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5.3 - Services

In the last few years all advanced economies have witnessed a transition from an industrial society to a system mainly based on the service sector and, in more recent times on the development of the so-called information technology (IT) and net economy.
The tertiarisation of advanced economies is a long-run trend which consists first of all in the growing relevance of the service sector, both in terms of number of enterprises and in terms of added value. There are several reasons behind this trend which underlie different patterns in the diverse areas which make up the service sector. On the one hand, new consumption patterns, lifestyles and population changes tend to increase the demand for services of households and individuals. On the other hand, technical progress, organisational change and the growing internationalisation of enterprises are behind the emergence of new sectors and the enterprises' growing demand for services.
In particular, company restructuring has led to a proliferation of small enterprises and, in the last few years, a large number of new professions. The service sector is the main sector in the region - another clear sign that new technologies have made a rethinking of the traditional model of manufacturing growth unavoidable. Not only are more services and less manufacturing needed, but more high-knowledge intensive skills and creativity are required throughout economic sectors.
Istat survey data on structure and competition of Italian enterprises confirm the development of the service sector in the Veneto economy. Between 2000 and 2005 there was an increase both in local enterprises - +7.8% - and in the number of staff - +14.7%. Moreover, the increase in the turnover of service companies - +21.1% - is 8 percentage points higher than the industry sector's. In 2005 the turnover in the service sector for the first time contributed over 50% to the total turnover of Veneto enterprises.
In terms of added value - which in the period in question has grown by +16.2% - trade has increased by +24.9%, entrepreneurial services by 22.1% and personal services by +16%.
In the following analysis service enterprises have been grouped using the Eurostat-OECD classification (Note 1). The four service classes are defined by type of activity and type of knowledge and are the following: knowledge-intensive high-technology sectors - post, telecommunications, computing, R&D - knowledge-intensive market services - sea transport, air transport, property services, rental of machinery, and services to enterprises - knowledge-intensive financial services, traditional services - trade, hotels, restaurants, land transport and travel agencies. A fifth group was added for services to private individuals.
An analysis of trends in these sectors shows that company turnover is growing in the knowledge-intensive market services - +41% - technology services - +38.5% - and in traditional services - +20%. On the other hand, it is decreasing by 11% when it comes to personal services. (Figure 5.3.1)
Traditional services - trade, hotels and restaurants - provide over 80% of service company turnover. Said percentage has been quite stable in the period in question as it only decreased by 0.2%. The relative weight of added value of those services has also gone down - from 59% in 2000 to 56.6% in 2005. The average turnover per member of staff has grown by about 19,000 euros. In 2005 it was slightly under 198,000 euros.
Company turnover in market services - transport, entrepreneurial activities and estate services - accounts for 10% of the overall turnover of services and in the last few years company service turnover has been growing steadily. The added value of market services - 20% of the total figure - has been quite stable.
In technology services the weight of company added value has increased considerably - +2% - while turnover is relatively steady - +0.6%. The average turnover per member of staff is also up - +26,000 euros and in 2005 it was over 120,000.
The start-up (Note 2) and closing down (Note 3) of enterprises in the services in questions show positive trends (Note 4) between 1 and 2% for technology service, financial and market enterprises while traditional sectors exhibit a negative trend. Data on active regional companies show positive trends overall, and growth rates are quite high in the market and technology sectors. (Figure 5.3.2)
From 2000 to 2005 there was a rapid expansion of companies working in market services - +44.7% - due to the boom of the real estate sector. This trend continued in the following two years with growth rates around 5 to 6%. In 2007 market service enterprises exceeded 51,000 staff and accounted for 22% of service enterprises in Veneto.
In the last eight years technology service enterprises have exhibited quite strong growth rates - +32.1% - and in the last year have exceeded 8,000 units. Growth rates were quite high from 2000 to 2005. Then growth has gradually slowed down, similar to market services in the last two years - +2% in 2006 and +1.7% in 2007.
The number of personal and financial service enterprises has also increased - +15.5% and +10.3% respectively - in the last eight years. On the other hand, the number of traditional service companies remained stable - +2.7%.

Top  Supply and demand of high technology services

The technology balance of payments (TBP) (Note 5) is used to measure the supply and demand of technology in an area. It records receipts and payments concerning foreign transactions of disembodied technology, in the form of industrial and intellectual property rights such as patents, licences, trademarks, know-how and technical assistance. Recorded values in the high-tech balance of payments are indicators of input, i.e. payments, and output, i.e. receipts, of technology.
In 2006 the overall TBP was positive by about 780m euros at national level. This is out of line with the structurally negative trend of the past and definitely better than the previous year, when there was a 232m euro deficit. As in the past, the overall balance is the result of surpluses in services with a technical content - 1,266m due to technical and engineering studies for which a surplus of 1,298m was registered and in research and development services (457 m) - partly counterbalanced by deficits in transactions of trademarks, designs - -440m - and in other technology payments - -358m. Finally, the trade in techniques shows a deficit of -145m. (Table 5.3.1)
In Veneto, despite a decrease both of receipts and of payments, the overall balance is still negative by about 51m euros, but has more than halved compared to 2005. Interestingly, the balance is only positive with reference to services with a technical content, i.e. those services that undergo more innovation and for which receipts grew over 50% compared to the previous year. Said trend is confirmed by the coverage ratio of TBP which is the ratio of receipts to payments. In Veneto this service has a value of 2.7; in other words, the Veneto region sells those services over two and a half times more than it buys them from abroad. In particular, technical and engineering studies and sending exports technicians abroad contributed more to these receipts. As opposed to what happened the previous year, trade in techniques shows a negative balance due both to the increase in payments to acquire patent rights, and to a general decrease of receipts with consequent worsening of the coverage ratio from 2.6 in 2005 to 0.4 in 2006. Transactions of trademarks and designs improve the balance which - albeit negative - is the result of a large decrease in payments. Balances relating to the two services in question are more limited and show the same values for research and development financed from abroad. (Figure 5.3.3) and (Figure 5.3.4)
Analysing Veneto's largest demand from abroad in 2006 among services as evidenced by receipts, it turns out that 63% of receipts derive from the supply of services with a technical content, a higher level compared to Italy - about 56%. Almost all other types of services have shares of receipts from 11 to 13%. (Figure 5.3.5)
On the other hand, in 2006 Veneto has mainly demanded services or transactions from abroad that regarded trademarks and designs. This field accounted for nearly 50% of the total Veneto payments, which sets Veneto quite apart from the rest of Italy where this sector has played a far more restricted role - 23%. (Figure 5.3.6)
Veneto accounts for 36.3% of overall receipts in the North-East of Italy (Note 6) and 3.4% of receipts out of the national total. In terms of payments, Veneto is a significant contributor to the total of the North-East with 45.9% and a contributor to the national total with 5.8%.
Balances by country show that Veneto is generally indebted to the most industrialised countries in the European Union, but the situation is quite varied depending on the country, ranging from a deficit of over 18m euros with The Netherlands to a positive balance of almost 25m euros with the United Kingdom. Among non-EU countries there are high deficits with Switzerland, emerging Asian countries, China and Japan.
A comparison of the capacity to produce and use technological services between Italian regions shows that four different types of supply and demand can be identified on the basis of standardised data (Note 7). Two regions with a strong interchange of technology - both incoming and outgoing - are Lombardia and Lazio, though they are quite different as Lombardia has a positive balance while Lazio has a negative one. Other large service exporters, Liguria and Piemonte, both have a positive balance. Regions reflecting the national average are Veneto, Trentino Alto Adige, Friuli Venezia Giulia, Toscana and Emilia Romagna, which can be described as medium users and producers of technology services. All these regions, apart from Emilia Romagna and Veneto, have positive balances. Finally, there is a fourth group of low-supply and low-demand regions consisting of Southern regions and the remaining central Italian ones. (Figure 5.3.7)

Top  High-innovation content services

In services some sectors are by their very nature very knowledge-intensive as they support company management: computing enterprises, research and development and professional services. There is a growing demand for such services from the manufacturing sector which - especially with reference to its smallest-size companies - has outsourced some company functions and can thus rely on highly qualified consulting, streamline its organisation and in this way specialise.
In the last few years the number of enterprises in those areas have grown considerably: computing companies - up by 21.7% between 2000 and 2007 - have increased by 1.3% in the last year; research and development enterprises have grown by 49.3% between 2000 and 2007 and 11.1% in the last year. Professional and entrepreneurial service companies have grown by 33.4% in the observed period and 4.1% in the last year. (Figure 5.3.8), (Figure 5.3.9) and (Figure 5.3.10)
Although the number of enterprises is constantly growing, these sectors have a high turnover as their high start-up and closing-down ratios show. In the last five years, of the three sectors mentioned only the more traditional one, i.e. professional and entrepreneurial services, has had a positive balance (Note 8). The other two, Research and Development and computing have a quite high closing-down rate, which is probably due to structural reasons but also to the fact that these sectors are not very open to innovation.



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Notes

  1. According to this classification manufacturing and service sectors are grouped into eight classes - four classes for manufacturing (see note 3 section 5.2) and four classes for services which are listed below.
  2. Percentage ratio of start-ups and active companies.
  3. Percentage ratio of closed down and active companies.
  4. Difference between the company birth and death rates.
  5. The TBP registers the flows of receipts and payments of international transactions of disembodied technology in the form of industrial and intellectual property rights such as patents, licences, trademarks, know-how and technical assistance. According to the scheme proposed by the OECD there are four main components of the TBP:
    - trade in techniques: such transactions form the core of international technology transactions and involve the transfers of patents, inventions and know-how as well as the respective rights of exploitation;
    - transactions relating to industrial property (trademarks, designs, patterns): they do not refer directly to technological know-how but often imply the transfer of such; these transactions are mainly transfers of trademarks and industrial designs;
    - services with a technical content: even if they do not constitute an actual transfer of technology they allow technological potential to be increased through the acquisition of technical skills;
    - research and development carried out abroad or financed from abroad.
  6. Veneto, Friuli Venezia Giulia, Trentino Alto Adige, Emilia Romagna
  7. In relation to the population.
  8. Balance: difference of the start-up and the closing-down rate of enterprises


Figure 5.3.1
Average turnover per employee in service enterprises. Values in thousands of euros. Years 2005 and 2000.
Figure 5.3.2
Annual percentage variation of services enterprises. Veneto 2002:2007
Table 5.3.1
TBP receipts and payments (in millions of euros) and percentage variation on the previous year. Veneto and Italy. Year 2006
Figure 5.3.3
TBP: balance grouped by service (in millions of euros). Veneto and Italy. Years 2001:2006
Figure 5.3.4
TBP: coverage ratio (*) by service. Veneto and Italy. Year 2006
Figure 5.3.5
Percentage variation of receipts by service. Veneto and Italy. Year 2006
Figure 5.3.6
Percentage variation of payments by service. Veneto and Italy. Year 2006
Figure 5.3.7
Receipts and payments per 1,000 inhabitants (thousands of euros) by region. Year 2006
Figure 5.3.8
Percentage variation of enterprises in the computing sector. Veneto and Italy. Years 2003:2007
Figure 5.3.9
Percentage variation of enterprises in the Research and Development sector. Veneto and Italy. Years 2003:2007
Figure 5.3.10
Percentage variation of enterprises in the professional and entrepreneurial service sector. Veneto and Italy. Years 2003:2007

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Data elaborated by the Statistics office of the Veneto region are collective property; reproduction of this material is authorised for non-commercial purposes only, provided the source "Regione Veneto - Regional Statistics System Management" is acknowledged.