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The Relation between Industry and Services in Terms of Productivity and Value Creation

Author

Listed:
  • Paul Baker
  • Neil Foster-McGregor

    (The Vienna Institute for International Economic Studies, wiiw)

  • Koenen Johannes
  • Sandra M. Leitner

    (The Vienna Institute for International Economic Studies, wiiw)

  • Julia Schricker
  • Robert Stehrer

    (The Vienna Institute for International Economic Studies, wiiw)

  • Thomas Strobel
  • Jurgen Vermeulen
  • Hans-Günther Vieweg
  • Anastasia Yagafarova

Abstract

Summary The share of manufacturing in GDP is declining, whereas the share of services – and business-related services in particular – is rising in almost all advanced economies. However, as these industries are mutually dependent in various ways this study focuses on the manufacturing sector as a user of activities provided by the services industries and – in particular – the way the latter contributes to productivity and value creation in the former. To the extent that this is the case, manufacturing industries benefit from a vibrant business-services industry and themselves play an important ‘carrier function’ of services – issues which are addressed by considering manufacturing activities in a value chain approach. As a consequence, EU Member States facing a declining share of manufacturing might still be part of the manufacturing value chain via the provision of services whereas other countries benefit from services provided by other countries. The role of cross-border flows of services and the patterns of outsourcing and offshoring of such activities across Europe is therefore gaining importance. It is argued that a differentiated pattern of specialisation emerged within Europe with a set of countries keeping a stronghold in manufacturing industries and others are specialising in the provision of related services, whereas some countries have faced a decline in their manufacturing shares, but have not succeeded in increasing their specialisation in business services either. The first four sections of the study present selected quantitative indicators concerning the ‘manufacturing value chains’, discuss the relative importance of the manufacturing–services interaction and its cross-border dimensions, and point towards differences across countries, industries and services activities, and the respective changes over time. Further, impacts of these interactions on manufacturing performance are addressed econometrically. The following two sections highlight important dimensions of services use in manufacturing and issues related to services trade and potential barriers in that respect for selected industries and countries, incorporating both quantitative and qualitative insights.

Suggested Citation

  • Paul Baker & Neil Foster-McGregor & Koenen Johannes & Sandra M. Leitner & Julia Schricker & Robert Stehrer & Thomas Strobel & Jurgen Vermeulen & Hans-Günther Vieweg & Anastasia Yagafarova, 2015. "The Relation between Industry and Services in Terms of Productivity and Value Creation," wiiw Research Reports 404, The Vienna Institute for International Economic Studies, wiiw.
  • Handle: RePEc:wii:rpaper:rr:404
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    References listed on IDEAS

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    1. Anita Wölfl, 2003. "Productivity Growth in Service Industries: An Assessment of Recent Patterns and the Role of Measurement," OECD Science, Technology and Industry Working Papers 2003/7, OECD Publishing.
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    Cited by:

    1. Sandra M. Leitner & Manuel Marcias & Daniel Mirza & Robert Stehrer & Roman Stöllinger, 2016. "The Future Development of EU Industry in a Global Context," wiiw Research Reports 409, The Vienna Institute for International Economic Studies, wiiw.
    2. Stöllinger, Roman, 2021. "Testing the Smile Curve: Functional Specialisation and Value Creation in GVCs," Structural Change and Economic Dynamics, Elsevier, vol. 56(C), pages 93-116.
    3. Robert Stehrer, 2020. "Konvergenz, Produktionsintegration und Spezialisierung in Europa seit 1995," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue Q1-Q2/20, pages 49-59.
    4. Tanel Rebane, 2018. "Complementarities In Performance Between Product Innovation, Marketing Innovation And Cooperation With Clients," University of Tartu - Faculty of Economics and Business Administration Working Paper Series 113, Faculty of Economics and Business Administration, University of Tartu (Estonia).
    5. Sergey Bodrunov, 2021. "Noonomy as the Material Basis for a Prospective Humanitarian Model of Public Order," Sustainability, MDPI, vol. 13(3), pages 1-20, January.
    6. Ferrando, Annalisa & Rossi, Stefania P. S. & Bonanno, Graziella, 2020. "Determinants of firms’ efficiency: do innovations and finance constraints matter? The case of European SMEs," Working Paper Series 2419, European Central Bank.
    7. Antonioli, Davide & Berardino, Claudio Di & Onesti, Gianni, 2023. "The intersectoral linkages and manufacturing productivity growth in Italian regions using the I-O approach," Structural Change and Economic Dynamics, Elsevier, vol. 66(C), pages 120-133.
    8. Alessandro Sarra & Claudio Berardino & Davide Quaglione, 2019. "Deindustrialization and the technological intensity of manufacturing subsystems in the European Union," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 36(1), pages 205-243, April.

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    More about this item

    Keywords

    manufacturing-service interaction; EU-wide specialisation; manufacturing value chains; industry studies;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • L6 - Industrial Organization - - Industry Studies: Manufacturing
    • L8 - Industrial Organization - - Industry Studies: Services
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods

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