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The Service Sector in Asia: Is It an Engine of Growth?

Author

Listed:
  • Park, Donghyun

    (Asian Development Bank)

  • Shin, Kwanho

    (Korea University)

Abstract

The underdeveloped service sector in Asia has the potential to become a new engine of economic growth for developing Asia, which has traditionally relied on export-oriented manufacturing to power its growth. The central objective of this paper is to empirically analyze the prospects for the service sector as a future engine of growth. Our analysis of 12 Asian economies indicates that the service sector already contributed substantially to the region’s growth in the past. Furthermore, somewhat surprisingly in light of the difficulty of achieving productivity gains in services, we also find that services labor productivity grew at a healthy pace in much of the region. Overall our analysis provides substantial cause for optimism about the role of the service sector as an engine of growth in Asia. However, some Asian countries where the service sector is currently struggling, such as the Republic of Korea and Thailand, will find it more challenging to develop the sector.

Suggested Citation

  • Park, Donghyun & Shin, Kwanho, 2012. "The Service Sector in Asia: Is It an Engine of Growth?," ADB Economics Working Paper Series 322, Asian Development Bank.
    • Handle: RePEc:ris:adbewp:0322
    Note: http://www.adb.org/sites/default/files/pub/2012/economics-wp322.pdf
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    Citations

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    Cited by:

    1. Valeriy V. Mironov & Liudmila D. Konovalova, 2019. "Structural changes and economic growth in the world economy and Russia," Russian Journal of Economics, ARPHA Platform, vol. 5(1), pages 1-26, April.
    2. Amrita Roy, 2022. "Structural change and labour productivity trend in the non-agricultural sector: a study of Asia," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 19(2), pages 227-249, December.
    3. Marcus Noland & Donghyun Park & Gemma B. Estrada, 2012. "Developing the Services Sector as Engine of Growth for Asia: An Overview," Working Paper Series WP12-18, Peterson Institute for International Economics.
    4. Ryan Rutkowski, 2015. "Service Sector Reform in China," Policy Briefs PB15-2, Peterson Institute for International Economics.
    5. Shandre Mugan Thangavelu & Lili Yan Ing & Shujiro Urata, . "Services Productivity and Trade Openness: Case of ASEAN," Chapters, in: Lili Yan Ing (ed.), East Asian Integration (First Edition), chapter 7, pages 195-222, Economic Research Institute for ASEAN and East Asia (ERIA).
    6. Hira Mujahid & Shaista Alam, 2020. "The Impact of Sectors Performance and Quality of Institutions on Economic Volatility: In Case of Asia," Asian Journal of Economic Modelling, Asian Economic and Social Society, vol. 8(4), pages 260-269, December.
    7. Keshab Ray & Meenakshi Sharma, 2021. "Antecedents and Outcomes of Brand Strength: A Study of Asian IT Organizations Towards Brand Sustainability," Corporate Reputation Review, Palgrave Macmillan, vol. 24(3), pages 128-142, August.
    8. Lee, Jong-Wha & McKibbin, Warwick J., 2018. "Service sector productivity and economic growth in Asia," Economic Modelling, Elsevier, vol. 74(C), pages 247-263.
    9. Uri Dadush, 2015. "Is Manufacturing Still a Key to Growth ?," Research papers & Policy papers 1507, Policy Center for the New South.
    10. Di Meglio, Gisela & Gallego, Jorge, 2022. "Disentangling services in developing regions: A test of Kaldor's first and second laws," Structural Change and Economic Dynamics, Elsevier, vol. 60(C), pages 221-229.
    11. Uwitonze, Eric & Heshmati, Almas, 2016. "Service Sector Development and its Determinants in Rwanda," IZA Discussion Papers 10117, Institute of Labor Economics (IZA).
    12. Minsheng Li & Lejie Li & Xun Li, 2022. "Restructuring Urban Outskirts Industrial Areas from the Industrial Clustering Perspective: A Case Study in Shunde, China," Land, MDPI, vol. 11(11), pages 1-16, November.
    13. Catherine Lam & Frank Walter & Kan Ouyang, 2014. "Display rule perceptions and job performance in a Chinese retail firm: The moderating role of employees’ affect at work," Asia Pacific Journal of Management, Springer, vol. 31(2), pages 575-597, June.
    14. Girik Allo, Albertus & Sukartini, Ni Made & Widodo, Tri, 2017. "Dynamic Changes in Comparative Advantage of Indonesian Agricultural Products," MPRA Paper 80028, University Library of Munich, Germany.
    15. Amrita Roy, 2015. "Expansion of Services Output Share: Traditional Factors or Policy Changes?," Global Economy Journal (GEJ), World Scientific Publishing Co. Pte. Ltd., vol. 15(3), pages 409-430, September.

    More about this item

    Keywords

    Services; structural change; growth; productivity; Asia;
    All these keywords.

    JEL classification:

    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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