Sistemas de Alerta Temprana (SAT) utilizados a escala internacional

The first specific aim of the study is to quantify the magnitudes and patterns of interactions between manufacturing and services, focusing on service activities which are bought in from manufacturing industries, particularly in relation to performance-related business services, such as advertising, R&D, engineering, etc.

7.1.1. RELATIVE PERFORMANCE OF MANUFACTURING AND SERVICES AND PATTERNS OF SPECIALISATION

Before delving into the details of the inter-linkages between manufacturing and services, the report provides an overview of performance indicators, by first considering the evolution of manufacturing and services categories as a proportion of GDP. The share of manufacturing in total GDP declined from 20% to slightly less than 16% in the EU-27 over the period 1995–2011, compared to a decline from 15.5% to 12.3% in the United States. By contrast, the share of business services increased in the EU-27 over the same period from 14.3% to 18% (for comparison, the US experienced an increase from 18% to 23%), with the share of other services categories remaining relatively stable. Similar trends can be observed for individual EU Member States, with the manufacturing share declining in most countries, though the magnitude varies widely across countries. The share of business services has increased in most countries. However, the relative pattern of development points to the emergence of a ‘European manufacturing core’ based around Germany and including countries such as Austria, the Czech Republic, Hungary and the Slovak Republic; there is another group of countries – ‘business services leaders’ – which have succeeded in specialising in service activities (e.g. the UK, the Netherlands and Belgium); and there is a third group of countries that fall into neither of these categories. As a

consequence, as compared to the mid-1990s, the European economic landscape nowadays looks much more differentiated with respect to specialisation patterns in manufacturing and services.

A second set of performance indicators which were looked at are productivity growth and unit labour cost dynamics. There has been a rather diverse pattern of relative productivity developments across countries in both the manufacturing and the business service sectors. By contrast, the growth rates of wages across sectors are far more similar within countries. As a consequence, this gives rise to a ‘dynamic Ricardian specialisation’69 pattern: the specialisation pattern within the EU mentioned above – with some countries specialising in business services, while others keep a relatively high share of manufacturing in GDP – can to a certain extent be explained by relative differences in productivity growth in manufacturing and services and wage drift across sectors. Other factors, such as

agglomeration and scale effects, FDI patterns and the evolution of production linkages, are likely to play an additional role in both manufacturing and service activities. These patterns underpin the increasing

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A Ricardian specialisation pattern is determined by relative productivity differences across countries and sectors, with wages across sectors being equalised. Analogously, a dynamic Ricardian specialisation arises due to differential growth rates of productivities while wage growth rates are similar.

need for cross-border flows of services within Europe, particularly so for those smaller countries that have maintained a significant share in manufacturing activities.

7.1.2. MANUFACTURING–SERVICES LINKAGES

Analysing the mutual dependence of manufacturing and services has been the particular focus of this study. A first aim was to assess the magnitude of these interactions and the respective changes over time. A number of indicators have been presented which are summarised as follows.

The first indicator considered is the role and magnitude of secondary production of services in manufacturing industries, i.e. those services which are sold to the market additionally to the main product.70 For the EU-27, about 4% of manufacturing gross output is due to secondary services production, although there is a wide range – from 10% to less than 2% – across countries. Within services use, distribution and business services account for the bulk of the secondary production of manufacturing industries. Over time there has been a slight increase in these shares, which is

particularly pronounced in Sweden and Finland. On the opposite side, the share of secondary production of manufactured products in services industries is on average less than 1%, with a slight decline since 1995. Only a few countries report larger shares. These numbers do not, however, capture the role of services provided in combination with the delivered product.

The second indicator considered is the direct cost share of service inputs in manufacturing industries, with a special focus on the role of business services. Overall, in the EU-27, services accounted for about 25% of total costs in manufacturing (i.e. including value-added costs) in 2011. This share had increased only slightly since 1995. There are some differences across countries, with shares at the lower end being about 15%, which is the case for most of the East European countries. Significantly higher shares are only observed for Ireland, which experienced a rather strong increase from 1995. Only a few countries have experienced significant changes over time. Differentiating by service categories shows that distribution (with about 12%) and business services (with about 9%) are the most important service inputs on average. Across countries, larger shares of business services correlate with a larger overall share of services use in manufacturing industries in most cases, particularly in Ireland, Sweden, France and the Netherlands. The share of business services is also the most dynamic component over time in the majority of countries.

Looking into the more detailed structure of business services, the item Other business services (NACE Rev. 1 CPA 74) accounts for the bulk of business service inputs (in the EU-27, 5.6%, compared to 8.8% of the total direct cost share of business services). The new NACE/CPA classification allows one to split this heterogeneous category into a more detailed structure: about 30% of the costs of other business services (about 2% in terms of gross output) is made up by legal and accounting activities; about 13% (0.8% in terms of gross output) by architectural and engineering activities; 16% (0.9% in terms of gross output) by advertising and market research; and 4.1% (0.2% in terms of gross output) by other

professional and scientific activities. Of the remaining performance-related business services, about

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These are products which are sold in addition to the company’s main product on the market, and can include

maintenance and repair services, business advisory, pre-sales and sales services. In the input-output framework, these include subsidiary products, by-products and joint products. It should be emphasised that this indicator does not fully capture the role of ‘servitisation of manufactured products’, i.e. other services supplied with the particular manufactured products.

0.6% of gross output is for computer programming, etc. and 1.1% for scientific research and

development. This last category – scientific research and development – is compared to other countries particularly important as a cost share of inputs in manufacturing in Finland, Ireland, Sweden, France and the Netherlands. The direct cost share of manufacturing inputs in services production is generally low, on average 2%. Here one has to consider, however, that manufacturing plays an important role in delivering investment goods supporting the provision of output in the services sector. Input-output data do not identify the costs of capital formation, which means that use of manufactured goods by services is underestimated.

Related to the overall direct cost share of services in manufacturing production is the share of imported

services in the overall cost of production, which – as mentioned above – is likely to become more

important, given the diverse specialisation patterns in Europe. The cost share of imported services in manufacturing gross output is, on average, about 2%, with some countries (such as Luxembourg, the Netherlands, Finland and Sweden) having a share of more than 4%, and Hungary, Denmark, Austria, Belgium and Malta more than 3%, with smaller and Central and Eastern European countries

experiencing higher import intensities. These patterns and shares are dominated by imports of

businesses services, which account for about 50% of service imports. The largest parts of these are due to imports in the category Other business services (CPA 74). Despite a positive relationship between the overall share of (business) services used in manufacturing and the imported share in gross output, the import intensity, i.e. the share of imported business services in total buy-in of business services, is negatively correlated with the overall buy-in. This pattern is mostly driven by country size, as most of the smaller countries tend to have a lower share of business services in manufacturing output, together with relatively larger imports. Within the category of business services, the most important items imported for use in manufacturing are scientific research and development and legal and accounting activities, followed by advertising and market research according to NACE/CPA Rev. 2 classification, though there is again a wide heterogeneity across countries.

The use of other industries’ outputs as a means of production (which enters as an intermediary input and therefore a cost item in the producing industry) that is then further used as an intermediate input in the production stages in other industries implies that industries’ outputs – and in particular outputs from services – are directly and indirectly used in other industries. These direct and indirect production

linkages are captured in this study by an indicator of backward linkages (which is closely related to the

multiplier concept in input-output literature) that focuses on services, and business services in particular. Focusing on business services, larger countries tend to have larger backward linkages, which are mostly domestically oriented. In particular, France has the largest domestic backward linkages in business services. In the smaller countries (including the Eastern European countries) these domestic linkages are smaller, and foreign linkages therefore play a more important role. These linkages have generally increased over time, though at a slow pace, with domestic increases dominating in a few countries only.

Therefore, as services are used in the production processes of a manufactured product, the value of a final manufactured product embodies directly and indirectly value added, created in services to a large extent. This domestic and foreign services content of manufactured products can make up a large proportion of manufacturing output, underpinning the relevance of the services sector for manufacturing production – or, vice versa, the role of manufacturing as having a ‘carrier function’ for (business) services: services account for slightly less than 40% of the value of a final manufactured product in the EU-27 as a whole, where the bulk stems from distribution services and business services (about 15%

each). This share is larger than in the US, mostly due to differences in the share of distribution services (a potential reason for that could be that distribution and retailing depends on Member States’ specifics). Across EU countries, the share ranges from more than 40% in France and Ireland to less than 30% in Greece, Malta and Romania. The largest part of these differences is due to differences in the direct and indirect value-added content of business services, in line with the findings concerning direct cost share. Over time, this share has increased, mostly due to a change in the respective content of business services, confirming the results already found when considering direct cost share.

7.2. MANUFACTURING–SERVICES INTERACTION AND MANUFACTURING