Moreover, an analysis of the speed of sectoral
re-allocation could reveal information about the
adaptability of production to changes in
domestic and international demand. Chart 5
plots the Lilien indicator based on employment
data, measuring the speed of structural
adjustment across EU countries for the period
1980-2001. A relatively high value of this
indicator indicates relatively rapid re-
allocations across sectors.
The indicator reveals some cross-country
heterogeneity that, after a peak at the beginning
of the 1990s, then dipped again to below its
initial value: the coefficient of variation
increased from 0.233 to 0.268 during 1990-
1995 and returned to 0.229 at the end of the
1990s, indicating a slowdown of sectoral re-
allocation at the end of the 1990s in the more
dynamic countries. During the 1980s, structural
adjustments were particularly rapid in
Luxembourg, Spain, Portugal, Greece and Italy,
translating the impact of the EU accession for
Greece, Portugal and Spain and a period of
industrial restructuring in Italy. At the
beginning of the 1990s, structural adjustment
significantly accelerated compared with the EU
average in Germany, Finland and Sweden,
reflecting the impact of German re-unification
and the strong economic recession, followed by
important structural reforms in Finland and
Sweden. At the end of the 1990s, sectoral re-
allocations continued at a relatively higher rate
in Luxembourg, Finland, Germany and
Portugal, and accelerated in Denmark.
Comparing these results with the Krugman
index presented earlier, it appears that the
relatively rapid structural adjustments that have
occurred in some countries (such as
Luxembourg, Portugal, Greece and Finland)
over the last 20 years have induced an increase
in sectoral specialisation in these countries.
This result seems to suggest that there were
significant structural adjustments during the
first half of the 1990s. It is important to bear in
mind, however, that the speed of sectoral re-
allocations as measured here may underestimate
the actual extent of industrial restructuring: the
Chart 5 Lilien indicator
A. Total economy (excl. social community and personal services)
1996-2001
.......... 1990-1995
— 1980-1989
z∕∕∕∠ 1980-2001
0.06
0.06
0.05
0.05
0.04
0.03
0.02
0.01
0.04
0.03
0.02
0.01
FR IT BE NL EA EU DE PT AT ES SE UK DK GR FI IE LU
0
Sources: OECD, European commission, NCBs and ECB
calculations.
Note: See Annex 4.2.1 for the calculation of the Lilien indicator.
Data for Greece start from 1988, for Luxembourg from 1985 and
for the Netherlands from 1987 for the whole economy. For reasons
of data availability, the business sector services are composed of
the three main aggregates for Belgium, Greece and the United
Kingdom. The figures for the EU and the euro area refer to
weighted averages of country indices.
ECB
Occasional Paper No. 19
July 2004
2 SECTORAL
SPECIALISATION:
CURRENT SITUATION
AND EVOLUTION
