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Investment dynamics in the euro area since the crisis

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  • Narcissa Balta

Abstract

This chapter shows that service sectors have both strong backward (demand) and forward (supply) interlinkages with manufacturing, and that these spillovers also create added value. Econometric estimates show that productivity growth in services contributes to the export performance of manufacturing. Evidence of underperformance in services sectors is presented in terms of a misallocation of productive resources across firms and relatively high mark-ups. These facets of underperformance are driven by a lack of competition. Indeed, product market regulation is for some countries and service sectors still relatively strict. By tackling structural bottlenecks, reforms to liberalise and enhance competition in service sectors can play an important role for growth and competitiveness. Although there is a general consensus on the need to liberalise service sectors in the euro area, little progress has been achieved over the last few years as only a few Member States have carried out significant reforms.

Suggested Citation

  • Narcissa Balta, 2015. "Investment dynamics in the euro area since the crisis," Quarterly Report on the Euro Area (QREA), Directorate General Economic and Financial Affairs (DG ECFIN), European Commission, vol. 14(1), pages 35-43, March.
    • Handle: RePEc:euf:qreuro:0141-04
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    File URL: http://ec.europa.eu/economy_finance/publications/qr_euro_area/2015/pdf/qrea1_section_4_en.pdf
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    Cited by:

    1. Narcissa Balta & Bořek Vašíček, 2020. "Financial channels and economic activity in the euro area: a large-scale Bayesian VAR approach," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 47(2), pages 431-451, May.
    2. Bańbura, Marta & Albani, Maria & Ambrocio, Gene & Bursian, Dirk & Buss, Ginters & de Winter, Jasper & Gavura, Miroslav & Giordano, Claire & Júlio, Paulo & Le Roux, Julien & Lozej, Matija & Malthe-Thag, 2018. "Business investment in EU countries," Occasional Paper Series 215, European Central Bank.

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    Keywords

    investment;

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