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The New Service Economy

The New Service Economy. Development of the U.S. Service Sector. Decomposition of Services. Producer Services. Why the rapid growth? (1) Growth in intermediate demands (2) Growth in final demands (3) Slow productivity improvement (?historic?) (4) Trade in Services & Import Substitution

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The New Service Economy

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  1. The New Service Economy

  2. Development of the U.S. Service Sector

  3. Decomposition of Services

  4. Producer Services Why the rapid growth? (1) Growth in intermediate demands (2) Growth in final demands (3) Slow productivity improvement (?historic?) (4) Trade in Services & Import Substitution An An overview of some key trends, largely drawn from Beyers research.

  5. The Growing Investment In IT Source: Digital Economy 2003

  6. The Increase in Productivity Growth Source: Digital Economy 2003

  7. Labor Productivity and IT Intensity All Less IT Intensive GDP/FTE Growth Error in Legend! Source: Digital Economy 2003

  8. Labor Productivity Growth Source: Digital Economy 2003

  9. Many Sectors Had Productivity Growth During The Recent Recession Source: Digital Economy 2003

  10. Beyers Producer Services Research • Funded by NSF and ERS • Telephone Interviews with 665 producer service establishments • Located in Urban and Rural Areas • Typical Interview lasted about 45 minutes • Selected findings

  11. Reasons for Producer Service Locations

  12. Startups are driven by a vision of business opportunities

  13. Niche Examples

  14. Most Companies are dynamic in changing their services, driven by changes in IT and a variety of related factors

  15. How Establishments Organize to Do New Work

  16. A - no change B - all change C - only geog. changes Ansoff’s Box B C New Market geography New A Present Present Product/service technologies Present New Market type 9 Strategies beyond A, B, and C

  17. Evidence of Performance: Ansoff’s Box & Producer Services A C 13 NO B Source: Beyers & Lindahl, E&P 1996

  18. Demand & Competitive Advantage Demand: It is predominantly related to the lack of expertise by clients, by their infrequent need for the service, the need for 3rd party info, and a host of other non-cost related reasons. Competitive Advantage: Created by firms pursuing the flip-side of demand forces: Differentiation, specialization, niching, collaboration, use of specialized subcontractors, etc. Not Cost.

  19. Producer Services have considerable Nonlocal Markets, but….

  20. Producer Service Businesses have Bifurcated Markets: They Tend to be Local or Export Lone Eagles & High Fliers Local Firms These data are indicative of market orientation of New Economy firms

  21. The Traded-Dimension of Producer Service Businesses is Expanding Over Time Localized firms mirror the trend for Lone Eagles/High Fliers

  22. Possible Development Sequence

  23. Face to Face Communication Is Key and is Not Diminishing in Its Importance

  24. Recognition of Producer Services as a Part of the Economic Base Historic metro concentration Recent rural deconcentration Role in “Edge Cities” The “New Economy.” --Producer Services as a progenitor to the New Economy: now multimedia, online retail, .com, .org, .edu; telemedicine, teleservices, tele?; content providers; media conduits; delivery agents, etc.

  25. Implications for Settlements for the New Economy ? Will this fuel decentralization of work? ? Or, will the power of agglomerations ?continue? To win out? ? What will happen to Edge Cities? Central Cities? What difference does it make where we focus on….Friday Harbor, Roslyn, Enterprise, Driggs, Missoula, Bellevue, Bend, Beaverton, Darrington, Sun City, Corvallis New Points?

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