Digitalisation of the UK Manufacturing Economy: Structural Dependencies and Implications for Intervention Strategies

Abstract

This paper empirically investigates the concept of industrial digitalisation by identifying major structural dependencies between the UK digital and manufacturing economy. Current policy analyses exploring the possible benefits for the digitalisation of UK manufacturing economy largely rely on expert judgment, and describe individual sectors without considering structural dependencies. The proposed analysis introduces a whole-system perspective on industrial digitalisation, deriving metrics of economic connectedness between relevant sectors by Input-Output Analysis using public-domain economic data. Key sectors contributing to the digitalisation of UK manufacturing are identified, and the structural paths of influence across these sectors are revealed analytically. The findings of this research provide industry and policy makers with a map of major structural dependencies across domestic and international manufacturing networks. Specifically, the analysis suggests that sectors such as aerospace provide multiplier effects to the digitalisation of other sectors, whilst pharmaceuticals manufacturing require more targeted investments to drive digital transformation.