An Economic Analysis of a Troubled Relationship, Second Edition
Developed economies around the world have become increasingly service oriented, the European Union (EU) being no exception. Services account for more than two-thirds of employment and GDP in the EU. In most other industrial countries services now typically account for around 70 per cent of output. While the financial crisis of 2008 hit financial and business services badly, the service sector has recovered faster than manufacturing, construction and mining industries. In countries such as Brazil and China, service growth accelerated in 2013. Manufacturing GDP in most EU countries was below the pre-crisis level even in 2013, while services such as information and communication, real estate activities and market services have not suffered as much as other services due to the financial crisis (EC, 2013c). Market services have grown by 1.7 percentage points per annum on average between 2000 and 2012, raising the share of market services in GDP close to 50 per cent, and the share of non-market services has also increased, rising to 23 per cent during the same period. Services play an important intermediary role that is not fully reflected in the statistics. Well-functioning financial, transportation and distribution systems are critical for the smooth running of the economy. Over time the inter-linkages between manufacturing and services have been on the rise. The service sector share of manufacturing output rose by 2 per cent on average between 2000 and 2009.
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