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Service Sector Productivity and Economic Growth in Asia
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Service Sector Productivity and Economic Growth in Asia

Author

Listed:
  • Lee, Jong-Wha

    (Asian Development Bank Institute)

  • McKibbin, Warwick J.

    (Asian Development Bank Institute)

Abstract

This paper explores the impacts of more rapid growth in labor productivity in the service sector in Asia based on an empirical general equilibrium model. The model allows for input–output linkages and capital movements across industries and economies, and consumption and investment dynamics. We find that faster productivity growth in the service sector in Asia benefits all sectors eventually, and contributes to the sustained and balanced growth of Asian economies, but the dynamic adjustment is different across economies. This adjustment depends on the sectoral composition of each economy, the capital intensity of each sector, and the openness of each sector to international trade. In particular, during the adjustment to higher services productivity growth, there is a significant expansion of the durable manufacturing sector that is required to provide the capital stock that accompanies the higher aggregate economic growth rate.

Suggested Citation

  • Lee, Jong-Wha & McKibbin, Warwick J., 2014. "Service Sector Productivity and Economic Growth in Asia," ADBI Working Papers 490, Asian Development Bank Institute.
    • Handle: RePEc:ris:adbiwp:0490
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    More about this item

    Keywords

    service sector; labor productivity; general equilibrium model; asian economies;
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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