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The contribution of business services to aggregate productivity growth

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Author Info
Henk L.M. Kox

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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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File URL: http://129.3.20.41/eps/io/papers/0402/0402005.pdf
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Publisher Info
Paper provided by EconWPA in its series Industrial Organization with number 0402005.

Download reference. The following formats are available: HTML, plain text, BibTeX, RIS (EndNote), ReDIF
Length: 20 pages
Date of creation: 26 Feb 2004
Date of revision:
Handle: RePEc:wpa:wuwpio:0402005

Note: Type of Document - pdf; prepared on windows; pages: 20; figures: 6. pre-publication version of chapter in Gelauff et al., Fostering Productivity
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Web page: http://129.3.20.41

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Related research
Keywords: business services productivity innovation economic growth knowledge diffusion

Other versions of this item:

Find related papers by 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, Technological Change, and Growth - - Technological Change
O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Henk Kox, 2002. "Growth challenges for the Dutch business services industry: International comparison and policy issues," CPB Special Publications 40, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
  2. Oulton, Nicholas, 2001. "Must the Growth Rate Decline? Baumol's Unbalanced Growth Revisited," Oxford Economic Papers, Oxford University Press, vol. 53(4), pages 605-27, October.
    Other versions:
  3. Egger, Peter & Pfaffermayr, Michael & Weber, Andrea, 2003. "Sectoral Adjustment of Employment: The Impact of Outsourcing and Trade at the Micro Level," Economics Series 145, Institute for Advanced Studies. [Downloadable!]
    Other versions:
  4. Pierre Mohnen & Julio Rosa, 2000. "Les obstacles à l'innovation dans les industries de services au Canada," CIRANO Working Papers 2000s-14, CIRANO. [Downloadable!]
  5. Baumol, William J, 1972. "Macroeconomics of Unbalanced Growth: Reply," American Economic Review, American Economic Association, vol. 62(1), pages 150, March.
  6. 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 Directorate for Science, Technology and Industry. [Downloadable!]
  7. Fixler, Dennis J. & Siegel, Donald, 1999. "Outsourcing and productivity growth in services," Structural Change and Economic Dynamics, Elsevier, vol. 10(2), pages 177-194, June. [Downloadable!] (restricted)
  8. Zvi Griliches, 1979. "Issues in Assessing the Contribution of Research and Development to Productivity Growth," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 92-116, Spring. [Downloadable!] (restricted)
  9. Nicolai J. Foss, 1999. "The Use of Knowledge in Firms," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 127(3), pages 458-, September.
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. 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!]
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