Are you being served? The role of the service sector in development 2013
The idea that services become more important as economies develop, while first agriculture and then manufacturing diminish in relative terms, dates back to the seventeenth century. The ‘service sector’ has both formal and informal elements and informal services can be surprisingly important at early stages in the development process.
This piece considers the role of informal services in two developing economies, Vietnam and PNG. Vietnam would benefit from improved productivity by progressively ‘formalizing’ its large informal service sector. But since PNG is at an earlier stage of development, it would benefit from an increase in the size of its informal service economy.