Understanding Service Sector Innovation
UNDERSTANDING SERVICE SECTOR INNOVATION BY Jerry• Sheehan UNDERSTANDING SERVICE SECTOR INNOVATION The future of the service economy depends on worldwide appreciation, dedication, and encouragement of innovation as a key component. ervices play a key role in developed economies. Industries that deliver help, utility, experience, information, or other intellectual content have expanded rapidly in recent decades and now account for more than 70% of total value added in the Organisation for Economic Co- operation and Development (OECD) countries.1 Market-based ser- vices (that is, excluding those typically provided by the public sector, such as education, health care, and government) account for 50% of the total and have become the main driver of productivity and eco- nomic growth in OECD countries, especially as use of IT services has grown (see Figure 1).2 Services have also emerged as the main source of job cre- ation in OECD countries, often compensating for job losses in manufacturing. Business services, such as computing, information services, and R&D services, generated more than half of all employment growth in many countries in recent years. Moreover, they help improve the competitive performance of firms in vir- tually all sectors of modern economies. 1The OECD has 30 member countries: Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea, Luxembourg, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic, Spain, Sweden, Switzerland, Turkey, U.K., and U.S. (See www.oecd.org.) 2Business services include the renting of machinery and equipment, computer and related activities, R+D, and other business services.
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