1. As economies develop and incomes rise, the agricultural sector declines in importance while the industrial sector grows, followed by growth in the service sector. This reflects changes in consumer demand and relative productivity between sectors.
2. As incomes continue rising, demand shifts from material goods to services like healthcare, education, and communications. Productivity increases more slowly in services since many jobs can't be automated. This leads services to make up a larger share of GDP and employment.
3. In developed economies, the service sector now dominates and industrialization is complete. Developing economies still industrialize while growing their services sector, which supports education and sustainable development with fewer resource needs.
1. As economies develop and incomes rise, the agricultural sector declines in importance while the industrial sector grows, followed by growth in the service sector. This reflects changes in consumer demand and relative productivity between sectors.
2. As incomes continue rising, demand shifts from material goods to services like healthcare, education, and communications. Productivity increases more slowly in services since many jobs can't be automated. This leads services to make up a larger share of GDP and employment.
3. In developed economies, the service sector now dominates and industrialization is complete. Developing economies still industrialize while growing their services sector, which supports education and sustainable development with fewer resource needs.
Copyright:
Attribution Non-Commercial (BY-NC)
Available Formats
Download as DOC, PDF, TXT or read online from Scribd
1. As economies develop and incomes rise, the agricultural sector declines in importance while the industrial sector grows, followed by growth in the service sector. This reflects changes in consumer demand and relative productivity between sectors.
2. As incomes continue rising, demand shifts from material goods to services like healthcare, education, and communications. Productivity increases more slowly in services since many jobs can't be automated. This leads services to make up a larger share of GDP and employment.
3. In developed economies, the service sector now dominates and industrialization is complete. Developing economies still industrialize while growing their services sector, which supports education and sustainable development with fewer resource needs.
Copyright:
Attribution Non-Commercial (BY-NC)
Available Formats
Download as DOC, PDF, TXT or read online from Scribd
service industry. their demand for food—the main Everything that grows also product of changes its agriculture—reaches its natural structure. Just as a growing tree limit, and they begin to demand constantly changes the shape, relatively more industrial goods. size, and configuration of its At the same time, branches, a growing because of new farm techniques economy changes the and proportions and machinery, labor productivity interrelations among its basic increases sectors— faster in agriculture than in agriculture, industry, and industry, making services and agricultural products relatively between other sectors—rural less and urban, expensive and further public and private, domestic- diminishing their and export-oriented. share in gross domestic product (GDP). Industrialization and Post-industrialization The same trend in relative labor productivity also diminishes the One way to look at the structure need for agricultural workers, of an while employment economy is to compare the opportunities in industry grow. shares of its As a result industrial output three main sectors—agriculture, takes over a larger share of GDP industry, and services—in the country’s than agriculture and total output and employment. Initially, employment in industry agriculture is a developing economy’s becomes predominant. most important sector. But as income per capita rises, agriculture loses its primacy, Post-industrialization giving way first to a rise in the industrial As incomes continue to rise, sector, then to a rise in the service sector. people’s These two consecutive shifts are called needs become less “material” industrialization and and they postindustrialization (or begin to demand more services “deindustrialization”). —in health, education, All growing economies are likely to entertainment, and go through these stages, which can be explained by structural many other areas. Meanwhile, changes in labor productivity in services consumer demand and in the does not grow as relative fast as it does in agriculture and labor productivity of the three industry main because most service jobs economic sectors. cannot be filled by machines. This makes health, education—and some services quite more expensive relative to new—modern communications, agricultural information, and business and industrial goods, further services. Producing services increasing tends to require relatively less the share of services in GDP. natural capital and more The lower human capital than producing mechanization of services also agricultural or industrial goods. explains As a result demand has grown why employment in the service for more educated workers, sector prompting countries to invest continues to grow while more in education—an overall employment in benefit to their people. Another agriculture and industry declines benefit of the growing service because sector is that by using fewer of technological progress that natural resources than increases agriculture or industry, it puts labor productivity and less pressure on the local, eliminates jobs. regional, and global environment. Eventually the service sector 53 replaces the industrial sector as Conserving natural capital and the leading sector of the building economy. Most high-income up human capital may help countries today are global development become postindustrializing—becoming more environmentally and less reliant on industry—while socially sustainable. Growth of most lowincome countries are the industrializing— becoming more service sector will not, however, reliant on industry . But even in be a miracle solution to the countries that problem of sustainability, are still industrializing, the because agricultural and service sector industrial growth are also is growing relative to the rest of necessary to meet the needs of the the growing world population. economy By the mid- 1990s services accounted for almost Challenges for two-thirds of world GDP, up from Transition about half in the 1980s. Economies In formerly planned economies Service Sector Growth the and service sector was previously Development underdeveloped because Sustainability governments controlled supply The service sector produces and failed to respond to growing “intangible” demand for services. In addition, goods, some well known— many modern services that play government, an important role in market economies—such as financial, business, and real estate services—were not needed under socialism. During these countries’ transition to market economies, their service sectors have grown rapidly to meet previously unfulfilled demand and the needs of the emerging private sector. Growth of services in transition economies is particularly important because it allows these economies to employ a share of the educated labor force that might otherwise be unemployed due to the economic crisis. So, in addition to continued public support for health and education, growth of services can help formerly socialist countries preserve the stock of human capital that will be crucial to their post industrial development.