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Growth in the business-related services sector is due in part to the outsourcing of certain services previously undertaken internally, but not only: modernisation of production systems, flexibility gains, international competition, the growing role of information and communication technologies (ICTs) and the emergence of other types of services are also important factors. Business-related services fall into four main categories: business services (computer services and liberal professions, for example), the distribution sector, network industries and financial services. The Commission doesn't beat about the bush: "without competitive business-related services it will not be possible to achieve the objective set in Lisbon" of making the RU the world's most competitive knowledge economy by 2010. The Commission adds that "without the growth generated by business-related services over the second half of the nineties, EU unemployment would have risen much higher than current rates". The sector must therefore be nurtured in view of its importance as a lever on competitiveness.

Integration of markets and competition.

The Commission is keen to open up services markets which are still too fragmented and over-protected, by breaking down legal and administrative obstacles within the internal market. It is keen to promote competition, notably in professional services and distributive trades. Finally, the Commission is keen to promote not only the development of e-government, but also the sub-contracting of certain services of general economic interest. The aim is to modernise public administrations.

Improving resources.

A lack of skills persists and the Commission is keen to promote a better qualified workforce, notably to avoid a delocalisation of services professionals to low labour cost countries, as has been the case with manufacturing industry. The potential of ICTs must be fully exploited, which is not currently the case. Finally, R&D spending is still very low in the business-related services sector, bearing no comparison with its economic contribution. Certain sub-sectors like knowledge-intensive services (management guidance, computer services and R&D), nevertheless act as catalysts in the innovation process throughout the economy.

Improving the organisation of knowledge.

It should be possible through standardisation to open up markets and encourage price and product comparisons. Knowledge of the value of companies' intangible assets, which are proportionately very important in service enterprises, should avoid uncertainty and speculation over the real value of companies. Improving productivity depends heavily on investment in intangible goods such as training, management of client relations, internal organisation and investment in ICTs. Regarding quality, there is currently no comprehensive European quality policy for services. The Commission is keen to encourage the introduction of quality indicators and to promote exemplary service practices.

Regional policy.

Business-related services tend to cluster around towns and cities well linked at the international level: the contrary of the policy of convergence applied by the EU. Since their impact on the competitive environment is far from negligible, promoting regional markets and services means attracting quality jobs and foreign investment. The Commission even suggests encouraging competition between public and private services. It adds that regional policy must not focus solely on the manufacturing sector.

Better statistics.

Knowledge about the sector and markets is scarce, according to the Commission's analysis, since the impact the sector can have on growth and sustainable development in the EU is still not fully recognised by all economic players or public authorities. Knowledge of the sector must be improved to free-up the decision-making process and track progress. The Commission presents a strategy in an annex for securing reliable statistics on the sector.
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Publication:European Report
Geographic Code:4E
Date:Dec 6, 2003

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