The contribution of business services to aggregate productivity growth
AbstractIn 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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Bibliographic InfoPaper provided by EconWPA in its series Industrial Organization with number 0402005.
Length: 20 pages
Date of creation: 26 Feb 2004
Date of revision:
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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business services; productivity; innovation; economic growth; knowledge diffusion;
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; Research and Development; Intellectual Property Rights
- O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-02-29 (All new papers)
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