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Two Waves of Service-Sector Growth

Author

Listed:
  • Barry Eichengreen

    () (Indian Council for Research on International Economic Rela)

  • Poonam Gupta

    () (Indian Council for Research on International Economic Rela)

Abstract

The positive association between the service sector share of output and per capita income is one of the best-known regularities in all of growth and development economics. Yet there is less than complete agreement on the nature of that association. Here we identify two waves of service sector growth, a first wave in countries with relatively low levels of per capita GDP and a second wave in countries with higher per capita incomes. The first wave appears to be made up primarily of traditional services, the second wave of modern (financial, communication, computer, technical, legal, advertising and business) services that are receptive to the application of information technologies and increasingly tradable across borders. In addition, there is evidence of the second wave occurring at lower income levels after 1990. But this change in the second wave is not equally evident in all economies: it is most apparent in democracies, in countries that are open to trade, and in those that are relatively close to the major global financial centers. This points to both political and economic conditions that can help countries capitalize on the opportunities afforded by an increasingly globalized post-industrial economy.

Suggested Citation

  • Barry Eichengreen & Poonam Gupta, "undated". "Two Waves of Service-Sector Growth," Indian Council for Research on International Economic Relations, New Delhi Working Papers 235, Indian Council for Research on International Economic Relations, New Delhi, India.
  • Handle: RePEc:ind:icrier:235
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    File URL: http://www.icrier.org/publication/WorkingPaper235.pdf
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    References listed on IDEAS

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    1. Alex M. Mutebi, 2007. "Regulatory Responses to Large-format Transnational Retail in South-east Asian Cities," Urban Studies, Urban Studies Journal Limited, vol. 44(2), pages 357-379, February.
    2. Thomas Reardon & Spencer Henson & Julio Berdegué, 2007. "'Proactive fast-tracking' diffusion of supermarkets in developing countries: implications for market institutions and trade," Journal of Economic Geography, Oxford University Press, vol. 7(4), pages 399-431, July.
    3. AfDB AfDB, . "AfDB Group Annual Report 2005," Annual Report, African Development Bank, number 61 edited by Koua Louis Kouakou.
    4. Berdegue, Julio A. & Balsevich, Fernando & Flores, Luis & Reardon, Thomas, 2005. "Central American supermarkets' private standards of quality and safety in procurement of fresh fruits and vegetables," Food Policy, Elsevier, vol. 30(3), pages 254-269, June.
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    More about this item

    Keywords

    Services; Growth; Structural change; traditional services modern services;

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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