Informatika 1081 Budapest, Csokonai u 3. Telefon: 210-1550 Fax: 303-1000 http://www.kopint-datorg.hu Üzleti Információ Kutatás The role of business services in the New Economic and Industrial Policy of Europe 25 May 2005 UNECE, Geneve Dr. Éva Palócz Deputy General Director KOPINT-DATORG Ltd. palocz@kopdat.hu
Long and hard way to integrated service markets in the EU Single Market, created in 1992: limited results in the service sector The Lisbon Strategy 2002: knowledge based economy can not be created without a broad netwerk of services: slow development The KOK Report 2004: new impetus and efforts have to be made The Proposal for a Directive on services in the Internal Market 2004 January: milestone in the process 2
Main elements of the 1. the freedom of establishment for service providers "single points of contact : administrative procedures through one channel 2. the free movement of services between the Member States country of origin principle (COP) 3. The right of recipients to use services from other Member States without being hindered by restrictive measures 4. Tight cooperation between national authorities, information networks 3
Expected positive impacts of the New Service Strategy According to the study of the Copenhagen Economics : Gross Value Added is expected to increase by 0.8%; net employment would increase by 0.3% (up to 600.000 jobs); average real wages would grow by 0.4%; average prices for services will reduce. 4
First reaction to the Directive Strong resistance against the Directive, demonstration. Reasons: Fear of dumping of cheap labor migration from new member countries: protection of jobs; Fear of worsening of the quality of services and weaker protection of service consumers, due to the Country of Origin Principle; Fear of merchandising of cultural, education, health care and other services relating to national social welfare. 5
100 90 80 70 60 50 40 30 20 10 0 Structure of GDP in EU(25) in 2004 The structure of GDP, according to sectors, in 2004 Service Construction Industry (excl. construction) Agriculture EU15 Luxembourg Cyprus Denmark France Belgium Netherlands Greece United Kingdom Sweden Austria Italy Germany Spain Portugal Finland Ireland NMS Malta Estonia Hungary Latvia Slovenia Poland Slovakia Lithuania Czech Rep. Source: Eruostat, AMECO database public administration excluded 6
12 10 8 6 4 2 0 Increase of share of services in GDP in percentage point (1995-2004) Increase of share of services in GDP in percentage point (1995-2004) public administration excluded EU15 Luxembour Cyprus Denmark France Belgium Netherlands Greece UK Sweden Austria Italy Germany Spain Portugal Finland Ireland NMS Malta Estonia Hungary Latvia Slovenia Poland Slovakia Lithuania Czech Rep. 7
Correlation between the level of GDP/head and the share of service sector in GDP (2003) 85 80 LU 75 CY 70 65 LAT GR FI AT y = 0,0004x + 59,679 R 2 = 0,318 60 LIT SLN 55 C IR 0 10 000 20 000 30 000 40 000 50 000 Source: Eurostat, AMECO database 8
Structure of services in percent of GDP in EU(25) in 2003 % 80 70 60 50 40 30 20 10 0 Luxembourg Denmark France Belgium Netherlands Greece UK Germany Sweden Austria Italy Spain Finland Portugal Ireland Source: Eurostat, AMECO database NMS Cyprus Estonia Hungary Latvia Slovenia Poland Slovakia Czech Rep. Lithuania other Health and social work Education Public business services Financial intermediation Transport, storage and communication Hotels and restaurants trade and repair 9
90 80 70 60 50 40 30 20 10 0 The share of share of service sector in GDP and in employment in EU countries in 2003 (%) % empl. GDP EU-15 UK Netherlands Luxembourg Belgium France Denmark Sweden Austria Finland Germany Ireland Greece Italy Spain Portugal NMS(9) Cyprus Latvia Poland Estonia Lithuania Hungary Slovakia Slovenia Czech Rep, Source: Eurostat, AMECO database 10
140 120 100 80 60 40 20 0 Nominal compensation per employee in PPS in 2003 [EU(15)=100] Serv Tota l Luxembourg Netherlands Belgium Austria France Italy UK Spain Ireland Greece Denmark Sweden Finland FR. Germany Portugal Slovenia Cyprus Hungary Poland Czech Republic Estonia Slovakia Lithuania Latvia Source: Eurostat, AMECO database 11
The share of NMS and EU(15) in services exports of NMS and EU(15) in per cent 80 70 60 NMS EU-15 50 40 30 20 10 0 AT PT Be LU IT FI IE EL DE SE FR DK UK SI CzR SK EE LV LT HU 12
The number of EU firms among the world s selected 15 largest services TNCs in 2003 Branch UK France Sweden Germany Netherlands Ireland Belgium Spain Total Advertising 4 5 9 Construction 1 3 2 1 2 1 10 Hotel 4 1 5 Logistic 2 1 1 4 Media 2 2 1 2 7 Restaurants 3 2 1 6 Tourism 3 2 5 Wholesale 1 1 2 1 5 13
Characteristic of the service market in transition economies (illustrated by Hungarian example) Outsourcing of service activities mainly by foreign owned companies; Foreign owned companies are heavily relaying on their traditional foreign service supplier; Several foreign service provider are establishing in Hungary in order to serve their traditional multinational partner (follow( their partners to foreign markets) 14
Characteristic of the service market in transition economies (illustrated by Hungarian example) Multinational companies are market leaders in every service sector: : mostm markets for business services are characterized by the dominance of 3-53 5 big multinational firms A market with multiple actors: division of labor has developed between market-leader multinationals and smaller domestic companies.. The latter are typically serving domestic firms 15
Composition of some service markets according to ownership structure in Hungary 100 90 80 70 60 50 40 30 20 10 0 Share of 100% domestic owned firms according to.. 60 50 40 30 20 10 0 Share of 100% foreignc owned firms according to.. Transport & postal serv. Financial services Real estate Leasing Informatics R&D Business serv. Total number of firms number of employees income Transport & postal serv. Financial services Real estate Leasing Informatics R&D Business serv. Total Source: Hungarian Tax Authority database number of firms number of employees income 16
Main elements of a possible strategy for business services The strategy for business services is not essentially differing from the goals and tasks of the complex economic strategy, used in other branches. The weights and combination of these economic means, however, might be somewhat different. The most relevant economic policy areas toward a business related service strategy are Strengthening knowledge and innovation skills, as well as R&D and atypical employment; Supporting SMEs; Supporting the expansion of info-communication technology; Improving the capacity to attract capital; 17