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The Contribution of Business Services to Aggregate Productivity Growth

In: Fostering Productivity: Patterns, Determinants and Policy Implications

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  • Henk L.M. Kox

Abstract

In most OECD countries, the business services industry has grown much faster than the market sector as a whole. The industry in most cases, however, has displayed stagnating productivity growth, in some periods even a fall in productivity. Does this fast-growing industry with a bad productivity record present a threat to aggregate productivity growth and, hence, to future economic growth? Reviewing existing empirical evidence, the paper argues that this concern need not be valid. The business services industry has an important role in the national innovation system and in knowledge spillovers to other industries. The innovation contribution of business services to the rest of the economy may countervail the effect of its own stagnating productivity growth. Moreover, the industry has not yet exhausted opportunities for tackling existing X-inefficiencies. The paper further sketches some policy options for improving the productivity record of business services, and for strengthening its role in knowledge spillovers to client industries.
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  • Henk L.M. Kox, 2004. "The Contribution of Business Services to Aggregate Productivity Growth," Contributions to Economic Analysis, in: Fostering Productivity: Patterns, Determinants and Policy Implications, pages 243-264, Emerald Group Publishing Limited.
    • Handle: RePEc:eme:ceazzz:s0573-8555(2004)0000263015
    DOI: 10.1108/S0573-8555(2004)0000263015
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    Cited by:

    1. Joseph Francois & Bernard Hoekman, 2010. "Services Trade and Policy," Journal of Economic Literature, American Economic Association, vol. 48(3), pages 642-692, September.
    2. Kox, Henk L.M. & Leeuwen, George van & Wiel, Henry van der, 2010. "Competitive, but too small - productivity and entry-exit determinants in European business services," MPRA Paper 24389, University Library of Munich, Germany.
    3. Ewa Cieślik, 2022. "A New Era Is Beginning in Central and Eastern Europe: Information and Communication Technology Services Exceed Manufacturing in the Global Production Chain," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 13(4), pages 2607-2639, December.
    4. Saltari, Enrico & Wymer, Clifford R. & Federici, Daniela, 2013. "The impact of ICT and business services on the Italian economy," Structural Change and Economic Dynamics, Elsevier, vol. 25(C), pages 110-118.
    5. Enrico Saltari, 2012. "The role of ICT and Business Services in Italy," Working Papers in Public Economics 152, University of Rome La Sapienza, Department of Economics and Law.
    6. Henk Kox & George Leeuwen & Henry Wiel, 2007. "Market Structure, Productivity and Scale in European Business Services," Palgrave Macmillan Books, in: Luis Rubalcaba & Henk Kox (ed.), Business Services in European Economic Growth, chapter 11, pages 195-212, Palgrave Macmillan.
    7. Hoekman, Bernard & Mattoo, Aaditya, 2008. "Services trade and growth," Policy Research Working Paper Series 4461, The World Bank.
    8. Ewa Cieślik, 2020. "Cross-Sectoral Inter-Country Linkages under the Belt and Road Initiative: Chinese ICT Services Value Added Inflows to Manufacturing Exports in the New Eurasian Land Bridge Economies," Sustainability, MDPI, vol. 12(20), pages 1-20, October.
    9. Kox, Henk L.M. & Van Leeuwen, George & Van der Wiel, Henry, 2011. "Being numerous does not yield efficiency - Productivity and entry-exit determinants in European business services," MPRA Paper 106166, University Library of Munich, Germany, revised Sep 2011.

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    More about this item

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • L8 - Industrial Organization - - Industry Studies: Services
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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