Knowledge intensive business services in a transition economy

This paper analyses contribution of knowledge-intensive business services (KIBS) to economic growth. It employs Input-Output Tables provided by Slovak Statistical Office for testing several hypotheses on role of KIBS in a transition economy. Development of business services primarily was closely correlated with development of communication services in developed EU-member countries. This assumption did not hold much for Slovakia. This paper found a weak correlation only, although the explanation power of the model seemed to increase over time. The second assumption was about causal relation between use of communication and business services and output increases. The use of communication and business services was a proxy for introduction of new technologies in production function. Production functions for both the communication and business services indicated that these industries made a significant contribution to economic growth. Output elasticity coefficients were quite similar in Slovakia and the EU-member countries.