Application of factor analysis and fuzzy c-means for classification of knowledge intensity in China´s manufacturing industry

This paper introduces an application of factor analysis for illuminating the distinct dimensions of manufacturing´s knowledge intensity which then gives help to industry classification with fuzzy c-means. With the world now coming into an age called “knowledge economy”, it is necessary to analyze the industry level and knowledge-intensity in different industries, furthermore, analyze how those reflect the industrial structure and ultimately the entire economy. With respect to knowledge-based innovation theory, principle component analysis is to be used, while a number of possibly correlated knowledge measures are transformed into a smaller number which can be used to identify different industries with different knowledge intensity. The data from China´s manufacturing industries in recent 5 years shows the developing paths of those industries. The empirical results show that although knowledge-intensity-based classification of China´s manufacturing industry is similar to those of foreign countries, many industries are much less developed and even lagged far behind. China´s industrial structure still needs to be perfected.