Globalisation and Service Sector Essay

6799 Words Jul 1st, 2012 28 Pages
Globalisation and Service Sector

: Input-Output Analysis

Rita Bhowmik

Jadavpur University, Kolkata- 700032.
Email : rita_bhowmik2003@


Globalization implies a comprehensive and self-evident process working towards establishing a worldwide aggregative whole of an economic structure into which all economies of the world must integrate today or tomorrow. This includes services which in most economies are the single largest contributor to economic growth and employment. It is widely recognized and deliberated upon that the global importance of service sector in terms of its share in Gross Output has been growing progressively in the economies of the world. The objective of this paper is to
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Greater varieties of competing services afford greater flexibility to producer in minimizing the cost of producing a given level of output. If there were no fixed costs in producing services, however, there would be an infinite variety available in the market because each firm in the industrial sector would demand an infinitely small amount of an infinite variety of services. But as long as there are fixed costs, the extent of variety will be limited by the size of the market for services. This gives a link between income growth and the efficiency of industrial production (Eswaran & Kotwal, 2002). Thus the introduction of the services sectors enhances the understanding of the process of industrialization in a significant way. This is not at all unusual by itself in the emergence of services as the principal sector of economic activity . In the advanced industrial economics, they already occupy this position. Even in the less developed countries, the resource endowment may be such that services come to play a central role. In a small country with salubrious climate, tourism could emerge as the dominant economic activity. Tourism, which is a part of the services industry, has immense potential of growth. There are also countries like Singapore, Hongkong, Panama etc. where certain special feature pertaining to trade and payment arrangements could influence the course

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