mba 3 sem unit 4th

1. Service Sector and Economic, Growth
Definition of service sector
The tertiary sector of the economy (also known as the service sector or
the service industry) is one of the three economic sectors, the others being the
secondary sector(approximately the same as manufacturing) and the
primary sector (agriculture, fishing, and extraction such as mining).
The portion of the economy that produces intangible goods. According to the
U.S. Census Bureau, the service sector primarily consists of truck transportation,
messenger services and warehousing; information sector services; securities,
commodities and other financial investment services; rental and leasing services;
professional, scientific and technical services; administrative and support services;
waste management and remediation; health care and social assistance; and arts,
entertainment and recreation services.
Individuals employed in this sector produce services rather than products.
Examples of service sector jobs include housekeeping, psychotherapy, tax
preparation, guided tours, nursing and teaching. By contrast, individuals employed
in the industrial/manufacturing sector might produce goods such as cars, clothing
and toys.

2. Service Sector and Economic, Growth
Service Sector and Economic, Growth
 Services includes the five sub-sectors on trade, hotels and restaurant; transport,
storage and communications; finance, insurance, real estate and business
services; public administration and defence; and the other services part of the
community, social and personal services (consisting largely of personal services).
The remaining sectors are all included in Manufacturing +, i.e., this sector also
includes mining apart from the utilities and construction sectors.
 In terms of sectoral composition, the services sector always dominated
the manufacturing sector in India. It overtook the dominant agriculture + sector
in the mid-eighties when it attained the level of 38 per cent of the aggregate
output. The manufacturing + sector too overtook the agricultural sector in the
mid-nineties by producing around 28 per cent of the domestic product.
 The services sector is clearly attaining the dominant position that was once
reserved for the agricultural sector. Growth seems to have by-passed the
manufacturing sector in India.

3. Service Sector and Economic, Growth
The contribution of services to development
 The service sector is an important component of any country‟s economy. It
makes a direct and significant contribution to GDP and job creation, and
provides crucial inputs for the rest of the economy, thus having a significant
effect on the overall investment climate, which is an essential determinant of
growth and development. Some service sectors such as the health, education,
water and sanitation sectors, are also directly relevant to achieving social
development objectives.
 The service sector accounts for a significant proportion of GDP in most
countries, including low income countries, where it frequently generates over
50% of GDP. The process of development usually coincides with a growing role
of services in the economy (alongside a reduced role for agriculture). Thus
services constitute an increasing percentage of GDP in nearly all developing
countries.

4. Service Sector and Economic, Growth
 The service sector is becoming increasingly important in the economies of
developed and developing countries. This is not unique to South Africa. While
some countries have recognised the importance of strategies to further
stimulate the productivity and growth of the service sector, other countries have
not yet recognised that the service sector is constrained by a variety of
challenges that are unique to this sector. In fact, many countries hope that
services will go away. This sector is already a large contributor to jobs and Gross
Domestic Product worldwide.
 Services are different from goods and require different strategies for
development than the primary and secondary sectors which have been
traditionally given attention. Although not everybody agrees on how to classify
services, it is generally agreed that services are becoming very important in
economic development. In some cases manufacturing will not become more
productive without more specialised services.
 For the manufacturing sector, the service sector, especially knowledge-intensive
and business services, is being increasingly recognised as important levers for
growth and development of the economy. Knowledge intensive service
providers are not only carriers of specialised knowledge; they are also
connectors, technology transfer agents and problem solvers.

5. Service Sector and Economic, Growth

6. • Telecommunication
• Hospitality industry/Tourism
• Mass media
• Healthcare/hospitals
• Public health
• Information technology
• Wholesale and Trade
• Transportation
• Education
• Government services
• Financial services
– Banking
– Insurance
– Investment management
• FMCG
• Professional services
– Accountancy
– Legal services
– Management consulting
• Consulting
• Retail sales
• Real estate
SERVICE INDUSTRY
Service Sector and Economic, Growth

7. Service Sector and Economic, Growth
Services sector in future providing about 70 per cent of the new job opportunities in the
economy
New employment possibilities in the services sector are construction, trade, transport,
storage, financial services, communication and personal services
Employment in manufacturing would also expand, but its contribution to the total increase
in employment would only be around 17 per cent.
 India is among the top 15 countries with highest overall GDP in 2011, India ranked 9th in
overall GDP and 10th in services GDP.
Service sector has a share of 57 per cent in the gross domestic product (GDP) in 2011-
2012.
Services sector has been increased by 9.1 per cent

8. • The three groups of services are :
• Group I - Traditional services – retail and wholesale trade, transport
and storage, public administration and defense – which tend to be
slow growing in the sense that their share in GDP has fallen in more
advanced countries.
• Group II is a hybrid of traditional and modern services consumed
mainly by households – education, health and social work, hotels
and restaurants, and other community, social and personal services –
whose share in GDP has risen in step with per capita income.
• Group III is made up of modern services – financial intermediation,
computer services, business services, communications, and legal and
technical services.
• Productivity growth has been highest in Group III.
WHERE IS SERVICE-SECTOR
GROWTH CONCENTRATED?

9. REASONS FOR GROWTH OF SERVICE
SECTOR
•Both demand and supply factors have led to the growth of service sector.
•On the demand side, the high growth of services output was mostly attributed to
factors such as increasing input usage of services by other sectors, mainly
manufacturing sector (i.e. higher domestic demand); higher foreign demand due
to trade demand); liberalization; and high income elasticity for services.
•On the supply side, the increased trade in services following trade liberalization
policies and other reforms in 1990s induced this growth.
•Economic affluence
•Changing role of women
•Cultural changes
•Conservation of natural resources
•Development of markets
•Increased consciousness of health care.

10. Finally to conclude that, the service sector is
very important for India, as it is contributing
half of the GDP growth in the Indian economy.
Employment is increasing due to development
of service sector. There is a very good scope to
improve further in the services provided by the
companies and government. As India is
developing very fastly there is a need for
change in the quality and also the speediness
of the services
CONCLUSION