1.6 Specialisation in knowledge based industries
Why is it significant?
The UK’s future success depends on competing on quality and know-how, rather than cost alone. The degree of specialisation in “knowledge based” output and exports provides an indication how successfully the UK economy is re-orientating towards high value-added, or more productive, activities.


How does the UK perform?
The UK’s share of exports in knowledge based goods declined in 2001 and 2002, after almost 20 years of increasing importance. Even so, the UK’s share of exports in knowledge intensive industries, at over 20 per cent, is the highest amongst the G7 countries (chart 1.6.1).
Exports of knowledge based services, on the other hand, have remained strong. In 2001 these accounted for over 60 per cent of UK exports in the service sector; a higher share than for any of our G7 competitors (chart 1.6.2).
Turning to output, the UK’s share of output in knowledge based services and industries is second only to Germany, and ahead of the US, although all countries have shares within ten percentage points of each other (chart 1.6.3).