STRUCTURAL CHANGES AND GROWTH IN EUROPE: ARE KNOWLEDGE-INTENSIVE SERVICES CHANGING PARADIGM OF EXPANSION OF SERVICES AS A LONG-TERM GROWTH-DIMINISHING FACTOR?

• Authors: Bacovic Maja , Andrijasevic Zivko , Cerovic Smolovic Julija
• Languages of publication: EN

Abstracts

EN

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.

Keywords

EN

OUTPUT GROWTH; LABOUR PRODUCTIVITY; TFP; KNOWLEDGE-INTENSIVE SERVICES; EUROPE; GDP

• Publisher: Institute of Slovak and World Economics and Institute for Forecasting, Slovak Academy of Sciences
• Journal: Ekonomický časopis (Journal of Economics)
• Year: 2022
• Volume: 70
• Issue: 2
• Pages: 124 – 143

Contributors

author

Bacovic Maja

• University of Montenegro, Faculty of Economics, Jovana Tomaševica 37, 810 00 Podgorica, Montenegro

• https://orcid.org/0000-0002-8865-3924

author

Andrijasevic Zivko

• https://orcid.org/0000-0002-1598-0756

author

Cerovic Smolovic Julija

• https://orcid.org/0000-0001-9547-1750

Identifiers

DOI

https://doi.org/10.31577/ekoncas.2022.02.02