WORKING PAPER 12-18

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

by Marcus Noland, Peterson Institute for International Economics
and Donghyun Park, Asian Development Bank
and Gemma B. Estrada, Asian Development Bank

October 2012

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. The authors' 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. Their 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 the services sector on poverty reduction is less clear but the authors 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.

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RELATED LINKS

Book: Global Trade in Services: Fear, Facts, and Offshoring September 2011

Policy Brief 12-10: Framework for the International Services Agreement April 2012

Policy Brief 08-1: "Fear" and Offshoring: The Scope and Potential Impact of Imports and Exports of Services January 2008

Book: Accelerating the Globalization of America: The Role for Information Technology June 2006

Working Paper 05-9: Tradable Services: Understanding the Scope and Impact of Services Outsourcing September 2005

Paper: This is Bangalore Calling: Hang Up or Speed Dial? What Technology-Enable International Trade in Services Means for the US Economy January 15, 2005

Paper: Outsourcing--Stains on the White Collar? February 2004

Policy Brief 03-11: Globalization of IT Services and White Collar Jobs: The Next Wave of Productivity Growth December 2003



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