Publication: Services-Led Growth: Better Prospects after the Pandemic?
Date
2023-03-28
ISSN
Published
2023-03-28
Author(s)
Nayyar, Gaurav
Davies, Elwyn
Abstract
The service sector accounted for
two-thirds of economic growth in emerging market and
developing economies over the past three decades. It
consists of a wide range of activities, ranging from
high-skilled offshorable services, such as information and
communications technology (ICT) and professional services,
to low-skilled “contact” services, such as retail and
hospitality. The pandemic disrupted many low-skilled contact
services that typically require face-to-face interactions
between providers and consumers. High-skilled offshorable
services were the least affected owing to the use of digital
technology that enabled remote delivery. Increased
digitalization has improved prospects for scale economies
and innovation in the service sector that were previously
constrained by the need for physical proximity and the lack
of opportunities to augment labor with capital. Policies to
support the diffusion of digital technologies could
therefore further raise the growth potential of the service
sector. Policies to improve market access for, and skills
in, ICT and professional services could ease important
constraints on growth opportunities in these high-skilled
offshorable services that have best withstood the pandemic.
The same holds true for policies, including regulatory
reforms, that promote investment in low-skilled contact
services, such as transportation, which have important
linkages with the wider economy.
Citation
“Nayyar, Gaurav; Davies, Elwyn. 2023. Services-Led Growth: Better Prospects after the Pandemic?. Policy Research Working Papers; 10382. © World Bank, Washington, DC. http://hdl.handle.net/10986/39609 License: CC BY 3.0 IGO.”