The Strategic Role of Producer Services in Regional Development

Abstract

In recent years, employment in services, especially in producer services, has expanded rapidly in the United States. Meanwhile, employment in manufacturing has remained relatively constant, although the proportion of production workers in manufacturing has declined. A common belief is that these phenomena have adversely affected productivity because most productivity gains are made in the direct production of goods. This view fails to take into account the complex nature of production organization in an economy increasingly based on flexible production, knowledge, information, and communications. Producer services, through their sophisticated interactions with goods production and other service activities, have been playing a strategic role in increasing productivity. Moreover, producer services are frequently exported and can provide a catalyst for regional development. There needs to be greater recognition of, and more research on, the nature and significance of productivity-enhancing interactions among producer services, goods production, and the quality of the labor force.