1. Introduction

The slowdown, since early 2000s but mostly pronounced after the end of the decade, of global productivity growth coupled with population aging has led to the slowdown in overall economic growth. It is therefore considered, that overall economic growth potential for the coming decades will be subdued. The challenge how to sustain economic growth is therefore generating a broad-based interest and calls for an analysis of the factors and policies which could help accelerate productivity growth and increase economic growth potential in the future (OECD, 2015).

However, economic growth in itself is not sufficient to drive economic (and social) wellbeing of individuals. It needs to build upon an increase in labour force productivity (rather than increasing the labour force as such) with equitable distribution of workers income (OECD, 2016a). Furthermore, the distribution of national income (the fruits of economic growth) between returns to capital and labour is also important (ILO-OECD, 2015).

Above mentioned economic developments as a consequence generated renewed interest within the developed economies in the capacity of industrial policy to address these challenges. This resulted in the launch of numerous new policy initiatives and increased public investment to drive industrial transformation (Garcia C. A., & Coulter, S., 2017; Deloitte, 2017, Warwick, K., 2013, IAB 2014, IEG, 2016, European Commission, 2017).

Similar tendencies have also been evident in the economy of Singapore, with negative multi-factor productivity growth since 2012, sluggish overall economic growth and limitations imposed on the import of labour. What is even more notable in Singapore is the broad based public expectation and the reliance of the political promise on the sustained economic growth as the driving force behind improvement in living standard and income growth of individual citizens of Singapore.

Potentially in this same context, the government of Singapore in 2016 initiated the Industry Transformation Programme (ITP) to facilitate innovation, trade as well as creation of more productive and higher quality jobs and ensuring that sufficient amount of qualified local labour force will be readily available to occupy those jobs. It is notable that the initiative in Singapore is very broad aiming to cover both “secondary” and “tertiary” economic sectors – respectively the manufacturing and the services sectors, including some non-market sectors as well as different policy domains –skills, innovation, trade, productivity and governance.

From the outset it is expected that the success of industry transformation programme will depend more (or be more challenging to achieve) as regards the transformation of services sector. While manufacturing sector was the sector driving global productivity growth, services seemed to be much less influenced by adoption of technology. Structural shifts of global economy from manufacturing to services in terms of labour or value added (i.e. “tertiarisation”) also played a role (Memedovic, O., and Iapadre, L., 2010; Kim, H. J., 2006).

These structural shifts however also come together with increased complexity of the manufacturing sector and its links to services sector. These are evidenced by the segmentation of the supply and production processes – the rise of global value chains and, at the same time, the increasing amount of services in manufacturing process, otherwise also known as “servicification of manufacturing” (Lanz, R., & Maurer, A., 2015).

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