The quantity and quality of available resources and innovations are extremely useful in the explanation of economic growth (Lucas, 1993). Such data is also able to measure various factors e.g. geographical and ecological (Sachs, 2003), and institutional environment in which businesses take place and decisions are being made regarding resource allotments (Gwartney et al., 2006). Moreover, research highlighted a direct link between the significance of service industry and economic growth performance based on US and European data (Bart et al., 2008). Attributable to, however, limited availability of service industry company level data particularly that on economies of scale, ...view middle of the document...
Thirdly, to assist the answer with argument, factual and critical assessment is applied to further demonstrate the domination of service industry by examining available economic data on US service industry. These data include but not limited to total employment growth, new businesses, workforce salaries, GDP contribution, and industrial division of labour, value added prices and real value added. With the above tools, service industry’s role as an engine of economic development is underscored. All the above combined highlight the expansion, transformation/structural alteration and therefore a balance switch to service industry within the US economy. Economists differ in determining information providing and they often classify quaternary sector as well. Furthermore, the wide range of activities services industry embraces are too diverse and beyond the scope of this paper to meaningfully analyze. In this paper when tertiary sector or service industry is mentioned, the production of information, hence quaternary sector is meant to be included within service industry.
The expansion of the service industry with economic growth
To approach the structure of economy the composition of its three largest sectors are compared in the country's total output. In the beginning of economic growth agriculture is the largest and most important sector, thus the economy is mostly reliant on agricultural and mining output. The industry sector becomes more important in light of this advanced economic growth when income per capita rises. Furthermore, with more advanced developments such as urbanization, this leads to a rise of the service sector. The United Kingdom was the first to undergo this route, and the industrial revolution between 1760 and 1840 provided a remarkable impetus to this progression.
Indeed, for the last hundred, but in particularly for over the last 30 years, the balance of economic structure has been switching from ‘’industry oriented’’ to rather ‘’services oriented’’ economies throughout the world, as depicted by Figure 1. This pattern has also been outgrown developed countries and reached developing counties (Weidong and Baohua, 2013). This substantial alteration towards the tertiary sector is also known as tertiarisation (Eurofound, 2009).
The terms of industrialization and post industrialization are consecutive shifts of which countries are likely to go through whilst economic growth. These, in turn are controlled by fundamental alterations in consumer needs and respective workforce output of the primary, secondary and tertiary sectors (agriculture, industry, and services respectively).
Figure 1. Sectoral structures of the economies. All figures as percentage of GDP. (Source: World Bank, 2013.)
Concerns rising from this issue are experienced not only in developed countries but throughout every economy, whilst the increasing importance of services industry is unquestionable. Indeed, numerous modern services play crucial role in...