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The development of the service industry in the modern economy: mechanisms and implications for China

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  • Dazhong Cheng

    (Fudan University)

Abstract

The present paper attempts to examine three types of mechanisms, including specialized division of labor, innovation, and demand-induced mechanisms that are crucial in the development of the service industry in the modern economy. The underdevelopment of transacted-through-market services in China is mainly caused by problems with these three mechanisms and especially by a lower level of specialized division of labor in the market rather than the fact that China is still at an earlier economic development stage than many of the economies used as comparisons. Government strategy should be prioritized to reduce obstacles and transaction costs that are inhibiting the evolution of specialization and the division of labor required for the development of a diverse and dynamic service sector that will help China optimize its economic structure.

Suggested Citation

  • Dazhong Cheng, 2013. "The development of the service industry in the modern economy: mechanisms and implications for China," China Finance and Economic Review, Springer, vol. 1(1), pages 1-12, December.
    • Handle: RePEc:spr:chfecr:v:1:y:2013:i:1:d:10.1186_2196-5633-1-3
    DOI: 10.1186/2196-5633-1-3
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    References listed on IDEAS

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    1. Barry Eichengreen & Poonam Gupta, 2013. "The two waves of service-sector growth," Oxford Economic Papers, Oxford University Press, vol. 65(1), pages 96-123, January.
    2. Victor R. Fuchs, 1968. "The Service Economy," NBER Books, National Bureau of Economic Research, Inc, number fuch68-1, March.
    3. Victor R. Fuchs, 1968. "Some Implications of the Growth of a Service Economy," NBER Chapters, in: The Service Economy, pages 183-199, National Bureau of Economic Research, Inc.
    4. Hoekman, Bernard & Mattoo, Aaditya, 2008. "Services trade and growth," Policy Research Working Paper Series 4461, The World Bank.
    5. Ronald Schettkat & Wiemer Salverda, 2004. "Demand Patterns and Employment Growth, Consumption and Services in France, Germany, the Netherlands, the United Kingdom and the United States," DEMPATEM Working Papers wp13, AIAS, Amsterdam Institute for Advanced Labour Studies.
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    5. Malgorzata Sztorc & Dorota Milek, 2022. "Modern Business Services as a Strategy for the Development of Smart Specializations," European Research Studies Journal, European Research Studies Journal, vol. 0(1), pages 433-462.

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