Producer Services Research, The Role Of Economic Growth

The 20th century has witnessed a dramatic change of the economic structure in the developed countries, in which the service industry accounted for the largest portion of GDP and social employment."Service economy"became the symbol of that time. Thanks to the innovation of communication and information technology, producer service (PS) which is the sub-category of service industry shows vigorous vitality in 1990s. Unlike the traditional consumer service, producer service has a close connection to the other industries, especially to the manufacturing industry. The promotion of production efficiency in PS industry not only contributes to its own output but also have a strong"spill-over effect"on the manufacturing industry. By introducing the human capital in the production process in a more professional way, the PS industry has a positive effect on the economic growth. Thus we can see simple links between PS and manufacturing, also between PS and economic growth. However, the reality is much more sophisticated. A circulating graph drown in the article illustrates the complex interaction among PS industry, manufacturing industry and the economic growth. And this graph becomes the theoretical framework of the thesis.Unfortunately, there is no consensus on which service business belongs to PS industry. With a in-depth analysis of 33 input-output tables, this article tries to offer a reasonable answer to the above issue. By case-by-case study, we identify the scale of the PS industry. The later empirical analysis is base on the work. And we find a couple of economic phenomenon which deserve a further study.First, PS'dependence on manufacturing is undermined in the developed economies compared with the developing ones. The flourish of PS in the developing economies is mainly due to the deeper labor division in itself. On the contrary, manufacturing relies more on PS. Second, the interaction between PS and economic growth is more definite. There is a positive feedback mechanism between the two in the developed economies. Namely, the development of the PS industry contributes to the economic growth, and the growth generates more demand for the products from the PS industry. However, in the developing economies, manufacturing is the main force to promote economic growth, and the"PS-economic growth feedback mechanism"cannot be seen in our samples.Third, manufacturing takes the largest proportion of GDP in China, while PS takes the least. By using hierarchical cluster analysis, we find another three economies whose economic structure is quite similar with that of China. These economies are all export-oriented and have a very poor performance on PS development. Finally we proved that it is the export-oriented policy that should be blamed for the lag of the PS industry. This policy isolates the manufacturing firms form the producer services, and the market cannot generate adequate demand to sustain the development of the PS industry. Thus we can get some policy implications form the study.