Structural Changes and Growth in Europe: Are Knowledge-intensive Services Changing Paradigm of Expansion of Services as a Long-term Growth-diminishing Factor?
Year: 2022
Type: article
Abstract: We explored the patterns of structural changes in Europe and found growing relevance of the service sector, particularly knowledge-intensive services.The study shows that labour productivity and TFP growth were lower in the service sector than in the goods sector but were higher in knowledge-intensive services than in other services.GDP per capita growth is positively related to the output's share of knowledge-intensive services as well as GDP growth and TFP growth in high-income countries, but not in medium-income economies.This might be explained by the rapid growth in the earlier stages of development in less-developed countries and its subsequent slowdown.Although knowledge-intensive services are the fastest growing sector in all countries, industry is still the most relevant sector for long-term growth, with the highest TFP and labour productivity growth.The growing knowledge-intensive services sector, with its higher TFP growth than other services, partially overcomes the negative effects of expansion of the service sector on long-term output growth.This study shows that R&D investment growth leads to significantly higher output growth in knowledge-intensive services than in other sectors, which may be used as a relevant policy tool.
Source: Ekonomický časopis
Institution: University of Montenegro
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: diamond
OpenAlex ID: W4281708994