Patterns and Trends in Services Related Activities in OECD Regions

This paper examines the spatial patterns in service sector activities and links them to the overall trends in the service sector among OECD countries. We find that services have a strong spatial dimension linked to non-tradable activities which depend on local conditions. In particular we observe a decrease in the geographic concentration of service sector activities among all OECD regions but an increase in concentration among regions within countries making service sector activities more heterogeneous in space over time. Financial and business services are particularly concentrated amongst service subsectors. Specialisation in financial and business services appears to be higher in capital regions or regions with large cities, and have particularly increased among OECD regions. Within countries, regions have specialised more in public administration and in social services. This latter trend is important given that productivity in public administration and social services and in wholesale and retail trade has a strong growth potential due to forces of convergence. Regional productivity is highly dependent on service sector productivity. Rather than just focusing on improving the service sector productivity of few regions it is critical to enhance productivity in all regions given that overall services are more dependent on the many local labour markets rather than few large service markets. Service sector productivity is highly dependent on human capital, density and innovation intensity at the regional level. Low human capital is a necessary but not a sufficient condition for productivity growth in services. The links are stronger in high skilled human capital. Density appears to be positively related and to a lesser degree innovation intensity.(This abstract was borrowed from another version of this item.)