Certain sectors have an outsize importance to the functioning of modern economies. Steel is is a fundamental component in many industrial applications. Shipbuilding is crucial for maintaining global maritime trade networks that form the backbone of the global economy. Semiconductors are at the heart of digital technologies and continue to become more embedded across all sectors.

Due to their strategic significance and the potential for market failures, sectors crucial to the green and digital transitions are under scrutiny by policymakers. This focus is essential, considering the pivotal role these sectors play. However, it can also unlevel the global or domestic playing field and lead to anomalies in competition mechanisms, resulting in distortions within markets and industries. A thorough understanding of the unique dynamics within these sectors requires detailed data collection and analysis.

Industry analysis often examines sectors in the aggregate. This approach provides a broad overview of the economic landscape and highlights key trends. However, for certain sectors, this aggregate data may not paint an accurate picture, potentially causing misunderstandings and misinterpretations of the dynamics at play. Sectoral analysis in turn helps policymakers in addressing challenges and benefits from opportunities in key sectors.

Granularity and relevant metrics differ across sectors. For example, in the steel industry, excess capacity is a significant issue; in shipbuilding, the impact of subsidies plays a crucial role; and in the semiconductor sector, the low level of interchangeability of most chips means each chip type needs to be looked at separately. These examples highlight only a few sector-specific data considerations; additional complexities arise when examining qualitative aspects.

Many industries depend on a large ecosystem, composed of various sectors, firms and technologies. Beyond the production network (input-output linkages), industrial ecosystems consist of investment networks (flows of tangible and intangible capital goods), knowledge networks (e.g. R&D, patents, etc.), and financial networks (M&A, VC investment, etc.), with different types of firms and public and private institutions having different roles in each layer.

These different layers can reveal the directionality of ecosystems in a way that traditional input-output analysis cannot. Financial flows can reveal information on the expectations of the ecosystem’s market players. For example, investments from major players in a sector into innovative start-ups in other sectors present clues as to the evolution of both sectors. Furthermore, knowledge networks can reveal the technological innovations led by sectors with similar challenges, clue to the directions of sectoral technological progress in the sector. Disregarding these relationships and dependencies would limit the ability of industrial policy to reach its objectives.