This study set out to analyze the increasing role of services from the viewpoint of industrial policies and development at an international level. The topic is very wide and the analyses remain at general level. More in-detail studies, including also concrete examples and case studies, are needed to elaborate the field of investigation further. The study was based on data from policy documents, technical reports and studies from the year 2000 onwards. These documents provide information on the issues emphasized in the international collaboration, but they do not analyze a wider set of change factors, tradeoffs between different goals, or for example the industrial policy goals at national or regional levels. Thus, for future analyses, also these aspects could be explored. The contribution of this paper is to draw attention to the need for further research about services and related changes also in the production modes of the forest-based sector.
The study found that the increasing role of services has been assessed from several dimensions for industrial policies and development; the traditional sectors and concepts are blurring, but also what is the target of an ‘industrial policy’. Recently the attention has drawn to the technological changes that increasingly inter-twine services with manufacturing and call for redefining what is ‘production’. Raw materials can be newly sourced or re-used, but the knowledge
24 flows that they carry are important throughout the different stages of production, use, re-use, recycling and end-use. Services, either as in-house operations or supplied from external service providers, are important for efficiency and productivity. Instead of taking services as support activities for production as they often are presented in the forest-based sector strategies (Pelli et al., 2017), the industrial policies target services also as sources of innovation and economic growth. In technology-enabled production both tangible and intangible resources can be organized in novel ways. This affects all stages of the forest-based value chains: the material processes from forest extraction to processing and to existing and new industrial uses, as well as to knowledge processes of natural resources management and forest governance.
The study summarized briefly the ongoing work on methods and approaches how to assess the developments: new metrics, datasets and approaches have been sought in the international and national economic analyses as well as sectoral analyses and case studies. These methods can also be used for assessing the increasing role of services in the forest-based sector, for example: Which services are provided and traded along the forest-based sector value chains? What is the effect of services sectors, business services in particular, on the forest-based sector productivity? What role(s) services have in innovation systems, for example, in the business ecosystems forming around the forest-based biorefineries? What is the service content of forest industry products, where value is created and how it is distributed at different stages of production?
Answering these questions would provide a better understanding on the present role of services in and for the forest-based sector.
For future-oriented analysis also the overall trends in the operating environment are important. The analyzed documents highlight globalization and technology as major drivers behind increasing role of services in the industrial processes. These two drivers interact and have strengthened each other in enabling the production to be organized in new ways. The global supply chains and their dynamics make economies more interdependent and exposed for rapid and more
25 unpredictable changes. The forest-based sector processes focus on raw materials and interim products mainly, but the sector boundaries are expanding for example towards energy, chemicals and textiles sectors. The new bio-based materials and products are not necessarily directly applicable to the further downstream production but require also adjustments in the customer industry processes (cf. Bauer et al., 2016). Optimization of the upstream processes with improved wood mobilization, extraction of forest resources and processing of materials is already developed, but the technology-enabled processes will also enable data and feedback loops from the further downstream processes back to the operations in forest. This creates both opportunities and challenges: What types of services do the further downstream industries need in order to adopt new technical solutions or bio-based materials into their own production processes? Where are the opportunities for companies and start-ups to find the niches that open in the evolving bioeconomy supply chains? What kind of support is needed to develop new solutions; does it require location close to the raw material base, close to the customer or which are the crucial resources needed?
How to compare the opportunities and risks related to the higher value-added end of the globally distributed value chains, including services activities, vis á vis the opportunities and risks of keeping the focus on the raw materials end of the evolving production? Investigation of these questions could help mapping out opportunities and challenges related to the future forest-based value chains.
The study found that upstream of supply chains and the natural resources base is relatively little addressed in the industrial policy and development documents. Mainly the issues of access to raw materials, substitution by (new) bio-based materials/products and efficiency in resource use is elaborated in the documents, together with the potential in environmental technologies. Bioeconomy is first and foremost a technological issue from the industrial policy perspective; it is one of the promising technological areas expected to change the production modes and contribute to productivity growth. This is quite a different perspective compared with the
26 description of a forest-based bioeconomy or green economy in the forest-related programmes (EC, 2013; FOREST EUROPE 2011; UNECE/FAO, 2014). Whether or not bioeconomy is anything radically new within the forest-based sector (cf. Pülzl et al., 2014), it is not necessarily understood with similar connotations in the customer industries or among their customers. An interesting perspective to the ‘next production revolution’ opens up from the expertise of the forest-based sector, for example in sustainable forest management, governance of natural resources and ecosystem services. Further elaboration of what is defined ‘as service’ in the future could provide a more balanced view to a bioeconomy compared with the technology emphasis presented in the industrial policy and economic collaboration processes: What types of sustainability services could support the further downstream industries? How to assess and define the ecosystem services ‘as service’ in the new production paradigm? What does the algorithm revolution mean in the context of non-market forest goods and services? These types of questions seek to connect the upstream and downstream operations in a new way.
To conclude: Instead of thinking the increasing role of services as a trend, it can be interpreted as a symptom of more profound changes underway in the production modes and logic how operations are organized. In a short term the identification and analyses on the volume and number of services in the forest industry are useful in making the role of services visible in the forest-based sector as well as its customer industries’ processes. For the analyses about a longer time horizon, also the evolving new modes of operation should be addressed. In the analyzed documents these were explained with concrete examples or mini case studies. For macro-level analyses the OECD (2016) highlights the need for technology foresights, on one hand to develop stakeholder networks and capacities, and on the other hand to support policy making in the situation when outcomes of the evolving technologies, speed or direction of change are difficult to predict.
Technology forecasting and impact analysis, including assessment of potential radical innovations in competing solutions for biomass-based materials and products, could be useful to assess possible
27 structural changes in the forest-based sector and to develop alternative scenarios (cf. Hurmekoski and Hetemäki, 2013). By assessing the role of services only with the accustomed metrics we limit our perception on the present-day production modes only, and important opportunities and challenges may remain unrecognized for the forest-based sector.
Acknowledgements
The research was presented in the biennial meeting of the Scandinavian Society of Forest Economics SSFE 2016, May 25th-27th 2016, in Oscarsborg in Norway. The author gratefully acknowledges the contribution by two anonymous reviewers that helped to focus and structure the paper. Research is supported with the financing of the Doctoral School of the University of Eastern Finland (2014-2017), and grant from the Metsämiesten säätiö Foundation (2016-2017).
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