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Services and economic growth in Pacific Island countries

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  • Azmat Gani
  • Michael D. Clemes

Abstract

Purpose - The purpose of this paper is to present an empirical study of the contribution of the services sector to per capita economic growth for Pacific Island countries. Design/methodology/approach - Within the new growth theory framework, the empirical procedure consisted of the regression analysis of data using the panel data fixed effects procedure. Findings - The results confirm the positive and statistically significant correlation of services growth to per capita gross domestic product growth. Research limitations/implications - Limitations largely centre on the use of aggregate cross‐country data. Variations may be found in what actually drives the services growth at the country level. Thus, a country‐specific study would be more appropriate in order to get more robust results. Also, the data do not capture the effect of non‐market services. Disaggregate services data that separate market data services with non‐market services would provide a more accurate picture of the influence of non‐market services. Practical implications - The practical implication is that that service sectors in the Pacific Island countries ought to be given greater support, for example, investment in physical and institutional infrastructure, market access, financial support, skill development and investment incentives. Social implications - Pacific Islands services sectors contribute to household welfare through paid employment and meet household demands of service sector output. Originality/value - This paper presents the first study among the Pacific Island countries that has examined the importance of services sector and its contribution to growth. The findings of this study are useful to Pacific policy makers in terms of improving the services sector through instituting appropriate growth enhancing policies.

Suggested Citation

  • Azmat Gani & Michael D. Clemes, 2010. "Services and economic growth in Pacific Island countries," International Journal of Development Issues, Emerald Group Publishing Limited, vol. 9(2), pages 113-130, July.
    • Handle: RePEc:eme:ijdipp:v:9:y:2010:i:2:p:113-130
    DOI: 10.1108/14468951011062327
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    Cited by:

    1. Peter A. Petri & Michael G. Plummer & Fan Zhai, 2010. "The Economics of the ASEAN Economic Community," Working Papers 13, Brandeis University, Department of Economics and International Business School.
    2. Dibyendu Maiti & Sunil Kumar, 2016. "Regional agreements, trade cost and flows in the Pacific," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 33(2), pages 181-199, August.
    3. Michael D. Clemes & Baiding Hu & Xuedong Li, 2016. "Services and economic growth in China: an empirical analysis," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 21(4), pages 612-627, October.
    4. Jeffrey A Edwards & Alfredo A. Romero, 2020. "Volatility, island nations and small states," Economics and Business Letters, Oviedo University Press, vol. 9(3), pages 248-254.
    5. Kemal Soyer & Hale Ozgit & Husam Rjoub, 2020. "Applying an Evolutionary Growth Theory for Sustainable Economic Development: The Effect of International Students as Tourists," Sustainability, MDPI, vol. 12(1), pages 1-20, January.
    6. Vusal Murselzade & Behiye Cavusoglu, 2021. "Relationship between the Service Sector and Economic Growth: Evidence from China," Asian Journal of Social Sciences and Management Studies, Asian Online Journal Publishing Group, vol. 8(1), pages 15-22.

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