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• Henk L.M. Kox

Chapter 2 chapter untangles factors behind the extraordinary growth of the BS industry during last decade, comparing it with other market industries. It analyses how the growth pattern is affected by product differentiation and the structure of competition. Particular attention is given to the role of foreign competition.

Chapter 3 deals with the impact of BS industry on the growth capacity of other industries. It shows how intermediary BS inputs can put other industries on a higher growth path that is associated with a higher specialisation level in labour and human capital (increased roundaboutedness). Knowledge-intensive BS branches not only generate their own innovations (e.g. software industry) but also contribute to the dissemination of best-practice knowledge and innovations throughout the economy. Remarkably, the BS industry has itself a very poor record of productivity growth. Over time, with a growing BS industry, this may become a drag on macro-economic growth if current trends will continue.

Chapter 4 pinpoints the main aspects in which the Dutch BS industry differed from its foreign counterparts, showing its comparative strengths and weaknesses. The strengths appear to be associated with its very fast growth and its relative openness to foreign competition. The main weaknesses relate to meagre innovation efforts and a stagnating labour productivity growth.

Chapter 5 provides a scenario analysis of the future growth of Dutch BS industry, covering the period till 2010. Apart from general GDP growth, six driving forces determine the growth outcomes for BS industry: technological change; outsourcing tendencies; final domestic demand structure; internationalisation tendencies; institutional developments; and structural changes in factor markets. Two coherent scenarios, an optimistic and a pessimistic one, sketch the possible courses of events. The chapter concludes with a quantitative projection of BS growth until 2010.

Chapter 6 identifies future-oriented policy issues, after identifying the dominant market failure problems with regard to the BS industry. The main policy options relate to: strengthening the BS industry’s own productivity development; achieving more market transparency; getting more exposure of markets to foreign competition; and strengthening the innovation contribution of the BS industry.

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Paper provided by CPB Netherlands Bureau for Economic Policy Analysis in its series CPB Special Publications with number 40.

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Date of creation: Apr 2002
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Handle: RePEc:cpb:spcial:40

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Related research

Keywords: services; business services; market structure; growth; growth sources; international comparison; productivity; trade; innovation;

Find related papers by JEL classification:
L8 - Industrial Organization - - Industry Studies: Services
L84 - Industrial Organization - - Industry Studies: Services - - - Personal, Professional, and Business Services
L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
O33 - Economic Development, Technological Change, and Growth - - Technological Change - - - Technological Change: Choices and Consequences; Diffusion Processes
O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
D2 - Microeconomics - - Production and Organizations

Cited by:
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1. Henry van der Wiel & George van Leeuwen, 2003. "Do ICT spillovers matter? Evidence from Dutch firm-level data," CPB Discussion Papers 26, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
2. Harold Creusen & Bert Minne & Henry van der Wiel, 2006. "Competition in the Netherlands," CPB Documents 136, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
3. Kox, Henk L.M. & Leeuwen, George van & Wiel, Henry van der, 2007. "Market structure, productivity and scale in European business services," MPRA Paper 6137, University Library of Munich, Germany. [Downloadable!]
4. Henk L.M. Kox, 2004. "The contribution of business services to aggregate productivity growth," Industrial Organization 0402005, EconWPA. [Downloadable!]

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This page was last updated on 2009-11-26.