07Appendix 3: Definitions
Industrial structure definition
The data used for cities’ industrial structure provides the number of jobs for groups of NACE rev. 2 industries (similar to SIC industries). Due to data availability, the term “manufacturing and utilities” refers to jobs in mining and quarrying; manufacturing; electricity, gas, stream and air conditioning supply; water supply, sewerage, waste management and remediation activities.
The term “business services” intends to proxy knowledge-based service jobs, although due to data availability the definition also captures a certain number of other services. “Business services” refers to jobs in information and communication; financial and insurance activities; real estate activities; professional, scientific and technical activities; administrative and support service activities.
Levels of education are determined by the International Standard Classification of Education (ISCED). Under the 1997 classification, applied in the dataset used, there are six levels of education (from 0 to 6), grouped into three categories: low, medium and high level of education. In the UK context, low level of education refers to having less than 5 good GCSEs as a highest level of education; medium level of education includes 5 good GCSEs, A level and vocational training; high level of education includes higher education and university degrees.
Purchasing Power Parities
All GVA values used in this report are expressed in pound sterling (£), adjusted for purchasing power parities. This removes the difference in price levels between countries. In other words, £100 (or its equivalent in local currency) does not buy the same amount of goods in the UK or in another country.
To illustrate this, let’s suppose an identical good is locally produced in three locations: in the UK, in Denmark and in Bulgaria. Based on the local costs of labour and capital, as well as local levels of inflation, the good produced in the UK is priced £25, the one produced in Denmark €50, and the one produced in Bulgaria лв23. Converted into pounds using the market exchange rate, this means the Danish good is worth £42 and the Bulgarian good £10. But as the cost of living (and wages) is lower in Bulgaria and higher in Denmark than in the UK, buying the local good might actually be as expensive for a Danish, a British or a Bulgarian consumer. On aggregate, not adjusting for purchasing power would over-estimate the Danish GVA (where the monetary value of goods and services produced is higher because of the higher cost of living), and underestimate the Bulgarian GVA.
Purchasing Power Parity values have been obtained using Eurostat Purchasing Power Standard data, then converted to the value of a pound in 2011.