Service Sector Productivity and Economic Growth in Asia

Jong-Wha Lee and Warwick McKibbin

No 490, ADBI Working Papers from 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.

Keywords: service sector; labor productivity; general equilibrium model; asian economies (search for similar items in EconPapers)
JEL-codes: J21 O11 O14 O41 O53 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2014-07-25
New Economics Papers: this item is included in nep-eff and nep-sea
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Citations: View citations in EconPapers (11)

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Related works:
Journal Article: Service sector productivity and economic growth in Asia (2018)
Working Paper: Service Sector Productivity and Economic Growth in Asia (2014)
Working Paper: Service Sector Productivity and Economic Growth in Asia (2014)
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