Stage two of modern economic development: the Service Revolution

Part VII focuses on the present and possible futures. This chapter examines the service phase and the notion of a service revolution. It outlines the main characteristics of a service and classifies service into four main groups. The most important enabling condition is a significant increase in income per head. Entry into a service economy is therefore more a matter of location on the demand than on the supply side of the economy. Increasingly, niche industrial goods are enveloped in a package of services. The chapter also examines the nature of the general-purpose technologies which mark entry into the phase. In a modern developed economy services are by far the greatest contributor to overall employment and to gross domestic product. This chapter concludes with a discussion of the difficulties experience by Japan in moving through the service phase and the premature entry of India.