3. Definition of the sectors & their spatial distribution
across the Swedish economy.
In the sequel, the relationship above will be tested across Swedish functional regions.
Equation (12a) and (12b) will serve as basis for the specification of the econometric
model. Before turning to the econometric results, however, the present section presents
the definition of the producer service sector and the manufacturing sector applied in the
paper. Also, it provides a general description of the spatial distribution of the
manufacturing and the producer service sector in Sweden.
3.1 Defining manufacturing and producer services8
O’Farrell & Hitchens (1990) maintain that one distinctive feature of service research
in general is the lack of consensus on both the boundary and classification of services.
Due to that services traditionally have been viewed as something tertiary, they have been
defined by means of exclusion, e.g. they are not manufacturing nor agriculture. However,
as Glasmeier & Howland (1994, p.199) rightly comment; “...the problem with this
scheme is that it does not reveal what services are, only what they are not”.
A standard way of classifying services is to use the Standard Industrial Classification
(SIC) system of the relevant country. However, since the SIC is a classification primarily
based on activity, (i.e. production units are classified according to their main activity) 9,
and not on the type of job, some problems are associated with the use of it. For instance,
such a scheme implies that a marketing manager working in a manufacturin g firm will be
classified into the manufacturing sector whilst a marketing manager in a marketing firm,
which provides the same service as the former, will be classified into the service sector.
Hence, employment data based on SIC codes will not provide “true” figures of those
engaged in services and those engaged in production.
Ideally for the purpose of this paper, producer service industries should be chosen
based on recent disaggregated input-output tables. This would make it possible to
ascertain which services the manufacturing firms are linked to and vice versa.
Unfortunately, such information is presently not available for Sweden. The latest regional
input-output table available for Sweden is from 1996 and is an aggregated one. Therefore,
in spite of the abovementioned deficiencies, the definition of producer services is captive
to the SIC classification scheme. In Appendix B, a list and description of the SIC codes at
the 5-digit level which are defined as producer services in this paper is provided. The
choice of industries to be classified as producer services was made by studying the main
activities of the industries, i.e. the description of the SIC-code. Hence, the definition of
the producer service sector in this paper is very wide, but it will nevertheless provide the
broad picture of the tendency of co-location with the manufacturing sector.
8 For a comprehensive review of various methods to classify services with discussions of pros and cons, see
Glasmeier & Howland (1994) and O’Farrell & Hitchens (1990).
9 For a description of the Swedish SIC (SNI, Svensk Naringslivsindelning ), see the homepage of Statistic
Sweden, www.scb.se.