The Service Sector in Lower-Income Asian Economies
This paper reviews the main barriers to growth of the service sectors in six lower-income countries spread across different subregions of developing Asia. It also reviews policy options that can contribute towards the inclusive growth of these countries.
In the past 10 years, the service sector has been a significant contributor to overall economic growth in Bangladesh, Cambodia, Nepal, Papua New Guinea, Uzbekistan, and Viet Nam. Sector growth has been supported by strong industrial growth in some while in others the critical factors have been liberalization, structural reforms, government support, and foreign investments. In order to increase the labor productivity of the sector and realize its potential to contribute to inclusive growth, these countries must address gaps in human capital and the higher costs of setting up new businesses and of doing business that stifle entrepreneurship and private enterprise. These impediments also stand in the way of developing the industry sector and of broader economic growth and development. Policy reforms that ease those impediments will help to achieve balanced growth in which the service and industry sectors support and reinforce each other. As services tend to be more labor intensive, they can foster inclusive growth by serving as an engine for creating jobs.
- Country Experiences
- Papua New Guinea
- Viet Nam
- Concluding Observations