Demand and technology determinants of structural change and tertiarisation

The paper provides fresh empirical evidence on the relative contribution of final and intermediate demand to changes in the sectoral structure of advanced economies. These latter have led, over the last three decades, to the massive growth of service sectors, most especially the business services. The paper draws upon the recently released OECD InputOutput (IO) tables. The empirical analysis is based on an IO Structural Decomposition Analysis (SDA) carried out on 13 manufacturing and service sectors, from the end of 1960s to the end of 1990s. Although heterogeneous sectoral patterns emerge, we find that the largest contribution to the the structural changes leading to the growth of services stems from (domestic) final demand, whereas the role of foreign trade remains marginal even in the last decade. Changes in the sectoral intermediate linkages have instead been the main responsible for the growth of KIBS (Knowledge Intensive Business Services), along with a sustained contribution of final consumption. We suggest that the role of (domestic) demand constraints might affect the degree of exploitation of technological opportunities and the patterns of growth, even in the case of the most technologically advanced service sectors, and we indicate future steps of research. -- Structural change ; Growth of Services ; InputOutput Structural Decomposition Analysis