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9. Demand, innovation and growth in services: evidence from the Italian case Maria Savona INTRODUCTION1 The economics of services has never found a proper systematization within the body of economic analysis, despite service activities representing nowadays a major component of advanced economies, accounting for between 50 and 75 per cent of jobs in most OECD countries (OECD, 2000). The various theories of economic growth have rarely explicitly embodied service industries in their domain of analysis. A stylized reading of the literature suggests that service growth has been approached either in terms of service supply, that is the specificity of service production processes and its impact on productivity growth, or in terms of (final) demand shifts, as the main determinant of services growth. These dimensions cut across the usual dichotomy between mainstream and nonconventional theories of economic growth. Moreover, among the non-marginalist streams of analysis which have tried to incorporate the role and impact of technological change on economic growth (Nelson and Winter, 1982), the absence of an explicit and consistent extension to the domain of service industries is even more severe. As argued in the next section, a polarization in terms of methodological approaches also occurs in the most recent contributions which look at the economic impact of technological change on services. A conceptual framework encompassing the link between the demand side, technological change and growth in services is still missing.2 This work draws therefore on two main considerations. On the one side, the role of demand is generally taken...