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Chapter III — Drivers of Sector Growth and Competitiveness
FIgURE III.24: Shares of goods and services in private consumption in constant and current prices in
seven EU countries from 1980 to 2009
80
70
60
50
40
30
20
10
0
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
Services (Constant)
Services (Current)
Goods (Constant)
Goods (Current)
2002
2003
2004
2005
2006
2007
2008
2009
Note: The seven countries presented are Austria, Denmark, Finland, France, Italy, Netherlands and United Kingdom. Goods sectors include
food and non‑alcoholic beverages, alcoholic beverages, tobacco and narcotics, clothing and footwear, furnishings, household equipment
and routine maintenance of the house. Services sectors include health, transport, communications, recreation and culture, education,
restaurants and hotels, miscellaneous goods and services, housing, water, electricity, gas and other fuels.
Source: calculated using Eurostat data.
A substitution of consumption of goods for services has
taken place between 1980 and 2008. Breaking down
private consumption into large categories in seven
countries shows that food and non‑alcoholic beverages
have fallen to a much lower share of total consumption,
from 19 % to 12 %, while the share of housing and
utilities in total private consumption has risen from 17 %
to 24 % between 1980 and 2009. Changes in the shares of
consumption expenditures across categories may reflect
changes in the level of income (income effects), changes
in relative prices (substitution effects) or government
interventions. First, over long periods of time income
typically increases significantly so that the preference over
different categories changes because households tend to
shift consumption from basic to luxury categories. As an
example, the increase in the share of expenditures in health
services or housing is very likely reflecting an increasing
consumption of services that can be seen as relatively
luxurious; the kind of commodities households tend to
consume more of the richer they are. Second, relative
changes in technology and/or trade patterns can change
relative prices, rendering some commodities cheaper than
others. What will happen with the share in consumption
expenditures will depend on whether the induce changes
in quantities are more or less than proportional to the
price change. For example, the increase in the share
communication services is probably to a large extent
reflecting a drop in the price of communications driving
a more than proportional increase in consumption. In
contrast, large increases in productivity are probably behind
the drop in the relative price of food, and hence the drop
in its share in consumption expenditures compared to, say,
services where productivity grows more slowly. Similarly,
trade probably explains the drop in the relative price of
clothes and its subsequent drop in the share of expenditures
because the eventual increase in consumption does not
compensate for the drop in prices. Finally, cultural changes
due to public awareness campaigns, legal constraints and
taxes may explain other changes like the drop in the share of
alcoholic beverages and tobacco cf. Figure III.25.
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