1. The New Service Economy

2. Development of the U.S. Service Sector

3. Decomposition of Services

4. Producer Services Why the rapid growth? (1) Growth in intermediate demands (2) Growth in final demands (3) Slow productivity improvement (?historic?) (4) Trade in Services & Import Substitution An An overview of some key trends, largely drawn from Beyers research.

5. The Growing Investment In IT Source: Digital Economy 2003

6. The Increase in Productivity Growth Source: Digital Economy 2003

7. Labor Productivity and IT Intensity Source: Digital Economy 2003 Error in Legend! All Less IT Intensive GDP/FTE Growth

8. Labor Productivity Growth Source: Digital Economy 2003

9. Many Sectors Had Productivity Growth During The Recent Recession Source: Digital Economy 2003

10. Beyers Producer Services Research Funded by NSF and ERS Telephone Interviews with 665 producer service establishments Located in Urban and Rural Areas Typical Interview lasted about 45 minutes Selected findings

11. Reasons for Producer Service Locations

12. Startups are driven by a vision of business opportunities

13. Niche Examples

14. Most Companies are dynamic in changing their services, driven by changes in IT and a variety of related factors

15. How Establishments Organize to Do New Work

16. Ansoff’s Box Present New Product/service technologies PresentNew Market type New Present Market geography A B C 9 Strategies beyond A, B, and C A - no change B - all change C - only geog. changes

17. Evidence of Performance: Ansoff’s Box & Producer Services Source: Beyers & Lindahl, E&P 1996 A B C NO 13

18. Demand & Competitive Advantage Demand: It is predominantly related to the lack of expertise by clients, by their infrequent need for the service, the need for 3rd party info, and a host of other non-cost related reasons. Competitive Advantage: Created by firms pursuing the flip-side of demand forces: Differentiation, specialization, niching, collaboration, use of specialized subcontractors, etc. Not Cost.

19. Producer Services have considerable Nonlocal Markets, but….

20. Producer Service Businesses have Bifurcated Markets: They Tend to be Local or Export Local FirmsLone Eagles & High Fliers These data are indicative of market orientation of New Economy firms

21. The Traded-Dimension of Producer Service Businesses is Expanding Over Time Localized firms mirror the trend for Lone Eagles/High Fliers

22. Possible Development Sequence

23. Face to Face Communication Is Key and is Not Diminishing in Its Importance

24. Recognition of Producer Services as a Part of the Economic Base Historic metro concentration Recent rural deconcentration Role in “Edge Cities” The “New Economy.” --Producer Services as a progenitor to the New Economy: –now multimedia, online retail,.com, –.org,.edu; telemedicine, teleservices, tele?; content providers; media conduits; delivery agents, etc.

25. Implications for Settlements for the New Economy ? Will this fuel decentralization of work? ? Or, will the power of agglomerations ?continue? To win out? ? What will happen to Edge Cities? Central Cities? What difference does it make where we focus on….Friday Harbor, Roslyn, Enterprise, Driggs, Missoula, Bellevue, Bend, Beaverton, Darrington, Sun City, Corvallis New Points?