The Service Sector: Some Unresolved Issues

Abstract

Though service growth has long been recognised, the literature has not yet produced an account of the nature of services or of the determinants of their growth that commands widespread support. This is not simply a matter of producing an elegant definition, or formal model of growth, or of deciding which school of thought to follow. It is common for different standpoints to exist, as in economic theory or in management theory, for example. This article proposes the view that orderly and effective policy development at government, industry or company level depends on taking a well-grounded view of several issues that recur in the literature, but so far without resolution. Consistent resolution of the issues is more likely to occur if the current fragmented knowledge is supplemented by co-ordinated, and probably comparative research programmes. It is possible to make inroads into the issues, in the absence of such research, by means of analysis of some of the recurrent themes. The issues identified are: (i) the nature of services, as opposed to manufactures; (ii) the causes or determinants of service growth; (iii) the inter-relationships between services and the rest of the economy; (iv) the prospects for service growth in terms of both employment and income; (v) the 'tradeability of services' and (vi) the main policy implications for government and industry. It is concluded that there are no compelling reasons for believing that services cannot take up shortfalls in employment and income due to manufacturing decline (or cyclical behaviour). Nor is there any reason to believe that they will do so, given present policies and states of knowledge.