Input-Output Tables and the Interconnectedness of the Service Industries

The chapter seeks to show the importance of the IO framework for fully appreciating the contribution of service industries to economic growth. It reviews the recent literature on structural change and terziarization (the shift of resources away from manufacturing and agriculture and toward the service industries) and highlights the importance of supply (inter-industry differential in productivity growth) and demand causes for the growth of services. It will be depicts the basic productivity analysis and investigates the importance of changes in the inter-industry linkages and outsourcing for the growth of the service industries. This section also reviews how productivity growth across industries can be linked by means of IO tables. Additional institutional factors may affect the speed at which resources accrue to service industries, which are still very important determinants of inter-country differences in the size of the service industries even if not easily treatable in an IO framework.