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Producer Services and Manufacturing Productivity: Evidence from Japan Industrial Productivity Database

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Author Info
Kiyoyasu Tanaka
Abstract

As service sectors account for a growing share of economic activity in advanced economies, economists claim that the quality and cost of producer services supplied by the service sectors are crucial in supporting the competitiveness of manufacturing firms. This paper provides an empirical assessment on this argument by exploring a link between service-sector performance and manufacturing productivity in Japan for the period 1980-2005. Assuming that an improvement in producer services is measured with errors by a price deflator growth of service outputs, I propose an estimation framework in which an observed productivity depends partly on the performance of service sectors weighted by service-input intensities. Robust to a wide range of specifications and alternative indicators of services upgrading, I find little evidence that the service sectors contributed to productivity growth of the manufacturing sector. Thus, my findings do not support the claim that the upgrading of producer services improves manufacturing competitiveness.

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File URL: http://gcoe.ier.hit-u.ac.jp/research/discussion/2008/pdf/gd09-076.pdf
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Paper provided by Institute of Economic Research, Hitotsubashi University in its series Global COE Hi-Stat Discussion Paper Series with number gd09-076.

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Date of creation: Jul 2009
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Handle: RePEc:hst:ghsdps:gd09-076

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Related research
Keywords: Producer Services; Service Sector; Productivity; Japan;

Find related papers by JEL classification:
D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity
L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
L80 - Industrial Organization - - Industry Studies: Services - - - General

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

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