New perspectives on intersectoral relationships between manufacturing and services

This study advocates the explicit incorporation of the production of in-house information services into input-output tables in order to overcome the limitations imposed by conventional accounting frameworks which distort the relationship between manufacturing and services. This relationship is analysed using a well-known impact methodology. The importance of consumption induced multiplier effects, i.e. demand linkages, is also emphasised. The shift in perception of intersectoral relationships which adoption of our methodology provides is demonstrated using Japan in 1980 as a case study. It is shown that ‘conventional’ analysis seriously underestimates the importance of services for output and employment creation. Comparisons to a recent study by Park and Chan (1989) are drawn which provided the stimulus for this paper.