Definition: Top down method

Category: Classifications

NACE Rev. 2
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The top-down method follows a hierarchical principle: the classification of a unit at the lowest level of the classification must be consistent with the classification of the unit at the higher levels. To satisfy this condition the process starts with the identification of the relevant position at the highest level and progresses down through the levels of the classification in the following way:

a. Identify the section which has the relatively highest share of the value added.

b. Within this section identify the division which has the relatively highest share of the value added within this section.

c. Within this division identify the group which has the relatively highest share of the valued added within this division.

d. Within this group identify the class which has the relatively highest share of value added within this group


NACE Rev. 1
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Where at class level, one activity accounts for more than 50% of value added this determines the classification of the unit. In all other cases classification rules must be observed. These require classification to be carried out in stages, using the top-down method.

1. List the activities carried out by the unit, attributing to each appropriate class of NACE Rev. 1 the value added or another relevant measure if it is not possible to calculate the value added in a recent 12 month period.

2. Determine the section of NACE Rev. 1 that has the highest share of the chosen measure.

3. Within this section, determine the division of NACE Rev. 1 that has the highest share of the chosen measure.

4. Within this divisions, determine the group of NACE Rev. 1 that has the highest share of the chosen measure.

5. Within this group, determine the class of NACE Rev. 1 that has the highest share of the chosen measure. This class identifies the principal activity. http://circa.europa.eu/irc/dsis/nacecpacon/info/data/en/index.htm Eurostat, "NACE Rev. 1", 1996