Services are often seen as slow to change and difficult to export or reform.
However, a combination of technological change and policy reform is transforming services into the most dynamic part of many economies.
In East Asia and Pacific (EAP), a region associated with manufacturing-led growth, services are already driving development.
Key insights & Data highlights
Over the last decade, the share of services in economic activity and employment increased significantly. In fact, services account for nearly 50 percent of jobs in the EAP region, up from 42 percent a decade ago.
Indeed, in all major economies across the region, the services sector has contributed more to aggregate labor productivity growth than the manufacturing sector.
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Services represent the fastest-growing component of international trade and foreign direct investment in the EAP region. Furthermore, the service sector tends to employ more women, with this trend becoming more pronounced as development levels rise.
We recruit high-skilled workers for our clients and offer competitive salary packages and benefits. On the impact of technology, we have noticed, with the rise of artificial intelligence (AI), more requests for training on AI tools and a higher interest in hiring talent that is already familiar with industry specific trends around AI.
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Services Unbound proposes a framework to depict services-led development
Changes in technology and policy reforms within services are leading to structural change across and within sectors. The result is higher productivity in services sectors and in the other sectors that use those services.
At the same time, it is increasing the demand for people with the skills needed to work with these new technologies.
of services policy reform and technological diffusion is also improving access to education, health, and finance, and equiping people to take advantage of these new opportunities.
But deeper reforms will be needed to fully unleash the virtuous cycle where opportunity and skills reinforce each other and drive development forward.
We were one of the first companies in Asia to provide offshore, near-shore, and onshore services to our clients, as well as high-quality technical support, R&D services, and software engineering. FPT Software started with a small team in Hanoi and has since grown to a workforce of around 30,000 people globally, operating in 30 countries and territories.
The report presents evidence for these arguments.
First, new firm-level analysis reveals that in the Philippines, the average services firm has about a third more data and software assets per worker than its manufacturing counterpart , and the adoption of digital technologies is associated with higher productivity and value added within firms.
Second, new firm-level evidence for Viet Nam reveals that the reduction in restrictions on transportation, finance, and business sectors over the period 2008¨C16 was associated with a 2.9 percent annualized increase in value added per worker in these sectors.
Furthermore, the liberalization in services was associated with a 3.1 percent annualized increase in labor productivity of the manufacturing enterprises that use services inputs, benefiting small and medium private enterprises most significantly.
Third, new jobs created in digital services require greater skills than those in traditional services, as indicated by new microlevel evidence from Indonesia.
Source: Services Unbound, Figure O.6
Lastly, the use of new digital technologies and reforms in education and health services could help address the skills deficit as well as the inequality of access and quality across the region, and it could equip more EAP citizens to engage productively in the new digital economy.
We were looking for countries with high economic growth, favorable demographics, and underbanked populations. Cambodia met all the criteria. (...) At the start of our operations, the economy was heavily cash based. Our experienced management team at ABA developed a QR code¨Cbased payment. The technology was already popular in other Asian markets and Cambodia quickly embraced the innovation, partly because of its young and tech-savvy population.
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The role of policy
To unleash the virtuous cycle between opportunity and capacity, and to ensure inclusive and sustainable services development,
New data reveal that services trade liberalization is still unfinished business.
Despite past reforms, many countries still have relatively restrictive regimes for services.
Source: Services Unbound, Figure O.9
... in building the infrastructure and skills needed to take advantage of emerging opportunities.
... with cooperative international action to address services market failures that have a transborder dimension.
It is not enough for countries to reform their services sectors on their own. They also need to collaborate with others to tackle services-related challenges that go beyond borders, such as issues involving digital services, regulations, or the flow of data between countries.
For development to succeed, policies must be attuned to the interplay between opportunity and capacity. Focusing on creating opportunities, such as new jobs, without helping people build the skills and resources to seize them can lead to shortages.
Likewise, investing in education or training without generating meaningful opportunities may result in untapped potential.
Source: Services Unbound, Figure O.11
Only when policies strike the right balance, building people¡¯s capacities while expanding opportunities, can a virtuous cycle take hold.
In this cycle, growing capabilities shape a country¡¯s strengths, and those strengths, in turn, inspire further investment in human potential, fueling sustained development.
