The Service Sector of a Knowledge-based Economy – a Comparative Study

Abstract

The study objective was identification of the service industries that determine the rate and lines of development of a knowledge-based economy. The analysis covered the EU member countries and the years of 2008-2012. This report consists of four sections. The first one provides the characteristics of a knowledgebased economy and describes the role of services sector in progressing towards this stage of development. The second section offers a classification of services that led to establishing the category of knowledge-based services. The industries classified as knowledge-based services contribute directly to the creation, processing and distribution of knowledge throughout an economy. The following part presents a division of the EU member economies into four groups, depending on their advancement towards the knowledge-based economy as defined by two indices: the Knowledge Economy Index (KEI) and the Knowledge Index (KI). The study concluded on empirical verification of the significance of knowledge-based services within individual European economies. In a knowledge-based economy, where knowledge is the key factor in gaining a competitive advantage, it is just the services related to knowledge acquisition, distribution and creation that drive the economic growth. The development level of service activities classified as knowledge-based services largely determines the economy’s performance in knowledge creation, distribution and use. This is so because these activities directly contribute to the economy’s competitive advantage based on knowledge.