Knowledge-based industries used as indicator

The table prepared by the Financial Times is based on adding up the total number of points amassed by Organisation of Economic Co-operation and Development (OECD) member countries in 10 separate surveys selected from the mass of data in the OECD study.

These indicate how each country performed according to specific indicators linked to their current and likely future performance in "knowledge- based" industries. Taken as a group, they give an overall picture of each country's competitive position.

What counts as a "knowledge-based industry" is defined by OECD experts.

In manufacturing this includes aerospace, pharmaceuticals, chemicals, medical equipment and general machinery.

In services, the OECD includes post and telecommunications, finance and insurance, and general business services such as accountancy. Many of these sectors are growing faster than other parts of the world economy.

The 10 indicators include four that relate to "output":

Countries' proportion of total output provided by knowledge- intensive manufacturing;

Countries' proportion of total output provided by knowledge- intensive services;

The number of patents a country files in specific "families" of technologies, divided by its population, and

Recent labour-productivity growth.

The indicators also include six sets of "input" data:

Countries' investment in knowledge, defined as software, research and development, and higher education;

Spending on information technology, including hardware;

Investment in venture capital;

The proportion of total manufacturing output accounted for by foreign companies;

The proportion of total services output accounted for by foreign companies and services, and

The number of foreign students in university-level education, divided by the total student population.

The OECD data are based mainly on surveys by national statistical offices dating from the mid- to late-1990s.

In the Financial Times analysis, a ranking of first in one of the separate 10 surveys provides a country with a score of 10 points; a ranking of second gives a country a score of nine points, and so on.

The countries that score best in all 10 surveys end up accumulating the most points.