Presentation by Alexandra Tsvetkova, Economist, OECD Trento Centre at the sixth meeting of the Spatial productivity Lab of the OECD Trento Centre held on 11 December 2019. More info http://oe.cd/SPL

1. ECONOMIC PROFILE WITH A
FOCUS ON R&D-INTENSIVE
INDUSTRIES
Province of Trento, 2012-2016
The 6th SPL Meeting
OECD Trento Centre for Local Development
11 December 2019
Province of Trento, 2012-2016
Spatial Productivity Lab
Centre for Entrepreneurship, SMEs, Regions and Cities

2. • Global megatrends affect regions
differently – opportunities for
some but formidable challenges
for others
• The RDI industries are crucial for
regional sustained growth,
resilience and competitiveness
Why to focus on the R&D-intensive industries?

3. R&D-INTENSIVE INDUSTRIES IN TRENTINO:
EMPLOYMENT

4. • Total RDI employment in the
Province - 14000 paid workers
in 2016 (14% of total Trentino
employment)*
• Val d’Adige was home to 48% of
all RDI employment in the
Province (5340 jobs)
• The ‘second league’ players
were Vallagarina (2552 jobs or
18% of total) and Alta Garda e
Ledro (2092 jobs or 15%)
* excludes agriculture, government and financial services
Total RDI employment
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Total number of paid employees in RDI
industries by CV and year
2012 2013 2014 2015 2016

5. • Trentino traditionally was
strong in RDI
manufacturing (2:1 ratio
with RDI services in
2012)
• CVs with visible presence
of the RDI sector mostly
engage in manufacturing
• Val d’Adige is specialised
in RDI services
RDI employment by sector
0
1000
2000
3000
4000
5000
6000
Total number of paid employees in RDI industries by
CV, 2016
Manufacturing Services

6. • In 2012-2016, RDI employment
in Trentino grew by 28%, while
total employment by only 2%
• In 3 CVs (Cembra, Giudicarie
and Alto Garda e Ledro) the
RDI sector expanded during
2012-2016 despite a drop in
total employment
Total RDI employment growth
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Total number of paid employees in RDI
industries by CV and year
2012 2013 2014 2015 2016

7. • In fact, all new jobs in the
Province of Trento on the net
were added in the RDI sector
• An increase in the RDI jobs was
1.6 times higher than the
increase in the total number of
jobs
Change in employment, 2012-2016
1965
3107
0
500
1000
1500
2000
2500
3000
3500
Total RD
Change in employment in PAT, 2012-2016

8. • In 2012-2016, RDI
manufacturing grew by 3%,
while RDI services grew by
74%
• Almost all new jobs in RDI
services were added in Val
d’Adige (2538)
• All other CVs added less
than 20 RDI service jobs
except for Vallagarina (256)
and Alto Garda e Ledro (65)
RDI employment growth by sector
-100
-50
0
50
100
150
Growth rate of paid employment in RDI industries
by CV, 2012-2016
Manufacturing Services

9. • To be more specific, all new
jobs in the Province of Trento
on the net were added in the
RDI services sector
• Because of the growth in RDI
services, the ratio of RDI
manufacturing to RDI services
was close to 1:1 in 2016 (change
from 2:1 in 2012)
Change in employment by sector, 2012-2016
199
2901
0
500
1000
1500
2000
2500
3000
3500
Manufacturing Services
Change in employment in PAT by sector, 2012-
2016

10. • RDI sector is a sizable and
growing part of the
Trentino economy – share
went from 11% to 14%
between 2012-2016
• Notable cases of RDI
performance: Val d’Adige,
Alto Garda e Ledro &
Vallagarina and Bassa
Valsugana
RDI employment share
0
5
10
15
20
25
Share of employment in RDI industries by CV and year
2012 2013 2014 2015 2016

11. R&D-INTENSIVE INDUSTRIES IN TRENTINO:
EXPORT ACTIVITIES

12. • Total RDI exports in the Province
amounted to 1.3 bln euros (44% of
total Trentino exports) in 2016
• 45% of all RDI exports in the
Province came from Alto Garda e
Ledro (615 mln euros)
• The ‘second’ and ‘third league’
players were Vallagarina (337 mln
euros or 25% of total), Val d’Adige
(153 mln euros or 11%) and Alta
Valsugana (112 mln euros or 8%)
Total RDI exports
0
100
200
300
400
500
600
700
Export volume in R&D-intensive industries
by CV and year
2012 2013 2014 2015 2016

13. • Practically all of the RDI
exports come from
manufacturing (1.3 bln
total vs 4 mln euros in
2016)
RDI exports by sector
0
100
200
300
400
500
600
RDI exports by sector and CV, 2016
Manufacturing Services

14. • RDI exports decreased by 75
mln euros (-5%) between 2012
and 2016 (total exports grew by
9% during the period)
• CVs that reduced RDI exports
by at least 1 mln euros while
expanding total exports were
Valle di Fieme, Bassa
Valsugana and Vallagarina
Total RDI exports growth
0
100
200
300
400
500
600
700
Export volume in R&D-intensive industries
by CV and year
2012 2013 2014 2015 2016

15. • In 2012-2016, RDI exports in
manufacturing declined by 6%
(-88 mln euros), while RDI
exports in services grew by
223% (+3 mln euros)
• Alto Garda e Ledro (-106 mln
euros) and Vallagarina (-43 mln
euros) reduced manufacturing
exports the most
• Vallagarina, however, was
responsible for 78% of RDI
services exports increase (+2.2
mln euros)
RDI exports growth by sector
-270
-220
-170
-120
-70
-20
30
80
130
180
230
RDI exports growth rate by sector and CV,
2012-2016
Manufacturing Services

16. • Despite decline in RDI
exports, the sector’s
engagement in export
activities is almost 4 times
higher compared to total
economy
• In 2016, exports accounted
for 44% of total revenues
in RDI industries as
opposed to 12% in the
overall Trentino economy
RDI exports share
0
10
20
30
40
50
60
2012 2013 2014 2015 2016
Share of exports as % of revenues
RDI Total

17. R&D-INTENSIVE INDUSTRIES IN TRENTINO:
WAGES

18. • On average, RDI industries are
paying higher wages (26k per
year in 2016 compared to 23k
overall)
• The spread of RDI wages is
larger – on average from 63%
to 137% of Province’s average
(spread for overall wages is
86% to 119%)
• The highest wages are in CVs
with strong presence of RDI
manufacturing
Wages in RDI industries
0
5
10
15
20
25
30
35
40
Annual pay per paid employee by CV and year
2012 2013 2014 2015 2016

19. • Wages in RDI
manufacturing are higher
than in RDI services (29k
vs. 23k in 2016)
• Rotaliana, Alto Garda e
Ledro, Val d’Adige and
Alta Valsugana paid 34k
or more in RDI
manufacturing in 2016
• Vallagarina paid 31k in
RDI services
RDI wages by sector
0
5
10
15
20
25
30
35
40
Annual pay per paid employee in RDI industries by
CV, 2016
Manufacturing Services

20. • In 2012-2016, RDI wages in
Trentino grew by 3%, while
total wages by 5%
• The largest increase occurred in
Rotaliana (22%) and the largest
decline in the RDI wages was
observed in Primero (-15%)
RDI wage growth
0
5
10
15
20
25
30
35
40
Annual pay per paid employee by CV and year
2012 2013 2014 2015 2016

21. • During 2012-2016, wages
in services grew by 6%,
while in manufacturing by
1%
• The overall dynamics of
growth was diverse – only
five CVs enjoyed growth in
wages both in
manufacturing and
services
RDI wage growth by sector
-40
-30
-20
-10
0
10
20
30
40
Growth in RDI wage by sector and CV, 2012-
2016
Manufacturing Services

22. R&D-INTENSIVE INDUSTRIES IN TRENTINO:
VALUE ADDED PER PAID EMPLOYEE

23. • This chart suggests that there
was negative value added per
paid employee in Primero
• Overall, RDI value added per
employee appears lower than
the total value added  more
negative values are ‘hidden’ in
aggregation
* MOL/DIPFR
RDI value added per paid employee*
-20
-10
0
10
20
30
40
50
60
70
80
RDI value added per paid employee by CV and
year 2012
2013
2014
2015
2016

24. • The negative values are
observable only in
manufacturing and, more
specifically, in RDI
manufacturing – no
negative aggregates in
total manufacturing (or
services)
RDI value added per paid employee by sector
-70
-50
-30
-10
10
30
50
70
90
RDI value added per paid employee by CV and sector,
2016
Manufacturing Services

25. • Province of Trento enjoys strong presence of RDI industries
• RDI industries grow faster than other sectors
• Services within RDI sector grow way faster than
manufacturing  if dynamics continues, RDI services will
dominate RDI sector
• Need to diversify into RDI services in CVs other than Val
d’Adige
• Traditionally tourism-dependent areas might be good
candidates – e.g. high-tech tourism services that build/utilise
augmented reality and other new technologies
Conclusions: Employment

26. • Despite the decline in RDI exports, the sector is at the
forefront of the Province’s competitiveness in
international markets
• Yet, more attention may be needed to the export activities
as services expand – in particular, exploring option for
exporting RDI services
Conclusions: Exports

27. • Wages in the RDI sector are higher but tend to be more
volatile
• Slow wage growth (and declining export share) could
herald future problems for the sector with human capital
attraction and, hence, innovation, which is crucial for
competitiveness
Conclusions: Wages

28. THANK YOU!
The 6th SPL Meeting
OECD Trento Centre for Local Development
11 December 2019
Spatial Productivity Lab
Centre for Entrepreneurship, SMEs, Regions and Cities

29. (CI) Manufacture of computer, electronic and optical
products
(MB) Scientific research and development
(CE) Manufacture of chemicals and chemical products
(CJ) Manufacture of electrical equipment
(CK) Manufacture of machinery and equipment n.e.c.
(CL) Manufacture of transport equipment
(JA) Publishing, audio-visual and broadcasting activities
(JC) IT and other information services
List of R&D-intensive industries in Trentino

30. (G) Wholesale and retail trade; repair of motor vehicles and
motorcycles
(H) Transportation and storage
(I) Accommodation and food service activities
(J) Information and communication
(L) Real estate activities
(M) Professional, scientific and technical activities
(N) Administrative and support service activities
(R) Arts, entertainment and recreation
(S) Other service activities
List of service industries