Developing the Service Sector As an Engine of Growth for Asia

Abstract

The service sector already plays a critical role in developing Asia’s economy and is set to grow even further in the future. Services are now a vital source of output, growth, and jobs in the region, but suffer from very low productivity levels. The central challenge for Asia’s service sector is to move from traditional, low value-added activities to modern, high value-added activities. This book analyzes the current state of the region’s service sector, the salient barriers to service sector development, and the prospects for the sector to serve as an engine for inclusive growth. The guiding principle for Asian policy makers must be to create more competitive service markets by breaking down regulatory barriers which protect vested interests. Such barriers keep out domestic and foreign competitors, and thus stifle efficiency and innovation. While tackling the vested interests requires a great deal of political will, doing so is absolutely essential for more productive services. Complementary investments in human capital and physical infrastructure will also speed up service sector development.