During the last 30 years, the importance of the private service sectors for GDP and employment has increased substantially in the industrialized world. One explanation advanced in the literature is that this change partly reflects the emergence of the knowledge-based economy that has forced manufacturing, as well as other firms, to focus on the core business to stay competitive (Wikström and Normann, 1994; Tordoir, 1995; Nielsen, 1996). These firms have thereby chosen to outsource peripheral services (e.g., marketing, cleaning and customer services) permanently to specialized service firms, or to purchase such services (e.g., management, IT and financial services) on a project basis from consulting firms (CFs). Simultaneously, the manufacturing sector has continued to rationalize and increase its productivity, implying that a substantial part of the workforce has been driven to look for employment in other sectors. This has facilitated the emergence of new services that did not exist earlier (e.g., Internet, computer and mutual fund services) and has led to a restructuring of the whole business sector. In most industrialized countries, the manufacturing sector’s share of GDP and employment has decreased from a range of 40% to 50% 30 years ago to between 15% and 30% today. Even within manufacturing, many of the supplied products today are services such as contractor, training and after sales (Grönroos, 1990).
KeywordsForeign Direct Investment Host Country Development Agency Investment Project Consult Service
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