Tertiary Sector Hypertrophy during Development: An Examination of Regional Variation

Third World countries are evidencing a dramatic growth of informal services that has made the size of their tertiary sector relative to the secondary considerably larger than that observed historically in the now industrialized countries. Although this phenomenon of tertiary sector hypertrophy has received much attention in the literature, the possibility of regional variation within the Third World has been relatively unexplored. It is argued that there are strong rationales for expecting a spatial variation in the sectoral partitioning of labor and in tertiary sector hypertrophy, and that the experiences of less developed countries cannot be generalized. Empirical analysis using 1980 data from 108 countries shows that countries in Africa exhibited the highest levels of tertiary hypertrophy at a given income level, followed by Asia and Latin America. Regional differences are apparent in the income level at which the maximum hypertrophy is observed. It is suggested that analyses of structural changes in development need to be sensitive to the spatial, temporal, and contextual milieux.