ABSTRACT

The post-war era has witnessed a major growth of service activity within the advanced industrialised countries of the world. Well over one-half of the Gross Domestic Product of most developed market economies is now contributed by what is loosely termed the 'service sector'. This represents a major transformation in the structure of economic activity within these countries. This chapter begins with a discussion of how goods may be distinguished from services and the factors that account for the rise of the 'service economy' within the advanced industrialised countries over the last half-century. This is followed by a discussion of the growth of trade in services that is linked with a growing tendency in recent decades towards an internationalisation of service activity. One of the most surprising results of cross-country comparisons is the absence of any systematic relationship between the share of services in total output or employment and a country's level of per capita income.