Publication: At Your Service?: The Promise of Services-Led Development
Loading...
Files
13,242 downloads
3,653 downloads
1,475 downloads
Date
2021-09-15
ISSN
Published
2021-09-15
Editor(s)
Abstract
Throughout history, industrialization has been synonymous with development. However, the trend of premature deindustrialization and the spread of automation technologies associated with Industry 4.0 has raised concerns that the development model based on export-led manufacturing seen in East Asia will be harder for hitherto less industrialized countries to replicate in the future. Can services-led development be an alternative? Contrary to conventional wisdom, the features of manufacturing that were considered uniquely conducive for productivity growth - such as international trade, scale economies, inter-sectoral linkages, and innovation - are increasingly shared by the services sector. But services are not monolithic. The twin gains of productivity growth and large-scale job creation for relatively low-skilled workers are less likely to come together in any given services subsector. The promise of services-led development in the future will be strengthened to the extent that technological change reduces the trade-off between productivity and jobs, and growth opportunities in services with potential for high productivity do not depend on a manufacturing base. Considering technological change and linkages between sectors while differentiating across types of services, this book assesses the scope of a services-driven development model and policy directions that maximize its potential.
Link to Data Set
Citation
“Nayyar, Gaurav; Hallward-Driemeier, Mary; Davies, Elwyn. 2021. At Your Service?: The Promise of Services-Led Development. © World Bank. http://hdl.handle.net/10986/35599 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Trouble in the Making?(Washington, DC: World Bank, 2017-09-20)Globalization and new technologies are impacting the desirability and feasibility of what has historically been the most successful development strategy. Manufacturing has been seen as special, promising both productivity gains and job creation. But trade is slowing. Global value chains (GVC) are maturing. Robotics, artificial intelligence, 3D printing, and the Internet of things are shifting what makes locations attractive for production and threatening significant disruptions in employment. There is a risk of increased polarization, within countries and across countries. Shifting the attention from high-income countries, this report takes the perspective of developing countries to ask: -- If new technologies reduce the importance of low-wage labor, how can developing countries compete? -- Do countries need to industrialize to develop? -- How can countries at different levels of development take advantage of new opportunities? Development strategies need to broaden. Different manufacturing sub-sectors can still provide productivity growth or jobs; fewer can deliver both. Many of the pro-development characteristics traditionally associated with manufacturing--tradability, scale, innovation, learning-by-doing--are increasingly features of services. With faster diffusion of technology, it will be all the more important for countries to improve the enabling environment, remain open to trade, and support capabilities of firms and workers to ensure future prosperity is shared.Publication Europe 4.0(World Bank, Washington, DC, 2020-11-09)This report examines the underlying economics of different types of digital technologies. It highlights what the new drivers of change are, why the dynamics with this latest round of technological change may be different, and what the distributional impacts may be within and across countries. It then examines the evidence for how different digital technologies are – or are not – contributing to competitiveness and opportunities for small and young firms, and firms in less developed areas, and what can be done about it. Europe faces a digital dilemma. European firms are particularly strong in operational technologies such as smart robotics and 3D printing. While this helps Europe's competitiveness, it also widens the divide between large and small firms, and leading and lagging regions. On the other hand, digital technologies, such as transactional technologies or matching platforms, have the greatest potential for market inclusion and convergence, but this is where Europe remains less competitive. The report lays out how Europe 4.0 is attainable. The COVID-19 (coronavirus) pandemic has highlighted the importance of the data economy — and raised the risks if the digital dilemma is not addressed. This report provides a framework, evidence and recommendations on how governments can respond. Europe has the chance to attain a dynamic and inclusive technologically enhanced future, it should take that chance.Publication Have Robots Grounded the Flying Geese? Evidence from Greenfield FDI in Manufacturing(World Bank, Washington, DC, 2019-12)For decades, manufacturers around the world have outsourced production to countries with lower labor costs. However, there is a concern that robotization in high-income countries will challenge this shifting international division of labor known as the "flying geese" paradigm. Greenfield foreign direct investment decisions constitute a forward-looking indicator of where production is expected, rather than trade flows that reflect past investment decisions. Exploiting differences across countries and industries, the intensity of robot use in high-income countries has a positive impact on foreign direct investment growth from high-income countries to low- and middle-income countries over 2004-15. Past a threshold, however, increased robotization in high-income countries has a negative impact on foreign direct investment growth. Only 3 percent of the sample exceeds the threshold level beyond which further automation results in negative foreign direct investment growth and is consistent with re-shoring. For another 25 percent of the sample, the impact of robotization on the growth of foreign direct investment is positive, but at a rate that is declining. So, although these are early warning signs, automation in high-income countries has resulted in growing foreign direct investment for more than two-thirds of the sample under consideration. Some geese may be slowing, but for now, most continue to fly.Publication Services-Led Growth(World Bank, Washington, DC, 2023-03-28)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.Publication The Impact of the Investment Climate on Employment Growth : Does Sub-Saharan Africa Mirror Other Low-Income Regions?(2010-02-01)Using survey data from 86,000 enterprises in 104 countries, including 17,000 enterprises in 31 Sub-Saharan African countries, this paper finds that average enterprise-level employment growth rates are remarkably similar across regions. This is true despite significant differences in the quality of the investment climate in which these enterprises operate. Objective measures of investment climate conditions (including the number of outages, the share of firms with bank loans, and others) indicate that conditions are most challenging within Sub-Saharan Africa, as well as for smaller enterprises. However, enterprises employment in Sub-Saharan Africa is less sensitive to changes in access to infrastructure and finance relative to other low-income regions. This can be understood by looking at non-linear effects by firm size -- and the finding that these size effects are particularly strong within Sub-Saharan Africa. Although unreliable infrastructure services and inadequate access to finance generally hamper growth, in Sub-Saharan Africa they are actually associated with higher employment growth rates among micro enterprises. Although employment growth is good news in Sub-Saharan Africa, that much of the expanded employment is in small, labor-intensive, less productive enterprises raises longer-run concerns about the efficiency of the allocation of resources and aggregate productivity growth in the region.
Users also downloaded
Showing related downloaded files
Publication Services Unbound(Washington, DC: World Bank, 2024-12-09)Services are a new force for innovation, trade, and growth in East Asia and Pacific. The dramatic diffusion of digital technologies and partial policy reforms in services--from finance, communication, and transport to retail, health, and education--is transforming these economies. The result is higher productivity and changing jobs in the services sector, as well as in the manufacturing sectors that use these services. A region that has thrived through openness to trade and investment in manufacturing still maintains innovation-inhibiting barriers to entry and competition in key services sectors. 'Services Unbound: Digital Technologies and Policy Reform in East Asia and Pacific' makes the case for deeper domestic reforms and greater international cooperation to unleash a virtuous cycle of increased economic opportunity and enhanced human capacity that would power development in the region.Publication Women, Business and the Law 2024(Washington, DC: World Bank, 2024-03-04)Women, Business and the Law 2024 is the 10th in a series of annual studies measuring the enabling conditions that affect women’s economic opportunity in 190 economies. To present a more complete picture of the global environment that enables women’s socioeconomic participation, this year Women, Business and the Law introduces two new indicators—Safety and Childcare—and presents findings on the implementation gap between laws (de jure) and how they function in practice (de facto). This study presents three indexes: (1) legal frameworks, (2) supportive frameworks (policies, institutions, services, data, budget, and access to justice), and (3) expert opinions on women’s rights in practice in the areas measured. The study’s 10 indicators—Safety, Mobility, Workplace, Pay, Marriage, Parenthood, Childcare, Entrepreneurship, Assets, and Pension—are structured around the different stages of a woman’s working life. Findings from this new research can inform policy discussions to ensure women’s full and equal participation in the economy. The indicators build evidence of the critical relationship between legal gender equality and women’s employment and entrepreneurship. Data in Women, Business and the Law 2024 are current as of October 1, 2023.Publication Business Ready 2024(Washington, DC: World Bank, 2024-10-03)Business Ready (B-READY) is a new World Bank Group corporate flagship report that evaluates the business and investment climate worldwide. It replaces and improves upon the Doing Business project. B-READY provides a comprehensive data set and description of the factors that strengthen the private sector, not only by advancing the interests of individual firms but also by elevating the interests of workers, consumers, potential new enterprises, and the natural environment. This 2024 report introduces a new analytical framework that benchmarks economies based on three pillars: Regulatory Framework, Public Services, and Operational Efficiency. The analysis centers on 10 topics essential for private sector development that correspond to various stages of the life cycle of a firm. The report also offers insights into three cross-cutting themes that are relevant for modern economies: digital adoption, environmental sustainability, and gender. B-READY draws on a robust data collection process that includes specially tailored expert questionnaires and firm-level surveys. The 2024 report, which covers 50 economies, serves as the first in a series that will expand in geographical coverage and refine its methodology over time, supporting reform advocacy, policy guidance, and further analysis and research.Publication Global Economic Prospects, January 2025(Washington, DC: World Bank, 2025-01-16)Global growth is expected to hold steady at 2.7 percent in 2025-26. However, the global economy appears to be settling at a low growth rate that will be insufficient to foster sustained economic development—with the possibility of further headwinds from heightened policy uncertainty and adverse trade policy shifts, geopolitical tensions, persistent inflation, and climate-related natural disasters. Against this backdrop, emerging market and developing economies are set to enter the second quarter of the twenty-first century with per capita incomes on a trajectory that implies substantially slower catch-up toward advanced-economy living standards than they previously experienced. Without course corrections, most low-income countries are unlikely to graduate to middle-income status by the middle of the century. Policy action at both global and national levels is needed to foster a more favorable external environment, enhance macroeconomic stability, reduce structural constraints, address the effects of climate change, and thus accelerate long-term growth and development.Publication Vietnam(World Bank, Hanoi, 2020-05-01)Following from Vietnam’s ratification of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in late 2018 and its effectiveness from January 2019, and the European Parliament’s recent approval of the European Union-Vietnam Free Trade Agreement (EVFTA) and its subsequent planned ratification by the National Assembly in May 2020, Vietnam has further demonstrated its determination to be a modern, competitive, open economy. As the COVID-19 (Coronavirus) crisis has clearly shown, diversified markets and supply chains will be key in the future global context to managing the risk of disruptions in trade and in supply chains due to changing trade relationships, climate change, natural disasters, and disease outbreaks. In those regards, Vietnam is in a stronger position than most countries in the region. The benefits of globalization are increasingly being debated and questioned. However, in the case of Vietnam, the benefits have been clear in terms of high and consistent economic growth and a large reduction in poverty levels. As Vietnam moves to ratify and implement a new generation of free trade agreements (FTAs), such as the CPTPP and EVFTA, it is important to clearly demonstrate, in a transparent manner, the economic gains and distributional impacts (such as sectoral and poverty) from joining these FTAs. In the meantime, it is crucial to highlight the legal gaps that must be addressed to ensure that national laws and regulations are in compliance with Vietnam’s obligations under these FTAs. Readiness to implement this new generation of FTAs at both the national and subnational level is important to ensure that the country maximizes the full economic benefits in terms of trade and investment. This report explores the issues of globalization and the integration of Vietnam into the global economy, particularly through implementation of the EVFTA.