Services Sector in Lithuania: Labour Productivity as a Factor of Growth

Jolanta Žemgulienė

doi:10.15388/ekon.2008.17650

Abstract

This paper examines the tendencies of Lithuanian services sector’s value added and labour productivity during 1995-2006. Comparative analysis of the average annual labour productivity growth in manufacturing and service industries reveals arguments supporting the W. Baumol’s consideration that there can be sporadic productivity increases in nonprogressive sectors. During 1995-2000, labour productivity growth in services exceeded productivity growth in manufacturing. The paper offers an interpretation of the Verdoom law for empirical regularities of the relationship between the cross-sectorial labour productivity growth rate and the value added growth rate.

Highlights

Economic growth and de-industrialisation are important topics discussed in economic literature
Our data show that the increase in labour productivity growth in services was confined to one industry - financial intermediation, real estate, renting
Data of the national statistics show a significant growth in value added in the services sector and manufacturing: the annual growth rate of gross value added during the period 1995-2006 was 11%, the growth of value added in service industries being even more rapid (12.1 %) than in manufacturing (10.9%)

Summary

Introduction

Economic growth and de-industrialisation are important topics discussed in economic literature. Economic statistics provides an empirical evidence of the changing structure of economics in many countries. It is characterised by a gradual process of decline in the share of agriculture and manufacturing and a rise in the share of services. M. Spithoven, "services are crucial for the functioning of a society and an economy. "services are crucial for the functioning of a society and an economy They have not been given the attention they deserve and remain poorly understood by the economics profession. Services are taken to be technologically sluggish or stagnant, and this is regarded as an explanation for their rising share in overall employment" (Spithoven,2000)

Objectives

Methods

Findings

Conclusion