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Has Liberalization Strengthened the Link between Services and Manufacturing?

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  • Liao, Christine Marie
  • Pasadilla, Gloria O.

Abstract

Globalization and pressure from increased competition have led to “splintering” of in-house services from formerly integrated manufacturing firms in developed economies and, at the same time, to an increase in “outsourcing” of these same services. These two trends have caused a stronger linkage in services and manufacturing in economic data because services which were previously lumped with manufacturing are now recorded separately and, in a sense, given identity. The study tries to shed some light on this linkage in the Philippine case. Contrary to experiences of other countries, the contribution of services to growth in manufacturing decreased from the 1980s to the 1990s. The manufacturing sector’s usage of services also declined from the first to the second period. This result suggests that the Philippines has caught the “splintering” trend quite late and is, perhaps, only now catching on that the available 1990s data have not yet been able to capture.

Suggested Citation

  • Liao, Christine Marie & Pasadilla, Gloria O., 2007. "Has Liberalization Strengthened the Link between Services and Manufacturing?," Discussion Papers DP 2007-13, Philippine Institute for Development Studies.
  • Handle: RePEc:phd:dpaper:dp_2007-13
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    References listed on IDEAS

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    1. Dirk Pilat & Anita Wölfl, 2005. "Measuring the Interaction Between Manufacturing and Services," OECD Science, Technology and Industry Working Papers 2005/5, OECD Publishing.
    2. Rashmi Banga & B.N.Goldar, 2004. "Contribution of services to output growth and productivity in Indian manufacturing: Pre and post reforms," Indian Council for Research on International Economic Relations, New Delhi Working Papers 139, Indian Council for Research on International Economic Relations, New Delhi, India.
    3. Blunch, Niels-Hugo & Verner, Dorte, 1999. "Sector growth and the dual economy model - evidence from Cote d'Ivoire, Ghana, and Zimbabwe," Policy Research Working Paper Series 2175, The World Bank.
    4. Per Mathis Kongsrud & Isabelle Wanner, 2005. "The Impact of Structural Policies on Trade-Related Adjustment and the Shift to Services," OECD Economics Department Working Papers 427, OECD Publishing.
    5. Andersson, Martin, 2004. "Co-Location Of Manufacturing & Producer Services – A Simultaneous Equation Approach," Working Paper Series in Economics and Institutions of Innovation 8, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    6. Francois, Joseph & Reinert, Kenneth A, 1995. "The Role of Services in the Structure of Production and Trade: Stylized Facts from a Cross-Country Analysis," CEPR Discussion Papers 1228, C.E.P.R. Discussion Papers.
    7. Dirk Pilat & Paul Schreyer, 2003. "Measuring productivity," OECD Economic Studies, OECD Publishing, vol. 2001(2), pages 127-170.
    8. Shujiro Urata & Kozo Kiyota, 2003. "Services Trade in East Asia," NBER Chapters,in: Trade in Services in the Asia Pacific Region, NBER East Asia Seminar on Economics (EASE), Volume 11, pages 379-428 National Bureau of Economic Research, Inc.
    9. Poonam Gupta & James P. F. Gordon, 2004. "Understanding India’s Services Revolution," IMF Working Papers 04/171, International Monetary Fund.
    10. Cororaton, Caesar B. & Cuenca, Janet S., 2001. "Estimates of Total Factor Productivity in the Philippines," Discussion Papers DP 2001-02, Philippine Institute for Development Studies.
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    Cited by:

    1. Virginia Di Nino, 2015. "‘The phenomenal CAT’: firms clawing the goods of others," Questioni di Economia e Finanza (Occasional Papers) 281, Bank of Italy, Economic Research and International Relations Area.

    More about this item

    Keywords

    globalization; splintering; outsourcing; services-manufacturing link; growth accounting;

    JEL classification:

    • F1 - International Economics - - Trade

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