Page 156 - Contributed Paper Session (CPS) - Volume 1

CPS1239 Valerie M.B. et al.

The servicification of manufacturing in Asia:
Redefining the sources of labor productivity
using time
1
Valerie Mercer-Blackman , Christine Ablaza 2
1 Asian Development Bank
2 University of Queensland
Abstract
Current measures of productivity using national accounts do not properly
assess the indirect contribution of services to other sectors. For example, the
additional value generated by services in the production of manufactured
goods can be substantial, but it is not properly accounted for because of the
indivisible and intangible nature of services. We propose a conceptual
framework of servicification, offer some preliminary evidence of this
phenomenon in Asia using an input-output framework and propose the
adoption of time-use surveys to measure productivity when the distinction
between labour and leisure disappears in the digital age.

Keywords
Servicification; Premature Deindustrialization; Labor Productivity; Input -
output tables; Time-use surveys

1. Introduction, definitions and the measurement problem
Services are becoming increasingly prominent in terms of both
output and employment in developing Asian countries. The fact that this
shift is occurring even as manufacturing has yet to fully develop has prompted
some to call the deindustrialization “premature” (Rodrik 2016). This
hypothesis, based on the premise that the manufacturing sector is more
productive than services and thus the driver of growth, has incorrectly raised
concerns about the role of services in development. This paper shows that the
sectoral approach to measuring output ignores the increasing fragmentation
of production wherein tasks may be outsourced to other sectors domestically
or internationally, so the contribution of many services to the manufacturing
process are not properly captured. We show that current productivity
measures suffer from biases in definition and measurement. as it is difficult to
measure their contribution given the indivisible, intangible nature of services.
At the same time, the contribution of services is becoming even more
important in a knowledge-based, digital economy. This paper measures the
extent of “servicification” in manufacturing in Asia and globally; shows why
measures using national accounts do not capture this phenomenon and
proposes a method using the principle of time-use.
Services encompass a wide range of activities that fall outside of
agriculture, manufacturing, or other industries (Andersen and Corley 2003).
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