The two-way integration between manufacturing and services

Abstract

In recent decades, developed economies have shown increasing employment in the services sector. This trend was accompanied by a contraction in the manufacturing sector. The traditional sectoral boundaries are becoming more blurred, causing some difficulties in the determination of the role of each industry in the economic system. This paper explores this topic by adopting a methodological approach that is different from the traditional analysis in the six main member countries in the Organization for Economic Cooperation and Development. In particular, following Pasinetti’s input–output subsystem approach, the paper describes interindustrial linkages from a vertical perspective. The analysis allows us to capture a growing gap across those countries in the dynamics of both manufacturing and services. These differences do not seem to emerge using the traditional approach.