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The Pivotal Role of Services in Transitional Economies: Lessons from the West

Author

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  • Kolleen Rask

    (Department of Economics, College of the Holy Cross)

  • Kevin Rask

    (Department of Economics, Colgate University)

Abstract

A critical lesson to be learned from developed market economies is that strategic services are at the core of an efficiently operating market system. Paradoxically, in transitional economies striving to create a private market structure, services tend to be the least developed, least appreciated, and unbalanced sector. This condition derives from the heritage of socialist countries which is largely one of supplanting these essential services functions with a command structure in which development of independent service industries lags that of manufacturing and agriculture. Improving our understanding of the significance, composition, and evolution of service industries in the development process of market economies is an important contribution to the current economic transition process. This extensive experience serves to illustrate not only the pivotal role of services in facilitating growth and development, but also the dynamic and flexible public policy toward services. Western service development, therefore, is used as a basis for projecting current and future needs of service industries in transitional economies. There is strong evidence that without efficient service industries, other sectors of the economy stagnate, a situation which must be strenuously avoided in the fragile political environment of most transitional economies.

Suggested Citation

  • Kolleen Rask & Kevin Rask, 1994. "The Pivotal Role of Services in Transitional Economies: Lessons from the West," Working Papers 9405, College of the Holy Cross, Department of Economics.
    • Handle: RePEc:hcx:wpaper:9405
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    References listed on IDEAS

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    1. Laurits R. Christensen & Dale W. Jorgenson, 1969. "The Measurement Of U.S. Real Capital Input, 1929–1967," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 15(4), pages 293-320, December.
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    Cited by:

    1. Gács, János, 2002. "Structural Change and Catching Up: Experience of the Ten Candidate Countries," MPRA Paper 60339, University Library of Munich, Germany.
    2. Ilona Kovacs, 1999. "Business services in Hungary during the transition," CERS-IE WORKING PAPERS 9904, Institute of Economics, Centre for Economic and Regional Studies.
    3. János Gács, 2003. "Transition, EU Accession and Structural Convergence," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 30(3), pages 271-303, September.
    4. Desislava Kolarova, 2006. "Microeconomic Aspects in Business Services’ Development: the Case of Bulgaria," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 2, pages 90-119.
    5. David Chu & Kolleen Rask, 2000. "The Transformation of China’s Health Care System and Accounting Methods: Current Reforms and Developments," Working Papers 0003, College of the Holy Cross, Department of Economics.
    6. Barran, Fernando & Kegels, Chantal, 1996. "Channels of Monetary Policy in a Transition Country: Hungary," LIDAM Discussion Papers IRES 1996016, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).

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    Keywords

    transition economies; services;

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