Knowledge-Intensive Business Services and R&D Diffusion: a Comparative Assessment of Some EU27 Countries

Abstract

In this article we develop a measure to approximate the diffusion of product-embodied R&D that takes place by means of the intermediate purchases of KIBS in 19 of the EU27 countries over the period 2000-2005. The results obtained confirm a rising trend in the use of KIBS as intermediate consumptions as well as the predominance of the domestic provision of this type of services with two exceptions: Ireland and, to a lesser extent, Finland. Leaving aside the two countries with the lowest intensities, Estonia and Hungary, four major groups of countries in terms of the R&D intensity of their KIBS sector were distinguished: very high (Finland, Sweden and Austria), high (Ireland, Czech Republic and Spain), medium (Greece, Belgium, Slovakia, Romania, Slovenia and Germany) and low (Portugal, Netherlands, Poland, Italy and Lithuania). Overall, a high correspondence between R&D intensity and product-embodied R&D diffusion was found, although Ireland, Romania, Belgium and the Netherlands displayed a disappointing diffusion per unit of value added in comparison with the R&D expenditures developed. The existence of weak linkages between the KIBS sector and the rest of industries can be identified as the main explanation for this “diffusion gap”. In brief, the results obtained confirm that KIBS are essential industries for improving innovation performance as they carry out strong efforts in R&D that spill over to the rest of the production system.

DOI: http://dx.doi.org/10.5755/j01.ee.24.4.2081