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

48 Pages Posted: 9 Jan 2013

See all articles by Marcus Noland

Marcus Noland

Peter G. Peterson Institute for International Economics; East-West Center

Donghyun Park

Asian Development Bank - Economic Research

Gemma Bolotaulo Estrada

Asian Development Bank - Economic Research

Date Written: November 2012

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.

Keywords: structural change, growth, productivity, Asia

JEL Classification: L8, O14, O40, O47

Suggested Citation

Noland, Marcus and Park, Donghyun and Estrada, Gemma Bolotaulo, Developing the Service Sector as Engine of Growth for Asia: An Overview (November 2012). Asian Development Bank Economics Working Paper Series No. 320, Available at SSRN: https://ssrn.com/abstract=2198159 or http://dx.doi.org/10.2139/ssrn.2198159

Marcus Noland (Contact Author)

Peter G. Peterson Institute for International Economics ( email )

1750 Massachusetts Avenue, NW
Washington, DC 20036
United States

East-West Center ( email )

1601 East-West Road
Honolulu, HI 96848-1601
United States

Donghyun Park

Asian Development Bank - Economic Research ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

Gemma Bolotaulo Estrada

Asian Development Bank - Economic Research ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

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