Developing the Service Sector as an Engine of Growth for Asia

Publication | October 2013

Developing the service sector can yield far-reaching benefits for Asia’s economy. The service sector already accounts for a substantial share of developing Asia’s output, employment, and growth.

  • US$55.25 (hard copy)

The service sector already plays a critical role in developing Asia's economy and is set to grow even further in the future. Services are now a vital source of output, growth, and jobs in the region, but suffer from very low productivity levels. The central challenge for Asia's service sector is to move from traditional, low value-added activities to modern, high value-added activities. This book analyzes the current state of the region's service sector, the salient barriers to service sector development, and the prospects for the sector to serve as an engine for inclusive growth. The guiding principle for Asian policy makers must be to create more competitive service markets by breaking down regulatory barriers which protect vested interests. Such barriers keep out domestic and foreign competitors, and thus stifle efficiency and innovation. While tackling the vested interests requires a great deal of political will, doing so is absolutely essential for more productive services. Complementary investments in human capital and physical infrastructure will also speed up service sector development.

Key facts and findings

  • The service sector already plays a major role in developing Asia's economies.
  • Services are a large and growing source of jobs across the region.
  • Services are set to expand even further in the coming years.
  • Developing Asia's service sector suffers from markedly low labor productivity.
  • Low labor productivity partly reflects the dominant role of traditional services.
  • Regulatory, infrastructure, and human capital bottlenecks constrain service sector productivity.
  • Modern services of particular importance to Asia are business-related services.
  • Growing per capita gross domestic product will help to lift labor productivity in developing Asia's service sector.
  • Trade in services also boosts productivity.
  • Developing Asia's service trade has been growing, and there is scope for further growth.
  • The region's service industries face an inadequate regulatory environment.
  • Service sector development can contribute to poverty reduction and inclusive growth in developing Asia.


The future of the sector depends on whether the expansion of services in Asia is driven by dynamic, open competition or by the inflexible protection of vested interests. If competition prevails, Asia can establish a robust, highly productive sector generating collateral benefits for other industries and providing services that power inclusive growth. Competition, in particular foreign competition, worked miracles for manufacturing in Asia as the region transformed itself into the factory of the world. It can work new miracles for the region's service sectors and for the broader economy.


  • Services as an Engine of Growth
  • Regional Studies
  • Country Studies
  • Key Findings and Recommendations

Additional Details

  • 412
  • 6 x 9
  • BKK135945-2
  • 978-92-9254-262-7 (Print)
  • 978-92-9254-263-4 (e-ISBN)

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