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Has Liberalization Strengthened the Link between Services and Manufacturing?

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Author Info

  • Gloria O. Pasadilla

    (Philippine Institute for Development Studies)

  • Christine Marie M. Liao

Abstract

Globalization and pressure from increased competition have led to splintering of in-house services from formerly integrated manufacturing firms in developed economies and, at the same time, to an increase in outsourcing of these same services. These two trends have caused a stronger linkage in services and manufacturing in economic data because services which were previously lumped with manufacturing are now recorded separately and, in a sense, given identity. The study tries to shed some light on this linkage in the Philippine case. Contrary to experiences of other countries, the contribution of services to growth in manufacturing decreased from the 1980s to the 1990s. The manufacturing sectors usage of services also declined from the first to the second period. This result suggests that the Philippines has caught the splintering trend quite late and is, perhaps, only now catching on that the available 1990s data have not yet been able to capture.

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Bibliographic Info

Paper provided by East Asian Bureau of Economic Research in its series Microeconomics Working Papers with number 22047.

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Date of creation: Jan 2007
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Handle: RePEc:eab:microe:22047

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Related research

Keywords: globalization; splintering; Outsourcing; services-manufacturing link; growth accounting;

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  1. Blunch, Niels-Hugo & Verner, Dorte, 1999. "Sector growth and the dual economy model - evidence from Cote d'Ivoire, Ghana, and Zimbabwe," Policy Research Working Paper Series 2175, The World Bank.
  2. Dirk Pilat & Anita Wölfl, 2005. "Measuring the Interaction Between Manufacturing and Services," OECD Science, Technology and Industry Working Papers 2005/5, OECD Publishing.
  3. Poonam Gupta & James P. F. Gordon, 2004. "Understanding India’s Services Revolution," IMF Working Papers 04/171, International Monetary Fund.
  4. Per Mathis Kongsrud & Isabelle Wanner, 2005. "The Impact of Structural Policies on Trade-Related Adjustment and the Shift to Services," OECD Economics Department Working Papers 427, OECD Publishing.
  5. Rashmi Banga & B.N.Goldar, 2004. "Contribution of services to output growth and productivity in Indian manufacturing: Pre and post reforms," Indian Council for Research on International Economic Relations, New Delhi Working Papers 139, Indian Council for Research on International Economic Relations, New Delhi, India.
  6. Shujiro Urata & Kozo Kiyota, 2003. "Services Trade in East Asia," NBER Chapters, in: Trade in Services in the Asia Pacific Region, NBER East Asia Seminar on Economics (EASE), Volume 11, pages 379-428 National Bureau of Economic Research, Inc.
  7. Dirk Pilat & Paul Schreyer, 2001. "Measuring productivity," OECD Economic Studies, OECD Publishing, vol. 2001(2), pages 127-170.
  8. Andersson, Martin, 2004. "Co-Location Of Manufacturing & Producer Services – A Simultaneous Equation Approach," Working Paper Series in Economics and Institutions of Innovation 8, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
  9. Cororaton, Caesar B. & Cuenca, Janet S., 2001. "Estimates of Total Factor Productivity in the Philippines," Discussion Papers DP 2001-02, Philippine Institute for Development Studies.
  10. Francois, Joseph & Reinert, Kenneth A, 1995. "The Role of Services in the Structure of Production and Trade: Stylized Facts from a Cross-Country Analysis," CEPR Discussion Papers 1228, C.E.P.R. Discussion Papers.
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