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Growth and the Services Sector: The Portugal Case

Author

Listed:
  • Marta S. S. Ramos

    (University of Coimbra, Faculty of Economics)

  • Marta C. N. Simoes

    (University of Coimbra, Faculty of Economics)

Abstract

Does the increasing tertiarisation of an economy have the potential to sustain its growth rate? This work aims at contributing to this debate from a Portuguese perspective by conducting a characterization of the services sector in Portugal for the period 1970-2005/8. We first analyze the services sector as a whole, and then consider different sub-sectors based on the division of this sector into two broad categories, modern impersonal services and traditional personal services. At the aggregate level, the productivity performance of the Portuguese services sector is low relative to that of selected more advanced countries. This is due to the strong weight of traditional services. However, modern services show a great potential to increase its productivity and participation in international trade. Portugal should thus focus on the development of transport and communications and finance and business services sub-sectors in order to overcome the negative productivity and standards of living differentials relative to most of our European partners. Decisio makers should also not forget that there is ample scope for some traditional services to benefit from recent technological advances and thus turning into modern services.

Suggested Citation

  • Marta S. S. Ramos & Marta C. N. Simoes, 2011. "Growth and the Services Sector: The Portugal Case," Book Chapters, Institute of Economic Sciences.
  • Handle: RePEc:ibg:chaptr:conissue-17
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    References listed on IDEAS

    as
    1. Ghani, Ejaz & Kharas, Homi, 2010. "The Service Revolution," World Bank - Economic Premise, The World Bank, issue 14, pages 1-5, May.
    2. Maroto-Sánchez, Andrés & Cuadrado-Roura, Juan R., 2009. "Is growth of services an obstacle to productivity growth? A comparative analysis," Structural Change and Economic Dynamics, Elsevier, vol. 20(4), pages 254-265, December.
    3. Uppenberg, Kristian & Strauss, Hubert, 2010. "Innovation and productivity growth in the EU services sector," EIB Economic Surveys, European Investment Bank, number 2, December.
    4. Margarida Duarte & Diego Restuccia, 2007. "The structural transformation and aggregate productivity in Portugal," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 6(1), pages 23-46, April.
    5. Dale W. Jorgenson & Marcel P. Timmer, 2011. "Structural Change in Advanced Nations: A New Set of Stylised Facts," Scandinavian Journal of Economics, Wiley Blackwell, vol. 113(1), pages 1-29, March.
    6. Mary O'Mahony & Marcel P. Timmer, 2009. "Output, Input and Productivity Measures at the Industry Level: The EU KLEMS Database," Economic Journal, Royal Economic Society, vol. 119(538), pages 374-403, June.
    7. Gable, Susanna Lundstrom & Mishra, Saurabh, 2011. "Service Export sophistication and Europe's new growth model," Policy Research Working Paper Series 5793, The World Bank.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Structural change; services sector; productivity; economic growth;

    JEL classification:

    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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