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Producer Services and Competitiveness of Manufacturing Exports

  • Yvonne Wolfmayr

    (WIFO)

The paper examines the role of service inputs in shaping the competitiveness of the manufacturing sector. It first estimates an export market share function of 18 manufacturing industries for 16 OECD countries over the period 1995 to 2000. The service linkage variables are derived from Input Output tables. The results point to a positive and highly significant impact of international service linkages in high skilled, technology driven industries that explains about 40 percent of the overall increase in the market share. While there is a clear differential impact across the different types of (consuming) manufacturing industries, the type of service input is not relevant. The second part of the paper estimates the impact of outsourced services as well as in house services on total factor productivity growth in Austrian manufacturing, based on an approach suggested by Feenstra Hanson (1999). The results suggest a positive and significant impact of services outsourcing on TFP growth that is higher in the high skilled intensive manufacturing industries. In contrast to the findings for export market shares, the distinction between the types of service inputs is highly relevant for the results on TFP growth, which stresses the role of knowledge intensive business services (KIBS) as important producers and transmitters of technology, innovations and knowledge (technological and knowledge spillovers). The impact of in house services could not be precisely estimated.

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Paper provided by FIW in its series FIW Research Reports series with number I-009.

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Length: 58
Date of creation: Jun 2008
Date of revision:
Handle: RePEc:wsr:ecbook:2008:i:i-009
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Order Information: Postal: FIW Project Office Austrian Institute of Economic Research Arsenal Objekt 20 A-1030 Vienna
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  1. Donald Siegel & Zvi Griliches, 1992. "Purchased Services, Outsourcing, Computers, and Productivity in Manufacturing," NBER Chapters, in: Output Measurement in the Service Sectors, pages 429-460 National Bureau of Economic Research, Inc.
  2. Jan Fagerberg, 1996. "Technology and Competitiveness," Working Papers Archives 1996548, Centre for Technology, Innovation and Culture, University of Oslo.
  3. Amiti, Mary & Konings, Jozef, 2005. "Trade Liberalization, Intermediate Inputs and Productivity: Evidence from Indonesia," CEPR Discussion Papers 5104, C.E.P.R. Discussion Papers.
  4. Karsten Bjerring Olsen, 2006. "Productivity Impacts of Offshoring and Outsourcing: A Review," OECD Science, Technology and Industry Working Papers 2006/1, OECD Publishing.
  5. Francois, Joseph F, 1990. "Producer Services, Scale, and the Division of Labor," Oxford Economic Papers, Oxford University Press, vol. 42(4), pages 715-29, October.
  6. Egger, Peter & Pfaffermayr, Michael & Wolfmayr-Schnitzer, Yvonne, 2001. "The international fragmentation of Austrian manufacturing: The effects of outsourcing on productivity and wages," The North American Journal of Economics and Finance, Elsevier, vol. 12(3), pages 257-272, November.
  7. Carlin, Wendy & Glyn, Andrew & Van Reenen, John, 2001. "Export Market Performance of OECD Countries: An Empirical Examination of the Role of Cost Competitiveness," Economic Journal, Royal Economic Society, vol. 111(468), pages 128-62, January.
  8. Jan Fagerberg, 1995. "Is there a large-country advantage in high-tech?," Working Papers Archives 1995526, Centre for Technology, Innovation and Culture, University of Oslo.
  9. Keld Laursen & Valentina Meliciani, 2000. "The importance of technology-based intersectoral linkages for market share dynamics," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 136(4), pages 702-723, December.
  10. Arnold, Jens & Javorcik, Beata & Mattoo, Aaditya, 2006. "Does Services Liberalization Benefit Manufacturing Firms?," CEPR Discussion Papers 5902, C.E.P.R. Discussion Papers.
  11. Daniela Di Cagno & Valentina Meliciani, 2005. "Do inter-sectoral flows of services matter for productivity growth? an input/output analysis of OECD countries," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 14(3), pages 149-171.
  12. M. Landesmann & M. Pfaffermayr, 1997. "Technological competition and trade performance," Applied Economics, Taylor & Francis Journals, vol. 29(2), pages 179-196.
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