Servicification: Its Meaning and Policy Implications

Abstract

Services account for about 80 percent of employment and 75 percent of GDP in OECD countries. In Korea, the ratio of the service industry in total employment is 70.2 percent, and its ratio in total GDP is 59.2 percent as of 2016. In major emerging economies, the ratios are between 40 and 70 percent on both accounts. Furthermore, these ratios are steadily increasing over time. In relation to this phenomenon, servicification means that services are becoming more important in manufacturing activities. In other words, the servicification of manufacturing can be defined as the fact that manufacturing increasingly buys, produces and sells services. More and more services are embedded in manufacturing goods. Likewise, manufacturing firms produce increasingly more services nowadays. For example, the share of services in total sales of the tech company IBM is about 60 percent, exceeding that of manufacturing.