Structural change in the manufacturing sector and its impact on business-related services: an input-output study for Germany

The paper employs an input-output framework to identify the contribution of economy-wide changes in technology and international trade to sectoral output growth in the German economy over the 1990s. Distinguishing two manufacturing sectors, a manufacturing core of export-oriented sectors and the rest of manufacturing, it subsequently formulates several scenarios about structural changes that are assumed to take place in each of these subsectors. Comparing the resulting output and employment to actual base-year values, we can thus identify the impact of the most important changes within manufacturing on, in particular, two subsectors of business-related services. The quantitative analysis establishes the order of magnitude-which is considerable-by which the latter have profited from structural changes in the manufacturing sector.