The Handbook of Innovation and Services
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The Handbook of Innovation and Services

A Multi-disciplinary Perspective

Edited by Faïz Gallouj and Faridah Djellal

This Handbook brings together 49 international specialists to address an issue of increasing importance for the world’s post-industrial economies; innovation as it relates to services.
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Chapter 17: Innovation and Services: On Biases and Beyond

Pascal Petit


Pascal Petit 17.1 Introduction: services – a potential of development that needs to be redefined In all developed economies the service sector is the only one where employment has kept on growing in the 1980s, 1990s and 2000s, turning them into fully fledged tertiary economies. The decrease in the shares of manufacturing and agriculture in total employment in these economies has been accompanied by relatively high productivity gains in these two sectors. By contrast productivity in services has appeared rather stagnant, displaying on average low gains. This broad sector which by now represents over two-thirds of employment was thus mainly identified as not innovative, neither in terms of process nor in terms of product. It led to a tertiary economy being featured as one of unbalanced growth between a broadening stagnant sector and a shrinking dynamic one. This model was well coined by Baumol (1967), some 30 years ago. In effect in a two-sector closed economy, where the demands of the two products remain in a constant ratio, employment is bound to concentrate more and more in the sector with the lower productivity gains and overall economic growth is also going to be determined by this slowly growing sector: a really inhibiting cost disease (see also Chapter 4 in this volume). Still, this should not imply that tertiary economies are condemned to stagnation. This representation relies much on how one assesses services in real terms, e.g. in volumes. This measurement is based on conventions which will be reviewed later on in...

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