ABSTRACT
This chapter explores the linkages between the services sector's productivity and expansion, human capital and aggregate productivity in the Portuguese economy over the period 1970-2006. The main aim is to examine whether the increasing tertiary sector in the Portuguese economy constituted an obstacle or an opportunity for its aggregate productivity performance and if the expansion of the services sector is related to human capital availability. In the case of Italy's regional manufacturing industry, Hirsch and Sulis find results similar to those of Ciccone and Papaioannou, pointing to the importance of human capital in fostering faster growth in high-skilled industries, which in turn leads to faster aggregate regional productivity growth. In many countries, the structure of production has shifted towards an increased specialisation in the services sector and away from manufacturing, traditionally viewed as the driver of technological change and hence economic growth.
