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Appendix 2: Sector Summary
Introduction: This appendix summarises the main findings for selected products and sectors. The product groups featured have been selected on the basis of their potential for R&D expenditure, demonstrated in the rest of the UK or abroad.
In the UKR&D for pharmaceuticals (23.7%) and aerospace (12.1%) are relatively more important, followed by computers and related activities (9.7%), motor vehicles and parts (8.6%) and radio, TV and communication equipment (including electronic components) (6.9%). Percentages in brackets are the share of total R&D.
In the following the employment and turnover statistics for sectors have been compared with R&D expenditure for the sectors' products.
Pharmaceuticals: This is the major UKR&D spender - UKR&D expenditure was £3.2 billion in 2003, almost one quarter of all UK expenditure on R&D. Scottish R&D spending was £194 million, 11% less than in 2002, and represented 6% of the sector UK total. R&D expenditure in Scotland for pharmaceuticals has increased significantly from 1999 onwards, reaching a level of over £200 million in 2002. Although expenditure has decreased in 2003, over the long term there is still an upward trend. Expenditure in 2003 contributed to over a third of total Scottish business R&D. The sector employed 4,600 people in Scotland and spent £42,000 per industry employee on R&D. The UK spent £48,000 per industry employee. In Scotland R&D expenditure as a percentage of sales was 37%. In 2003 2,600 people undertook R&D for pharmaceutical products in Scotland (including research consultancies); Scottish spending per R&D employee was lower than in the UK, £76,000 compared over £120,000 in the UK.
Transport equipment (excluding cars) and aerospace: Scottish R&D spending in 2003 was £21 million (an increase of £10 million from 2002), however this only represented 1.1% of the UK total of £1.8 billion. The sector employed 10,700 people in Scotland (including 5,400 in shipbuilding and 4,200 in aerospace) and spent £1,960 per employee on R&D - in the UK expenditure per employee was £12,300, mainly on R&D in the aerospace sector. For Scotland the R&D statistics for shipbuilding and aerospace cannot be separated for confidentiality reasons. Over the past five years expenditure on R&D in other transport equipment (excluding cars) was low in Scotland, between £1 million and £2 million per annum, but rising to £11 million in 2002 and £21million in 2003. In the UK this sector is a major R&D spender but neither shipbuilding nor aerospace spend comparable amounts in Scotland, despite a considerable manufacturing presence. Around 500 people undertook R&D for the sector in Scotland; expenditure per R&D employee was £42,000 compared to £101,000 in the UK.
Manufacturing of motor vehicles and parts: Scottish R&D spending was £11.2 million, an increase from £2.2 million in 2002. This accounted for 1% of the UK sector total. Over the past five years Scottish expenditure on R&D for motor vehicles has sat around £2 to £3 million, however this rose to £11 million in 2003. In the UK this sector spent £1,200 million on R&D. The sector employed about 5,200 people in Scotland and spent £2,100 per industry employee on R&D - in the UK £5,800 was spent per employee. About 180 people undertook R&D for that sector in Scotland, the expenditure per R&D employee was £63,000 compared to £98,000 in the UK.
Electrical machinery and apparatus / radio, TV and communications equipment including electronic components / precision instruments: These sectors have been combined as there has been considerable volatility in the data over the past few years. R&D for "Electrical machinery and apparatus" has fallen during the past five years from £115 million to £12 million, "Radio TV and communications equipment" has varied between £15m and £109m, and "Precision instruments" between £16m and £106m. In combination R&D in the three sectors has increased gradually from £102m in 1999 to £214m in 2002 and has decrease to £121million in 2003. The rapid changes that have been observed are due to projects starting and finishing, not re-coding of ongoing activities. Scottish R&D spending in this area was 6.7% of the UK total, the lowest it has been since 1999. The sectors employed 29,500 people in Scotland and spent £4,100 per employee on R&D - in the UK £5,500 was spent per industry employee. 1,300 people worked in R&D in these three sectors in Scotland giving a spend of £90,000 per R&D employee, compared to £75,000 in the UK.
Office machinery and computers: Scottish R&D spending was £4.7 million, 8% of the UK sector total. The sector employed 7,600 people in Scotland, a quarter of the UK total, and spent £620 per employee on R&D - in the UK £1,800 are spent per employee. This sector maintained a considerable manufacturing presence in Scotland in 2003. R&D employment of 80 people in Scotland, contrasts with UK employment of 1,000.
All services (excluding public sector): Scottish R&D spending was £67 million, 2.3% of the UK total. In Scotland the sector spent £125 per employee on R&D - in the UK £400 was spent per employee. R&D employment in Scotland was 1,200, giving expenditure per R&D employee of £55,000 compared to £72,000 in the UK. In Scotland most R&D for service sector products was undertaken by small Scottish based firms, in contrast to the manufacturing sector, where large foreign owned firms dominate.
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