Services make up around 70% of the Queensland economy, with three out of four employed Queenslanders currently working in a services industry1. Over the past decade, almost all employment growth in OECD countries has occurred in the services sector, as new competitive strengths, including lower-wage workforces, have emerged in rapidly developing countries such as India and China. It is now generally accepted that growth in services, especially knowledge-intensive services, contributes significantly to high-value job creation in mature economies, compared to growth in capital-intensive manufacturing and primary industries. As globalisation continues to create new competitive pressures - and opportunities - for many Queensland firms, services industries will increasingly represent an important source of job creation and innovation for the Queensland economy.
Services as a type of economic activity have typically been difficult to characterise, and are often defined as what they are not; that is, services are generally understood to be ‘not manufacturing’ and ‘not primary or resource industries’. The way in which innovation occurs in services, the types of knowledge (including research and development – R&D) that are important and the extent to which services can be traded globally are also only beginning to be understood.
However, it is increasingly recognised that innovative services industries hold the key to ‘strengthening economic growth and improving the foundations for the future performance of OECD economies’2. The aim of this Smart State Council report is to investigate the sources of competitive advantage in the services sector in Queensland, and opportunities for its future expansion as a key contributor to Queensland’s emerging knowledge economy.