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Developing the Service Sector as Engine of Growth for Asia: An Overview

Author

Listed:
  • Noland, Marcus

    (Peterson Institute for International Economics)

  • Park, Donghyun

    (Asian Development Bank)

  • Estrada, Gemma B.

    (Asian Development Bank)

Abstract

The maturing of the manufacturing sector in many Asian countries, combined with the relative backwardness of its service sector, has made service sector development a top priority for developing Asia. Our central objective is to broadly survey and analyze the current landscape of the region’s service sector so as to assess its potential to serve as an engine for inclusive economic growth. Our analysis indicates that services are already an important source of output, growth, and jobs in the region. However, its productivity greatly lags that of the advanced economies, which implies ample room for further growth. The impact of service sector on poverty reduction is less clear but we do find some limited evidence of a poverty reduction effect. One key challenge for all Asian countries is to improve the quality of service sector data. Overall, while service sector development is a long and challenging process, creating more competitive services markets by removing a wide range of internal and external policy distortions is vital for improving service sector productivity. As important as such policy reforms are, complementary investments in physical infrastructure and human capital will also be necessary to achieve a strong service sector.

Suggested Citation

  • Noland, Marcus & Park, Donghyun & Estrada, Gemma B., 2012. "Developing the Service Sector as Engine of Growth for Asia: An Overview," ADB Economics Working Paper Series 320, Asian Development Bank.
  • Handle: RePEc:ris:adbewp:0320
    Note: http://www.adb.org/sites/default/files/pub/2012/economics-wp320.pdf
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    References listed on IDEAS

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    1. Dirk Pilat & Anita Wölfl, 2005. "Measuring the Interaction Between Manufacturing and Services," OECD Science, Technology and Industry Working Papers 2005/5, OECD Publishing.
    2. Ghani, Ejaz & Kharas, Homi, 2010. "The Service Revolution," World Bank - Economic Premise, The World Bank, issue 14, pages 1-5, May.
    3. Joseph Francois & Bernard Hoekman, 2010. "Services Trade and Policy," Journal of Economic Literature, American Economic Association, vol. 48(3), pages 642-692, September.
    4. Gootiiz, Batshur & Mattoo, Aaditya, 2009. "Services in Doha : what's on the table ?," Policy Research Working Paper Series 4903, The World Bank.
    5. Perotti, Roberto, 1996. "Growth, Income Distribution, and Democracy: What the Data Say," Journal of Economic Growth, Springer, vol. 1(2), pages 149-187, June.
    6. Leamer, Edward E, 1987. "Paths of Development in the Three-Factor, n-Good General Equilibrium Model," Journal of Political Economy, University of Chicago Press, vol. 95(5), pages 961-999, October.
    7. Marcus Noland & Howard Pack, 2003. "Industrial Policy in an Era of Globalization: Lessons from Asia," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 358.
    8. Jed Kolko, 2010. "Urbanization, Agglomeration, and Coagglomeration of Service Industries," NBER Chapters,in: Agglomeration Economics, pages 151-180 National Bureau of Economic Research, Inc.
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    Cited by:

    1. Guna Raj Bhatta, 2014. "Structural Changes in a Small and Open Economy: Evidences from Nepal," NRB Working Paper 23/2014, Nepal Rastra Bank, Research Department.
    2. Yothin Jinjarak & Paulo Jose Mutuc & Ganeshan Wignaraja, 2014. "Does Finance Really Matter for the Participation of SMEs in International Trade? Evidence from 8,080 East Asian Firms," Trade Working Papers 24047, East Asian Bureau of Economic Research.
    3. Guna Raj Bhatta, 2014. "Structural Change and Per Capita Income in Nepal: Empirical Evidences," NRB Economic Review, Nepal Rastra Bank, Research Department, vol. 26(2), pages 41-60, October.
    4. Peter Daniels & Pengfei Ni, 2014. "Urbanisation and changes in the sectoral structure of economic development: the scale of the manufacturing sector in Chinese cities and the shift towards service industry," Working Papers hal-00943972, HAL.
    5. Claes G. Alvstam & Erja Kettunen & Patrik Ström, 2017. "The service sector in the free-trade agreement between the EU and Singapore: closing the gap between policy and business realities," Asia Europe Journal, Springer, vol. 15(1), pages 75-105, March.
    6. Wignaraja, Ganeshan, 2014. "Assessing the Experience of South Asia–East Asia Integration and India’s Role," ADBI Working Papers 465, Asian Development Bank Institute.

    More about this item

    JEL classification:

    • L8 - Industrial Organization - - Industry Studies: Services
    • 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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