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

Marcus Noland (), Donghyun Park () and Gemma Estrada ()

No WP12-18, Working Paper Series from Peterson Institute for International Economics

Abstract: The maturing of the manufacturing sector in many Asian countries, combined with the relative backwardness of its services sector, has made services sector development a top priority for developing Asia. Our central objective is to broadly survey and analyze the current landscape of the region's services 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 services 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 services sector data. Overall, while services 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 services 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 services sector.

Keywords: Services; structural change; growth; productivity; Asia (search for similar items in EconPapers)
JEL-codes: L8 O14 O40 O47 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cwa and nep-sea
Date: 2012-10
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Working Paper: Developing the Service Sector as Engine of Growth for Asia: An Overview (2012)
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