Trade in Services and Asian Developing Economies

The world economy has been undergoing rapid structural transformation for the last three decades. The service sector, which has often been neglected in most economic discussions, has come to play an increasingly important role in this transformation. This is most visible in major developed economies, many of which have passed from the stage of industrial societies to that of service societies. For instance, in the United States, almost 70 per cent of total output stems from the service sector, while in most western European countries, services account for between 55 and 60 per cent of national output. A similar transition has taken place in other developed economies. The exception seems to be Norway, where the relative importance of services has declined (due to the exploitation of North Sea oil). Similarly, in terms of employment, there has been a concomitant increase in the role of services, the increase being most dramatic in the last 20–30 years. In many developed countries, the share of services in total employment is more than 60 per cent and in some it has reached 70 per cent. Most Asian developing economies, however, are predominantly agricultural and are now making strides toward industrialization. As the role of industries has become increasingly greater in recent years, so has that of services. Barring a few exceptions, such as Singapore and Sri Lanka, the importance of the service sector as a source of income and employment has expanded significantly in the last 30 years…