Services-Led Development in Tunisia: Reclaiming an Interrupted Trajectory

This paper is the third in a series of country and comparative studies that together comprise a research program on services as drivers of economic growth and structural transformation in the Global South. The paper analyzes the pattern of Tunisia's services-led economic growth from 2012- 2022 using a specialized three-category framework: knowledge services (KS), enabling services (ES), and local services (LS). Using data from the OECD Trade in Value Added (TiVA), Trade in Employment (TiM), and Input-Output databases, the study evaluates Tunisia’s structural transformation against regional peers Morocco and Egypt, as well as EU15 and US benchmarks. The analysis focuses on indicators of global value chain (GVC) integration, domestic production linkages, employment structure and external demand, and productivity to determine if Tunisian services are serving as engines of growth and export-led convergence. The analysis reveals a structural trajectory that is unique in the North African dataset: Tunisia entered the period with KS firms importing foreign specialized intermediates at rates matching or exceeding EU15 levels, providing an initial structural advantage over both Morocco and Egypt. Yet Tunisia systematically surrendered that advantage in the decade to 2022 as foreign input sourcing declined across every major KS sub-sector, while the EU15 benchmark rose. Upstream GVC participation, meanwhile, remained below EU15 levels in all but one KS sector, confirming that initial input openness never converted into deep structural embedding in global production networks. The result is a services economy that has drifted in an unfavorable direction in terms of composition: the KS GDP share has declined, while public administration has expanded, and forward GVC integration has weakened across most tradable sub-sectors. Reversing this trajectory requires macroeconomic stabilization as a precondition, combined with deliberate investment to scale professional and technical services—the one KS sub-sector that has demonstrated international resilience—and to deepen the ICT sector's GVC embedding, before its initial structural advantages erode further.