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Analyzing the role of service sector on productivity growth across European regions

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  • Andrés Maroto Sánchez
  • Juan Ramón Cuadrado Roura

Abstract

Service industries play a core role in advanced economies, both from a quantitative a strategic point of view. Traditionally, productivity has been introduced as explaining factor of tertiarization processes in developed economies, while it has been simultaneously assessed that services display lower productivity levels and growth rates than other economic industries. Such a statement is supported initially on the personal nature of many service activities, which makes it difficult to substitute the work for capital and the introduction of technical progress. Nevertheless in recent years many papers and authors have refuted or limited this conventional thesis. This paper focuses on the impact of tertiarization on overall productivity growth at regional level. It departs from the analysis of a sample of regions belonging to 16 European countries (EU-15 except Luxembourg, plus Norway and Switzerland) to show the relationship between structural changes, tertiarization and productivity growth at this level. Data has been extracted from Regional Databases elaborated by Cambridge Econometrics and OECD. The main result is that several service industries have shown dynamic productivity growth rates, contributing more than expected to productivity growth. Lately, a data panel model highlights some additional aspects disaggregating by market and non market services.

Suggested Citation

  • Andrés Maroto Sánchez & Juan Ramón Cuadrado Roura, 2011. "Analyzing the role of service sector on productivity growth across European regions," Working Papers 04/11, Instituto Universitario de Análisis Económico y Social.
    • Handle: RePEc:uae:wpaper:0411
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    References listed on IDEAS

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    1. Peter Havlik, 2005. "Structural Change, Productivity and Employment in the New EU Member States," wiiw Research Reports 313, The Vienna Institute for International Economic Studies, wiiw.
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    Cited by:

    1. Uwitonze, Eric & Heshmati, Almas, 2016. "Service Sector Development and its Determinants in Rwanda," IZA Discussion Papers 10117, Institute of Labor Economics (IZA).

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