WP2: Productivity and its drivers in service industries


• To consider the extent to which low levels and growth in productivity in the EU relative to the US in market services is driven by lack of investment in intangible assets.
• To examine the changing industrial structure of the EU through an investigation of linkages between manufacturing and services.
• To analyse impacts on performance of the environment in which service industries operate, including the degrees of competition and regulation.


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WP leader: Mary O'Mahony (This email address is being protected from spambots. You need JavaScript enabled to view it. )


Full details of the workpackage can be found in the description of work, and outputs can be found below.  For further outputs of the project, please see other workackage descriptions, or browse through our Discussion papers, Review papers and Policy briefs.


This workpackage consists of five tasks:

Task 1: Growth accounting and macroeconomic modelling

This task will use growth accounting and macroeconomic modelling to examine the sensitivity of results to measurement error from imprecise output measurement and from non-competitive factor remuneration. In addition it will consider the effect of ICT on productivity at the sector level.

Task 2: Intangible investments

This will examine the impacts of intangible investments on growth. This will investigate the extent of investment in intangible assets such as R&D, firm specific training and brand maintenance in the Eu relative to the US. It will analyse whether there exist spillovers from ICT investments and intangibles and will investigate interactions between ICT and intangible investments.

Task 3: Linkages between services and manufacturing

This will analyse intersectoral linkages via trade in intermediates across industries with a view to identifying possible unexploited potentials of the interrelationship between manufacturing and services for European growth and implications for employment. It will undertake analysis separately for purchases of knowledge intensive business services (KIBS) which includes software, R&D activities and business services and investigate the relationship between the ICT intensity and the share of purchased services.

Task 4: Competition and regulation: general analysis

This task will start by characterising the competitive and regulatory environment using existing and new measures. It will then map the channels, systematically analysing the impact of regulation on service sector performance. This will focus on testing whether the measures of regulation detect significant effects on investment, human capital accumulation, innovation, market structure, entry and exit, MFP growth and employment.

Task 5: Competition and regulation: Sector-specific analyses

This task proposes to examine the effects of regulation and the effectiveness of competition in a selected key sector, professional services. In addition this task will include a case study of the impacts of regulation on financial services provided by international banks in east European member states and Turkey.

end faq

Outputs of Workpackage 2

DP1: Workforce Training, Intangible Investments and Productivity in Europe: Evidence from EU KLEMS and the EU LFS

Mary O'Mahony and Fei Peng, University of BIrmingham


DP7:The Increasing Service Intensity of European Manufacturing

Martin Falk and Fei Peng


DP8:Export performance and increased services content in EU manufacturing

Yvonne Wolfmayr


DP9: The impact of service regulation on economic performance in Europe: An industry analysis

Ana Rincón-Aznar and Catherine Robinson

Additional information