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The Servitization of French Manufacturing Firms

Author

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  • Matthieu Crozet
  • Emmanuel Milet

Abstract

The story of deindustrialization of developed economies is now old and well-observed. In most developed countries, value added by manufacturing as a percentage of GDP has decreased continuously since the 1950's, and is now less than 15% in most OECD countries. The shift of value added and employment away from manufacturing toward services may be even deeper than suggested by data based on sectoral classification. As the complexity and diversity of firms' activities grow, the boundary between services and industries becomes increasingly elusive. This paper uses detailed balance sheet data from a very large panel of French firms to examine the production and the sales of services by manufacturing firms. Our data reveals that 83% of firms registered in manufacturing sectors provide services for third parties, and nearly one-third of these firms provide more services than goods. Additionally, we find that from 1997-2007 manufacturing firms have increased their production of services. This growing trend in ``servitization" suggests that deindustrialization, already observed on a country-scale, is also taking place within firms.

Suggested Citation

  • Matthieu Crozet & Emmanuel Milet, 2014. "The Servitization of French Manufacturing Firms," Working Papers 2014-10, CEPII research center.
  • Handle: RePEc:cii:cepidt:2014-10
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    References listed on IDEAS

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    1. L. Rachel Ngai & Christopher A. Pissarides, 2007. "Structural Change in a Multisector Model of Growth," American Economic Review, American Economic Association, vol. 97(1), pages 429-443, March.
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    7. Victor R. Fuchs, 1965. "Introduction to "The Growing Importance of the Service Industries"," NBER Chapters,in: The Growing Importance of the Service Industries, pages 1-4 National Bureau of Economic Research, Inc.
    8. Dirk Pilat & Agnès Cimper & Karsten Bjerring Olsen & Colin Webb, 2006. "The Changing Nature of Manufacturing in OECD Economies," OECD Science, Technology and Industry Working Papers 2006/9, OECD Publishing.
    9. Victor R. Fuchs, 1965. "The Growing Importance of the Service Industries," NBER Books, National Bureau of Economic Research, Inc, number fuch65-1, June.
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    11. Kuznets, Simon, 1973. "Modern Economic Growth: Findings and Reflections," American Economic Review, American Economic Association, vol. 63(3), pages 247-258, June.
    12. Markusen, James R, 1989. "Trade in Producer Services and in Other Specialized Intermediate Inputs," American Economic Review, American Economic Association, vol. 79(1), pages 85-95, March.
    13. Gebauer, Heiko & Fleisch, Elgar & Friedli, Thomas, 2005. "Overcoming the Service Paradox in Manufacturing Companies," European Management Journal, Elsevier, vol. 23(1), pages 14-26, February.
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    Cited by:

    1. Breinlich, Holger & Soderbery, Anson & Wright, Greg C., 2014. "From selling goods to selling services: firm responses to trade liberalization," LSE Research Online Documents on Economics 60523, London School of Economics and Political Science, LSE Library.
    2. Lodefalk, Magnus, 2017. "Servicification of Firms and Trade Policy Implications," World Trade Review, Cambridge University Press, vol. 16(01), pages 59-83, January.
    3. repec:bla:jemstr:v:26:y:2017:i:4:p:820-841 is not listed on IDEAS
    4. Andrea Ariu & Holger Breinlich & Gregory Corcos & Giordano Mion, 2017. "The interconnections between services and goods trade at the firm-level," Working Paper Research 329, National Bank of Belgium.
    5. repec:bla:worlde:v:40:y:2017:i:3:p:499-516 is not listed on IDEAS
    6. Nikolaj Malchow-Møller & Jakob Munch & Jan Skaksen, 2015. "Services trade, goods trade and productivity growth: evidence from a population of private sector firms," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 151(2), pages 197-229, May.
    7. Matthieu Crozet & Emmanuel Milet, 2017. "Should everybody be in services? The effect of servitization on manufacturing firm performance," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 26(4), pages 820-841, December.
    8. Philippe Frocrain & Pierre-Noël Giraud, 2017. "The evolution of tradable and non-tradable employment: evidence from France," Working Papers hal-01695159, HAL.
    9. Pauline Bourgeon & Jean-Charles Bricongne, 2016. "Financing Time to Trade," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01373461, HAL.
    10. Catherine Fuss & Pierre Blanchard & Claude Mathieu, 2017. "Why do manufacturing firms produce services? Evidence for the servitization paradox in Belgium," Working Paper Research 330, National Bank of Belgium.
    11. Bernard Hoekman & Ben Shepherd, 2017. "Services Productivity, Trade Policy and Manufacturing Exports," The World Economy, Wiley Blackwell, vol. 40(3), pages 499-516, March.
    12. Crozet, Matthieu & Milet, Emmanuel & Mirza, Daniel, 2016. "The impact of domestic regulations on international trade in services: Evidence from firm-level data," Journal of Comparative Economics, Elsevier, vol. 44(3), pages 585-607.
    13. Muendler, Marc-Andreas, 2017. "Trade, technology, and prosperity: An account of evidence from a labor-market perspective," WTO Staff Working Papers ERSD-2017-15, World Trade Organization (WTO), Economic Research and Statistics Division.

    More about this item

    Keywords

    Désindustrialisation; Servitisation;

    JEL classification:

    • D2 - Microeconomics - - Production and Organizations
    • L8 - Industrial Organization - - Industry Studies: Services

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