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Producer Services and Competitiveness of Manufacturing Exports

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  • Yvonne Wolfmayr

    (WIFO)

Abstract

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.

Suggested Citation

  • Yvonne Wolfmayr, 2008. "Producer Services and Competitiveness of Manufacturing Exports," FIW Research Reports series I-009, FIW.
  • Handle: RePEc:wsr:ecbook:2008:i:i-009
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    References listed on IDEAS

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    1. 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 128-162, January.
    2. 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.
    3. 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.
    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. Mary Amiti & Jozef Konings, 2007. "Trade Liberalization, Intermediate Inputs, and Productivity: Evidence from Indonesia," American Economic Review, American Economic Association, vol. 97(5), pages 1611-1638, December.
    6. 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.
    7. Arnold, Jens & Javorcik, Beata & Mattoo, Aaditya, 2006. "Does Services Liberalization Benefit Manufacturing Firms?," CEPR Discussion Papers 5902, C.E.P.R. Discussion Papers.
    8. Fagerberg, Jan, 1996. "Technology and Competitiveness," Oxford Review of Economic Policy, Oxford University Press, vol. 12(3), pages 39-51, Autumn.
    9. Francois, Joseph F, 1990. "Producer Services, Scale, and the Division of Labor," Oxford Economic Papers, Oxford University Press, vol. 42(4), pages 715-729, October.
    10. M. Landesmann & M. Pfaffermayr, 1997. "Technological competition and trade performance," Applied Economics, Taylor & Francis Journals, vol. 29(2), pages 179-196.
    11. Keld Laursen & Valentina Meliciani, 2000. "The importance of technology-based intersectoral linkages for market share dynamics," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 136(4), pages 702-723, December.
    12. 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.
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    Citations

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    Cited by:

    1. Cernat, Lucian & Kutlina-Dimitrova, Zornitsa, 2014. "Thinking in a box: A ‘mode 5’ approach to service trade," DG TRADE Chief Economist Notes 2014-1, Directorate General for Trade, European Commission.
    2. Rinaldo Evangelista & Matteo Lucchese & Valentina Meliciani, 2015. "Business services and the export performances of manufacturing industries," Journal of Evolutionary Economics, Springer, vol. 25(5), pages 959-981, November.
    3. Evangelista, Rinaldo & Lucchese, Matteo & Meliciani, Valentina, 2013. "Business services, innovation and sectoral growth," Structural Change and Economic Dynamics, Elsevier, vol. 25(C), pages 119-132.
    4. Antimiani, Alessandro & Cernat, Lucian, 2017. "Liberalizing global trade in Mode 5 services: How much is it worth?," DG TRADE Chief Economist Notes 2017-4, Directorate General for Trade, European Commission.
    5. Rinaldo Evangelista & Matteo Lucchese & Valentina Meliciani, 2013. "The contribution of Business services to the export performances of manufacturing industries. An empirical study on 5 European countries," Working Papers 14, Birkbeck Centre for Innovation Management Research, revised Nov 2013.
    6. repec:euf:qreuro:0112-03 is not listed on IDEAS
    7. A team of the Working Group on Econometric Modelling of the European System of Central Banks, 2012. "Competitiveness and external imbalances within the euro area," Occasional Paper Series 139, European Central Bank.
    8. Markus Kelle, 2012. "Crossing Industrial Borders: German Manufacturers as Services Exporters," Development Working Papers 329, Centro Studi Luca d'Agliano, University of Milano, revised 27 Mar 2012.
    9. Francesca D'Auria & Jesus Maria Irigoyen & Josefa Monteagudo & Plamen Nikolov & Alexander Rutkowski & Michael Sket & Ann-Louise Winther, . "Quarterly Report on the Euro Area (QREA), Vol.11, No.2 (2012)," Quarterly Report on the Euro Area (QREA), Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    10. Valentina Meliciani, 2010. "Exports of Knowledge-intensive Services and Manufactures: The Role of ICTs and Intersectoral Linkages," Chapters,in: The Shape of the Division of Labour, chapter 4 Edward Elgar Publishing.

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    Keywords

    Export of Services;

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