Discernible Increase among Firms in Global Innovator Services

FIGURE 3.11 The Intensity of Investments in Software and Data Experienced the Most Discernible Increase among Firms in Global Innovator Services

Expenditure on computer software and databases per worker in OECD countries, by sector, 2008–17

thousands) , erage expenditure per worker ( € Av 25

20

15

10

5

0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Global innovator services Manufacturing Skill-intensive social services Low-skill tradable services Low-skill domestic services

Source: OECD STructural ANalysis (STAN) Database. Note: Dataset covers 23 Organisation for Economic Co-operation and Development countries, including Canada, the Republic of Korea, and European countries. “Other services” refers to other social, community, and personal services. OECD = Organisation for Economic Co-operation and Development.

changes in product design or packaging, product placement, product promotion, or pricing (OECD and Eurostat 2005).

Among OECD economies in 2018, for example, the share of firms that introduced new methods for product placement or new methods of organizing external relations were higher among most services subsectors than in manufacturing and not very different from each other (figure 3.12). This reinforces evidence from the United States that organizational capital dominates intangible assets in low-skill services such as wholesale and retail trade (Demmou, Stefanescu and Arquié 2019).

Implications for Productivity Growth and Job Creation

The three technology-driven trends described above—less dependence on physical proximity, increased automation, and rising investments in intangible capital—all have the potential to raise productivity in the services sector in several ways. First, increased possibilities to deliver services remotely (including internationally), enabled by the diffusion of new digital platforms, bring the productivity benefits associated with scale economies.

Second, automating business processes through the wider application of ICT, ML algorithms, and other AI-driven technologies can drive innovation in services even when the inherent role of labor remains important; some tasks may be automated, but not the whole service. However, much like in export-led manufacturing, automation in high-income countries can also negatively affect productivity growth in LMICs to the