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The Tertiary Sector Is Going to Dominate the World Economy; Should We Worry?

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  • Sultan, Muyed

Abstract

This paper explains some practical experiences on service sector growth as well as its contribution to the economy throughout the world. In rich countries, service contributions are comparatively higher than that in poor countries. But service sector growth rates are higher in the poor countries in comparison to the rich counterparts. This study is a good witness to service sector’s supremacy in the present era. This paper is trying to reach a decision – weather high sectoral difference make disturbance to economic growth or not? It is found that high service sector share in the economy is a cause of slower economic growth. Nonetheless, in the long run, slower growth rates cannot make noteworthy disturbances to the economy. Because, service sector has a self correction motive through the income effect. Some policy suggestions are included here to manage short and mid term effects of high sectoral difference (high service contribution in the economy).

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 14681.

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Date of creation: 14 Aug 2008
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Handle: RePEc:pra:mprapa:14681

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Related research

Keywords: Economic Growth; Income Effect; Sectoral Participation Ratio; Service Sector Share; Tertiary sector;

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References

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  1. Robert Gordon, 1995. "Problems in the Measurement and Performance of Service-Sector Productivity in the United States," RBA Annual Conference Volume, Reserve Bank of Australia, in: Palle Andersen & Jacqueline Dwyer & David Gruen (ed.), Productivity and Growth Reserve Bank of Australia.
  2. Nicholas Oulton, 2000. "Must the growth rate decline? Baumol's unbalanced growth revisited," Bank of England working papers, Bank of England 107, Bank of England.
  3. Elfring, Tom, 1989. "New Evidence on the Expansion of Service Employment in Advanced Economies," Review of Income and Wealth, International Association for Research in Income and Wealth, International Association for Research in Income and Wealth, vol. 35(4), pages 409-40, December.
  4. Andreas Breitenfellner & Antje Hildebrandt, 2006. "High Employment with Low Productivity? The Service Sector as a Determinant of Economic Development," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), Oesterreichische Nationalbank (Austrian Central Bank), issue 1, pages 110–135.
  5. Eileen Appelbaum & Ronald Schettkat, 1999. "Are Prices Unimportant? The Changing Structure of the Industrialized Economies," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., M.E. Sharpe, Inc., vol. 21(3), pages 387-398, April.
  6. L. Rachel Ngai & Christopher A. Pissarides, 2007. "Structural Change in a Multisector Model of Growth," American Economic Review, American Economic Association, American Economic Association, vol. 97(1), pages 429-443, March.
  7. Sirilli, Giorgio & Evangelista, Rinaldo, 1998. "Technological innovation in services and manufacturing: results from Italian surveys," Research Policy, Elsevier, Elsevier, vol. 27(9), pages 881-899, December.
  8. W. Erwin Diewert, 2006. "Comment on "Aggregation Issues in Integrating and Accelerating the BEA," NBER Chapters, National Bureau of Economic Research, Inc, in: A New Architecture for the U.S. National Accounts, pages 287-308 National Bureau of Economic Research, Inc.
  9. Zvi Griliches, 1992. "Output Measurement in the Service Sectors," NBER Books, National Bureau of Economic Research, Inc, National Bureau of Economic Research, Inc, number gril92-1.
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  11. Gordon, Robert J, 1995. "Is There a Trade-off between Unemployment and Productivity Growth?," CEPR Discussion Papers, C.E.P.R. Discussion Papers 1159, C.E.P.R. Discussion Papers.
  12. Francois, Joseph & Reinert, Kenneth A, 1995. "The Role of Services in the Structure of Production and Trade: Stylized Facts from a Cross-Country Analysis," CEPR Discussion Papers, C.E.P.R. Discussion Papers 1228, C.E.P.R. Discussion Papers.
  13. Mattoo, AAditya, 2002. "China's accession to the World Trade Organization - The services dimension," Policy Research Working Paper Series, The World Bank 2932, The World Bank.
  14. Badi H. Baltagi & Seuck H. Song & Byoung C. Jung, 2002. "A comparative study of alternative estimators for the unbalanced two-way error component regression model," Econometrics Journal, Royal Economic Society, Royal Economic Society, vol. 5(2), pages 480-493, 06.
  15. Robert Stehrer, 2005. "Employment, Education and Occupation Structures: A Framework for Forecasting," wiiw Research Reports, The Vienna Institute for International Economic Studies, wiiw 315, The Vienna Institute for International Economic Studies, wiiw.
  16. Carmen Álvarez-Albelo & Raúl Hernández-Martín, 2007. "Explaining High Economic Growth in Small Tourism Countries with a Dynamic General Equilibrium Model," Working Papers, Xarxa de Referència en Economia Aplicada (XREAP) XREAP2007-06, Xarxa de Referència en Economia Aplicada (XREAP), revised Jul 2007.
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