ABSTRACT
This chapter utilises statistical modelling to show that the consumption of knowledge-intensive business services (KIBS) in the UK and Japan is significantly related to both productivity and output across the whole economy. Input/Output data can reveal the extent to which sectors are interlinked, and analysis of how the flows within and between sectors changes over time helps reveal the evolution of an economy. The services included here are once again the KIBS ‘communications’, ‘financial and insurance’ and ‘real estate and business services’. The rate of growth of external services consumption in Japanese industry has been lower and less systematic than in the UK. The growth of inter-service activity has been particularly dramatic in the UK: services are increasingly using other services as intermediate inputs. The growth of consumption of communication and other KIBS by manufacturing emerges as much higher in the UK than in Japan.
