The Service economy [ressource électronique]

52 Pages·2000·1.3 MB·English

by  Organisation de coopération et de développement économiques. Direction de la science, de la technologie et de l'industrie

SCIENCETECHNOLOGY INDUSTRY
OECD
BUSINESSANDINDUSTRYPOUCYFORUMSERIES
THE
SERVICE
ECONOMY
ORGANISATIONFORECONOMICCO-OPERATIONANDDEVELOPMENT
ORGANISATIONFORECONOMICCO-OPERATION
ANDDEVELOPMENT
PursuanttoArticle1oftheConventionsignedinParison14thDecember1960,
andwhichcameintoforceon30thSeptember1961,theOrganisationforEconomic
Co-operationandDevelopment(OECD)shallpromotepoliciesdesigned:
-toachievethehighestsustainableeconomicgrowthandemploymentandarising
standardoflivinginMembercountries,whilemaintainingfinancialstability,and
thustocontributetothedevelopmentoftheworldeconomy;
-tocontributetosoundeconomicexpansioninMemberaswellasnon-member
countriesintheprocessofeconomicdevelopment;and
-tocontributetotheexpansionofworldtradeonamultilateral,non-discriminatory
basisinaccordancewithinternationalobligations.
Theoriginal Membercountries oftheOECD areAustria,Belgium,Canada,
Denmark, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the
Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, Turkey, the
UnitedKingdom andtheUnitedStates.ThefollowingcountriesbecameMembers
subsequentlythroughaccessionatthedatesindicatedhereafter:Japan(28thApril1964),
Finland(28thJanuary1969),Australia(7thJune1971),NewZealand(29thMay1973),
Mexico (18th May 1994), the Czech Republic (21stDecember 1995), Hungary
(7thMay1996),Poland(22ndNovember1996)andKorea(12thDecember1996).The
CommissionoftheEuropeanCommunitiestakespartintheworkoftheOECD
(Article13oftheOECDConvention).
©OECD2000
Permissiontoreproduceaportionofthisworkfornon-commercialpurposesorclassroomuse
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FOREWORD
ServicesaretransformingOECDeconomiesonamassivescale,butare
stillimpededbyregulationsandpoliciesthatstifleinnovationandcompetition.
Comprehensive reforms need to be pursued internationally as well as in
individualOECDcountries.Thesearetheprincipalconclusionsreachedby
participantsinaBusinessandIndustryPolicyEommorganisedbytheOECD
on28September1999.TheEommwasorganisedbytheIndustryCommittee,
partly to address the mandate of the OECD Ministerial to explain the
differences which have emerged in growth performance among OECD
countries.Itbroughttogetherseniorgovernmentofficials,experts,andbusiness
andtradeunionleadersfrom30countriestoaddressissuesrelatedto“Realising
thePotentialoftheServiceEconomy: EacilitatingGrowth,Innovationand
Competition”.
TheForumtracedtheevolutionoftheserviceeconomy,particularlyin
knowledge-basedareas,andexaminedhowitaffectsbusinessandsociety.With
manufacturingslippingtolessthan20%ofGDPandtheroleofservicesrising
tomorethan70%insomeOECDcountries,servicesareseenasplayinga
principalroleineconomies.Thetwosectorsare,however,becomingmore
interrelated. There is an increasingly important bundling ofservices with
products-suchassoftwarewithcomputers.Therelationshipisadynamicone,
withsoftware,forexample,drivingdevelopmentsincomputertechnology,and
viceversa.Outsourcingisakeyfactorinthisdevelopment.Withcompanies
focusing on core competencies, more service-related functions are being
sourcedfromspecialisedfirms;thistrendisservingtoimproveperformancein
keyareas.
TheroleoftheInternetandelectroniccommercewasalsoexamined.
Developments in this domain are shattering conventional communication
networksandareprovidingthemeansforcompaniestoengageinpartnerships
thatwouldhavebeenunimaginableseveralyearsago.Thesenewpartnerships
helptodiffuseknowledgeandtostrengthentheinternationalpresenceand
competitivenessoffirms,includingstart-upsandsmallandmedium-sizedfirms.
Attheinternationallevel,participantsagreedthatcountriesneedtowork
collectivelythroughtheGATStoestablishthetypeofreliableandeffective
trading environment thathas been achievedduring the past 50 years for
merchandisetrade.Atthesametime,moreneedstobedonetosubstantially
reducecurrentbarrierstotradeinservices.
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Governments needtoimplement acomprehensivepolicy approachto
removetheremainingstructuralbarrierswhichimpedetheperformanceand
developmentofstrategicbusinessservices,andrelatedknowledge-intensive
activities.Innovationpoliciesshouldbeadjustedandbroadenedawayfrom
traditional R&D support in manufacturing, and there is a need for new
initiatives in training and lifelong learning. Tax reform and removing
impedimentstoentrepreneurshiparecrucialinsomecountries.Moreadequate
measuringandreportingofintangible assetsisimportantfortheeffective
channellingofventurecapitaltoserviceactivities.Finally,betterinputand
performance indicators would provide the basic information needed by
governments,serviceproviders,usersandinvestorstomakemoreinformed
policyandbusinessdecisions.
ThereisconsiderablevariationacrossOECDcountriesintheextentto
which they have experienced rapid development of high-growth service
industries.This,inturn,hasbeeninfluencedbymajordifferencesinunderlying
policyconditions.IntheUnitedStates,therehasbeenextensiverestructuringof
existing firms which have reorganised their activities around their core
competenciesandoutsourcedawiderangeofservice-relatedactivities,aswell
asnumerousstart-upsofservicecompanies.StronggrowthinIntemet/ICT-
relatedserviceprovidershascontributedtotherapidgrowthofanincreasingly
sophisticatedrangeofinnovativeserviceproducts.Thesedevelopmentshave
beenbrought aboutby a numberofinterrelatedfactors, including lightly
regulatedproductmarkets,efficientmarketsforcorporatecontrol,strongsupply
of venture capital and a climate that is conducive to risk-taking and
entrepreneurship.StronggrowthinserviceshasalsooccurredinCanadaand
Australia,twocountrieswithopeneconomiesandrelativelyfewregulatory
barriers.Incontrast,growthinserviceshasbeenslowerincountrieslikeJapan
andKorea,wherethebusinessenvironmenthasbeenlessfavourabletoentryby
newcomersandtorisk-taking,andwhereextensivecross-holdingsofsharesand
the strength of keiretsu and chaebol relationships have slowed industry
restructuring.ParticipantsintheForumagreedthatthestakes arehigh, as
serviceswillprovidetheplatformforfutureeconomicgrowth.Itwasagreed
thattheOECDshouldcontinuetoworkwithMembercountriestohelpdesign
moreeffectiveandbetter-integratedpolicyapproaches.
FurtherinformationontheForum,includingcopiesofthepapersthatwere
presented,canbeaccessedontheInternetat:
http://www.oecd.ors/dsti/sti/industry/indcomp/act/services/forum.htm
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1
TABLEOFCONTENTS
THECHARACTERISTICSOFSERVICRINDIISTRIRS 7
Relationshiptomanufacturing 9
Competitiveconditions 10
Innovation 1
Environment 12
THEROICOFSERVICESINOECDECONOMIES 13
Trends I^
Outsourcing 15
Electroniccommerce 17
EMPT.OYMENTANDSERVICES 19
Characteristics 19
Theimportanceofhumancapital 20
Productivity 22
INTERNATIONALTRADEANDINVESTMENTINSERVICES 24
Tradetrends 24
Foreigndirectinvestment 25
Issues 26
Barrierstotrade 27
GATS 27
POLICYISSUES :in
Liberalisation SI
Regulatoryreform 32
Governmentprogrammes 34
Frameworkconditions 36
Smallandmedium-sizedenterprises 36
Upskilling 36
Governmentservices '^6
Servicesdata 37
CONCLUSION 37
Annex ?>9
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THECHARACTERISTICSOFSERVICEINDUSTRIES
Services are a diverse group ofeconomic activities that include high-
technology,knowledge-intensivesub-sectors,aswellaslabour-intensive,low-
skillareas.Inmanyaspects,servicesectorsexhibitmarkeddifferencesfrom
manufacturing—althoughthesedistinctionsmaybeblurring.
Thenatureofservices
Simplydefined,servicesareadiversegroupofeconomicactivitiesnot
directlyassociatedwiththemanufactureofgoods,miningoragriculture(see
AnnexTableA1foranillustrativelist).Theytypicallyinvolvetheprovisionof
human value added in the form of labour, advice, managerial skill,
entertainment,training,intermediationandthelike. Theydifferfromother
typesofeconomicactivitiesinanumberofways.Many,forexample,cannotbe
inventoriedandmustbeconsumedatthepointofproduction. Thiswould
includetripstothedoctor,enjoyingamealatarestaurant,flyingfromTokyoto
Paris,orattendingaconcert.Thisisinmarkedcontrastwithmanufactured
products,whosetangiblecharacterallowsthemtobestored,distributedwidely
andconsumedwithoutdirectinteractionwiththeentitythatproducedthegood.
Technologicaladvancesare,however,narrowingthedifferencesbetween
servicesandothereconomicactivities.Whileithasnotreachedthepointwhere
someonecanenjoytheambienceofagoodrestaurantwithoutphysicallygoing
toone,informationandcommunicationtechnology(ICT)nowenablespeople
toparticipateinagrowing numberofservice-relatedactivitiesinreal, or
deferred,time,withouthavingtobephysicallypresent.Copiesofmoviesand
most other performances can be recorded and mass-produced for future
consumption,likemanufacturedproducts.Softwareisdevelopedandboxedlike
anyothermanufacturedproduct,andisconsidered,forallintentsandpurposes,
agood-albeitwithahighservice-relatedcontent.Intheseinstancesservices
have,inasense,takenonthecharacteristicsofcommodities-oneprovideris
mass-producingacommonproductformanypeople.Serviceprovidersarethus
increasinglyabletobenefitfromeconomiesofscale(Box1).Thebenefitshave
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not,however,beenrestrictedtolargeenterprisesassmallfirmscanachieve
similargainsthroughincreasednetworking.
Therelationshipbetweenserviceprovidersandconsumersisalsochanging
inotherwaysthatmayhavesignificantimplicationsforeconomies.Technology
nowallowsproviderstoproduceasingleproduct,whichisnotmass-produced,
butwhichiscapableofbeingmass-consumed,eitheronastandardisedor
customisedbasis.SuchisthecasewithonlineInternetaccesstodictionaries,
encyclopaedias,newspapers,museumcollections,etc.Itwillalsoapparentlybe
thecasewithkey,basicoperatingsoftwareinthenearfuture,asbothMicrosoft
and Sun Microsystems have announced their intention to supplement
distributionof“boxed”softwarewithonlineversions(Taylor,1999).
Box1.Technologicaladvancesaretransformingservices
Inthe1920s,FordMotorCompanybuilttheRiverRougeassemblyplantinMichigan.
Coalandironorewerebroughtinoneendandfinishedautomobilescameouttheother.
Today,thiswouldseemaberrant,somesortofbizarrethemepark,butinfact,atthat
pointintime,thetechnologyofscalemadeitanentirelyrationalwayofworking.Thereis
agreatsimilaritybetweenbankstodayandtheautomobileindustrythatbuiltthatplant
nearly80yearsago.Andthatis,today’sbanks,likeHenryFordinthe1920s,are
learningthetechniquesofmassproductionforthefirsttime.
Therewasatimewhenabankwouldlendtoabusinessorprovideamortgage,would
taratkeonthteheaswsaeltlaonrdupnudteritoglnasthsei-rtbooobkesamdumcirhedtheanwdayvaalumedusfeorumitswsoeucludriptylaacnedacpoinescteanotf
return.Timeshavechanged.Banksnowtakethoseassets,structurethemintopools,
aInndefsfeelclt,sectuhreiytieussebatsheedironbatlhaonsceepsoholesettsoinnosttitaustioanalmiunsveesutmosr,sabnudtpoarstfoplairokimnagnalgoetrss-.
temporaryholdingspacestobundleupassetsandsellthemtothoseinvestorswhohave
afargreaterinterestinholdingthoseassetsforthelongterm.Thebankhasthusgone
frombeingamuseumwhereitacquiredonlythefinestassetsandheldandexhibited
theminperpetuityintoamanufacturingplantwhichprovidesaproductforthesecondary
market.JustasHenryForddid80yearsago,bankstodayarefocusingonproducinga
standardisedproductatapredictablerate,understandardnormsofquality,andare
teachingtheirworkforcestoproducethatproductasquicklyandasefficientlyas
possible.
Technologyhasbeenkeytothisprocess.Thereasonthatweseeaserviceseconomy
today,andgathertotalkaboutitandrecogniseitsimportanceisbecausetechnology
hasallowedserviceindustriestogaintheoperationalleveragethatmanufacturing
achieved 100years ago. In addition to banks, health systems, telephone and
telecommunicationsnetworks,anddistributionandretailingfirmsarefurtherexamplesof
sectorsthathavebeenabletobenefitfromeconomiesofscale.Asaresult,wearenow
livinginaworldwhereglobal-scaleservicecompaniesexistforthefirsttime,whereas
wehaveseenglobalmanufacturingcompaniesfor50yearsormore.
Source.'AdaptedfromEhrlich,1999.
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Technology is also affecting the relationship between providers and
consumersinareaspreviouslyunthinkahle,suchashealthcare,wheretheneed
forpersonalcontacttodiagnoseandtreatailmentsisbecominglessessential.
“Internet” banking, real estate, retail and financial services provide other
exampleswherepersonal,oronsite,contactwithserviceprovidersisnolonger
essentialfortheservicestobeperformed;inmanyinstancessuchservicescan,
infact,beprovidedfarmoreefficientlyviatheInternetorthroughotherremote
communicationmodes.
Relationshiptomanufacturing
Therelativeimportanceofmanufacturingandservicestoeconomies,and
theinter-relationshipbetweenthetwohavebeenthesubjectofmuchdiscussion
throughtheyears.Somehavearguedthatthedeclineinmanufacturingandthe
correspondingshifttoservicesisunsupportableinthelongmn,sinceservices
dependcritically on manufacturing fortheirexistence. In the absence of
manufacturing,servicesectorsareseenascollapsing.Ontheotherhand,a
forcefulcasewasmadeattheForumthatserviceshavebecomeamajordriving
force in economic growth. Ratherthan services following andsupporting
manufacturing,manufacturingisseenasflowingtothosecountriesandareas
wheretheservicesinfrastmctureisefficientandwelldeveloped.
The discussion on this point ultimately underscored the close and
symbioticrelationshipbetweenservicesandmanufacturing,andtheblurring,
sometimes arbitrary, distinction between the two. Without demand for
transportation,forexample,theneedfortrucks,buses,shipsandairplanes
wouldcollapse.Similarly,withoutdemandforinformationandentertainment,
therewouldbenoneedforprintingpresses,televisionsandradios.Theinter-
relationship between computers and software provides anexample ofthe
dynamicinterplaybetweenmanufacturingandserviceactivities,assoftware
developmentsarepushingdevelopmentofmorepowerfulcomputers,andvice
versa.Atthesametime,computersandsoftwarearetotallydependentoneach
otherinthesensethatneitherwouldhavecommercialvaluewithouttheother
(i.e.acomputerwithoutsoftwarewouldbeasworthlessassoftwarewithoutan
operatingplatform).
TheshiftofOECDcountriestowardsservicesmay,however,beoverstated
inlightofthestructuralchangesthatareoccurringineconomies.Increased
outsourcing ofkey services by manufacturers, forexample, is tending to
magnifytheapparentshifttoservices,totheextentthatsuchoutsourcing
simplyrepresentsachangeinaccounting.InthecaseofFrance,ifonelooksat
thecontributionthatmanufacturingandindustry-relatedservicesaretogether
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makingtotheeconomy,notmuchchangehas,infact,occurredbetweenthe
1980s(whentheyaccountedfor27%ofvalueaddedtoGDP)andthe1990s
(29%)(Seyvet,1999).
Inadditiontointeractingwithoneanother,servicesareincreasinglybeing
embodiedinmanufacturedproducts.Thisisreflectedintheinnovativeeffort
andexpertisethatiscapturedinthefinalvalueofproducts,aswellasdesign,
technicalassistanceandother“intangible”aspects.Insomecases,therising
demandforproductswithahigherservice-orientedcontentishavinganimpact
onthewaysthatcompaniesperceivethemselves.Oneoftheworld’slargest
steelproducers,forexample,currentlyconsidersitsservice-relatedactivitiesto
driveitsbusiness,withthemanufacturingaspectsplayinganimportantbutless
dominating role (Seyvet, 1999). Moreover, following in the footsteps of
France’sMinitel,sometelecommunicationsandInternetserviceprovidersare
nowprovidingtelecommunicationsandcomputerequipmenttosubscribersat
lowornocost,reflectingthegrowingintrinsicvalueoftheservicerendered.
Competitiveconditions
Theservicesectorcomprisessomeoftheworld’slargestcorporations
(AnnexTableA2), aswell as alargenumberofsmallandmedium-sized
enterpriseswhich,inmanycases,consistofasoleperson.Whileanumberof
sectorsarestillheavilyregulated,othersarerelativelyopen,withlowbarriersto
entryandkeencompetition.
Theconvergenceofservicesandmanufacturinginmanyareasis,however,
makingitincreasinglydifficulttoclassifyfirmsuniquelyundereithercategory,
particularlyasmanufacturersexpandtheirbusinessesintoservice-relatedareas.
Thefirms GeneralElectric (US) andIBM, forexample, whicharemajor
manufacturersofgoods,currentlygeneratemorethanhalftheirrevenuesfrom
services,reflectingatransitionthatcanbefound,tovaryingdegrees,throughout
industry(GeneralElectric,1998;IBM,1998).
Theprovisionofservices, andtheircost stmctures, differfromother
sectorsinanumberofkeyways.Inmanufacturing,substantialcosts-inthe
formofrawmaterials,labourandcapitalequipment-aretypicallyincurredin
mass-producingitemsformarket.Inthecaseofknowledge-basedservices,such
costscanbenegligible.Inthecaseofelectronicallydistributeditems(suchas
softwareandInternet-basednewssources),forexample,virtuallyallcostsare
incurredinproductdevelopment,thepreparationofasingle“master”product,
marketingandtechnicalsupport.Thishasimportantcompetitiveimplications.
Already,forexample,sophisticatedInternetbrowsersoftwareisbeingmade
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