Introduction

The relationship between economic development and the role of the service sector has attracted much attention. The first point of focus is the relationship between development and the size of the sector. There is a positive relationship between per capita income and the share of services in GDP and between per capita income and the share of services in employment. In developed economies, these shares can be very high. For example, these shares in output are around 90 per cent in Hong Kong and Macau, and nearly 80 per cent in the United States. Even in developing countries, the services share of GDP is relatively high, for example, around 50 per cent in Bangladesh and 40 per cent in Vietnam, and can be larger than manufacturing.

Analysts have also paid attention to positive connections between services and other aspects of development. For example, the Asian Development Bank (ADB) stressed a linkage between female participation in the workforce and a reduction in poverty rates (2012). The reduction in poverty is associated with the employment effects of services sector growth. Economies with higher service sector shares also have higher female participation rates in their workforces.

More recently, researchers have given greater attention to the intersectoral significance of services, and the role of services in facilitating the development of the competitiveness of other sectors of the economy. This role is especially important with a greater focus on GVCs in the world economy (OECD, 2013). Participation in GVCs is seen to depend on the presence of highperforming service sectors (OECD, 2013). A further consequence of this contribution of services is a greater connectivity to markets and thereby to making globalization more inclusive, i.e., delivering a wider distribution of benefits to citizens.