerpen, Sevilla and Venice.
Labour market focus
The map to the right exhibits the share of a region’s labour force employed in KIBS (“KIBS focus”).
The largest share of KIBS employment is typically concentrated in the capital regions of the respective countries. The most notable exceptions from this rule include Germany, where regions in the South and West focus on KIBS even more than Berlin; and the UK, where the whole belt of regions around London as well as Manchester/Liverpool and Edinburgh exhibit high relative KIBS employment.
Focus
2006 less than 4% from 4% to 6% from 6% to 8% more than 8%Source: European Cluster Observatory 2009
0 500 1000 km
KIBS
Region
KIBS Employment
KIBS Focus
Brussels, BE 122,731 16.0% Inner London, UK 472,940 15.2% Zürich, CH 138,797 14.6% Darmstadt (Frankfurt am Main), DE 231,492 13.4% Île de France (Paris), FR 788,496 13.3% Berks, Bucks and Oxon (Oxford), UK 174,599 12.7% Luxembourg, LU 27,961 12.2% Hamburg, DE 108,454 11.8% Berlin, DE 134,930 10.9% Bratislavsky kraj (Bratislava), SK 39,362 10.9%
Growth
Based on the longitudinal data available§, the average
annual growth rate of KIBS employment between 2001 and 2006 was 1.7% compared to 1.2% increase in total employment in Europe.
The regions exhibiting the largest growth include much of Austria, the Baltic states, Northern Spain/Southern France and Ireland, as seen from the map and table on the opposite page.
However, the fastest growing regions are mostly small ones with little KIBS employment. The only region which is both highly focused on KIBS (more than 8% employment) and fast-growing (more than 5% annual growth rate) is Ireland, which during the first years of the century enjoyed a boom in software and business services.
Regional Innovation (RIS)
Interestingly enough, the regions normally considered European champions in innovation (here represented by 2006 EU Regional Innovation Survey indicators**) show
varying degrees of growth in KIBS. Stockholm, Praha and Frankfurt am Main are the fastest decreasing KIBS regions among the top 20 most innovating regions in Europe.
Region
RIS
Growth
Annual
Stockholm, SE 0.90 -1.52% Västsverige (Gothenburg), SE 0.83 0.77% Oberbayern (München), DE 0.79 0.47% Etelä-Suomi (Helsinki), FI 0.78 -0.22% Karlsruhe, DE 0.78 1.15% Stuttgart, DE 0.77 1.17% Braunschweig, DE 0.76 -0.40% Sydsverige (Malmö), SE 0.76 -0.20%
Île de France (Paris), FR 0.75 0.80% Östra Mellansverige (Uppsala), SE 0.74 -0.74%
Berlin, DE 0.74 0.79% Tübingen, DE 0.72 0.78% Praha, CZ 0.70 -0.89%
Darmstadt (Frankfurt am Main), DE 0.69 -0.52%
Dresden, DE 0.69 1.16% Köln, DE 0.69 0.02% Danmark, DK 0.68 0.62% Pohjois-Suomi (Oulu), FI 0.68 0.63% Mittelfranken (Nürnberg), DE 0.68 1.10% Wien, AT 0.68 4.93%
§ The data is missing for Bulgaria, Cyprus, Greece, Italy, Netherlands, Portugal and Romania. ** UK regions are not shown as RIS was conducted for NUTS I regions.
Annual Growth
2001-2006 less than -1% from -1% to +1% from +1% to +5% more than +5% no dataSource: European Cluster Observatory 2009
0 500 1000 km
KIBS
Region
Average annual growth rate
2001 2006
Steiermark (Graz), AT 22.4% Eesti, EE 19.7% Lietuva, LT 15.5% Vorarlberg (Bregenz), AT 13.3% Salzburg, AT 13.2% Tirol (Innsbruck), AT 10.8% Cornwall and Isles of Scilly (Truro), UK 8.9% Zapadne Slovensko (Nitra), SK 8.4% Galicia (A Coruña), ES 7.5% Del-Dunantul (Pécs), HU 7.3%
About the European Cluster
Observatory
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Please visit the European Cluster Observatory atwww.clusterobservatory.eu.
Priority Sector report: Knowledge Intensive Business Services Priority Sector report: Knowledge Intensive Business Services ISBN 978-91-977556-1-0
ISBN 978-91-977556-1-0 This report is published by: This report is published by:
Center for Strategy and Competitiveness Center for Strategy and Competitiveness Stockholm School of Economics Stockholm School of Economics Box 6501 SE-113 83 Stockholm Sweden Website: www.hhs.se/csc Telephone: +46-(0)8-736 9630 Fax: +46-(0)8-31 99 27
