Technology in Services Policies for Growth, Trade, and Employment (1988) / Chapter Skim
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Technology in Services: Past Myths and Future Challenges
Technology in Services: Past Myths and Future Challenges
Pages 16-46
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From page 16... ...
Yet most government statistics show that total employment in manufacturing has decreased only marginally from long-term levels, and both real gross national product (GNP) and real net value added attributable to manufacturing grew steadily until the mid-1980s as shown in Figures 13.
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From page 17... ...
SOURCE: Bureau of Economic Analysis The National Income and Product Accounts of the United States, Bureau of Labor Statistics, Establishment Data Base: Employees on Nonagricultural Payrolls by Major Industry. 1 800 1 600 En 1 400 1200 ~ 1 000 CO 800 ° 600 m 400 200 o ~ Services _ _ _ ~ Manufacturing _ _ Agric., Min., Constr.
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From page 18... ...
Such simplifications belie the complexity, technological sophistication, and continuing growth potentials of services in the 1980s and l990s. While there is not a complete consensus on definitions, most authorities consider the services sector to include all economic activities whose output (1)
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From page 19... ...
30 20.6 81.4 [75%] NOTE: The services sector includes some giant industries, larger than the great manufacturing industries such as automobiles or steel.
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From page 20... ...
It should be no surprise then to find that, nationally, the total value added in services industries is higher than that in manufacturing (see Figure 31. Although total value added per employee in services is lower nationally than that in manufacturing, in the strategic business units of the larger companies sampled by Profit Impact of Market Strategy (PIMS)
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From page 21... ...
21 The "low capital intensity" perception asserts that services industries are less capital intensive and much less technologically based than manufacturing. While this may be so for small scale retailing and domestic services, many services sectors today are very capital and technologically intensive.
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From page 22... ...
·:-:-:-:-:-: ·:-:-:-:-:-: :-:-:-::: i-:-:-:-:-:-: :::::: ::::::::: :: :-::: :::::: ·:-::::-:-:- :-:-:::-:-:- :-:-:-:-:-:Nh~] Manufacturing All Nonretail Retail Services FIGURE 6 Profit Impact Market Strategy (PIMS)
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From page 23... ...
in a recent and very thorough study of the British economy showed the services sector productivity growing at 2.9 percent annually (based on the real value of output per employee) from 1960
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From page 24... ...
24 so i, i_ Cal .
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From page 25... ...
SOURCE: Bureau of Labor Statistics (October 1, 1987)
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From page 26... ...
Growth in services sector employment has more than offset declines in the goods-producing sector (gee Figure 11. Simultaneously, new technologies also vastly improved performance in virtually all services sectors.
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From page 27... ...
One more complete example will dramatize some of the ways services technologies—and these three modes of impact can interact to restructure competitive relations within and among modern nations: In the mid-1960s and early 1970s securities trading houses found that they were being overwhelmed by the need to physically handle the 10-12 million shares then being transferred daily. The major Wall Street firms formed what became the Depository Trust Company to immobilize virtually all traded certificates under one roof and to automate what had been the back office handling of such certificates.
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From page 28... ...
Despite the political attention given to manufacturing and the very real problems of certain industries, every state now has more services jobs than it has manufactunng, mining, construction, and agriculture jobs combined. No state suffered a decline in services jobs from 1976 to 1986.
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From page 29... ...
SOURCE: Bureau of Labor Statistics, Establishment Data Base: Average Hours and Earnings of Production or Nonsupervisory Workers on Private Nonagricultural Payrolls by Major Industry (November 1983; November 1987)
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From page 30... ...
whether in the future technology can improve productivity and value added in services more rapidly than in manufacturing, thus permitting higher future relative wages, and (2) whether wages in new services jobs will be higher than the wages employees in distressed manufacturing industries would have to accept to keep their companies from going overseas to achieve competitive costs.
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From page 31... ...
Added services employment kept average total nonfarm employment losses in recessions to only 1.6 percent during this period. In Canada a similar effect occurred, with services employment declining only in the 19531954 and 1981-1982 recessions (Chard, 1986~.
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From page 32... ...
Although the relative rate of investment in services during recessions, as compared with expansion periods, is an interesting question for further research, current data suggest that policymakers and executives seeking economic stability and new manufacturing markets should actively supportnot disparage—the growth of services industries. The Manufacturing-Services Interface Many have noted that the services sector is very dependent on manufacturing, i.e., services units often provide transportation, finance, advertising, repair, distribution, or communications support for manufactured goods.
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From page 33... ...
Although statistics on output per hour are hard to evaluate and some changes have undoubtedly occurred, 1980 data indicate that except in the area of finance and insurance, the United States was significantly more efficient than Japan in major services sectors (see Figure 81. In fact, Japan has usually suffered a large negative trade balance in services (Tanaka, 1984~.
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From page 34... ...
Yet, most companies have diligently driven out direct labor costs while only cautiously attacking the greater costs and value added potentials of services. Managing services activities for manufacturing enterprises and designing better measurement and control systems for them can provide a major attack point for improving competitiveness in the future.
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From page 35... ...
Perhaps the most important structural change in international competition stems from the continuing integration of the world's financial centers into a single world financial marketplace. World financial flows have already become largely disconnected from trade flows.3 Although world trade in goods and services aggregates only $3-4 trillion annually, financial transactions by CHIPS (Clearing House of International Payments)
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From page 36... ...
If properly exploited by U.S. companies and not by foreign services companies in the United States deregulation can offer significant competitive advantages.
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From page 37... ...
In many areas, deregulation and other accompanying innovations have already created a more decentralized, competitive, flexible, and lower cost services system for the United States, although sometimes at the cost of extensive consumer inconvenience. Although they are not well reflected in current economic measurements, the effects of these and other institutional consolidations that services technologies allow on competitive industry structures can be profound.
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From page 38... ...
With no element in its value chain (from raw materials to postsale services) immune to structural changes due to services technologies, each producer must constantly reassess who its true suppliers, competitors, and customers are and how each could enhance or subvert its competitive posture.
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From page 39... ...
Thus, in contrast to manufacturing exports, services trade data frequently recognize only the fees or profit margins that services companies can repatriate a small fraction of their total transactions' value. In part because of such measurement biases, the volume of services transactions would have to expand enormously to eliminate current balance of payments deficits due to merchandise trade.
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From page 41... ...
Direct Investment Abroad: Detail for Position and Balance of Payment Flows; Foreign Direct Investment in the United States: Detail for Position and Balance of Payment Flows. the largest single services exporter, the European Economic Community (EEC)
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From page 42... ...
SOURCE: Bureau of Economic Analysis, U.S. Direct Investment Abroad: Detail for Position and Balance of Payment Flows; Foreign Direct Investment in the United States: Detail for Position and Balance of Payment Flows.
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From page 43... ...
Finally, the government will probably see that specialized manufacturing capabilities exist for key strategic purposes. Services technologies are crucial to both the future health of manufacturing and the growth and productivity of the entire economy.
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From page 44... ...
Bureau of Economic Analysis, International Investment Division, Balance of Payments Division. Foreign Direct Investment in the United States: Detail for Position and Balance of Payment Flows.
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From page 45... ...
Bureau of Labor Statistics. Establishment Data Base: Average Hours and Earnings of Production or Nonsupervisory Workers on Private Nonagricultural Payrolls by Major Industry.
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From page 46... ...
Monthly Labor Review (September)
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