Essays on Services Industries Are Important in Building Economic Growth Coursework

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The paper "Services Industries Are Important in Building Economic Growth" is a good example of a macro and microeconomics coursework. Service industries have grown by leaps and bounds over the past five decades shaping the industry mix within the global economy. This growth has changed the structural nature of the global economy from an industrial oriented economy to a more service-oriented economy. McManus (2009:20) point out that in OECD economies, the service industry accounts for 60% of the GDP while Lee, Ribeiro, Oslon, & Roig (2008:2) shows that the proportion for manufacturing industries have fallen by roughly 15%.

Indeed the service industry in Australia is on a boom with the sector accounting for “ three-quarters of national output” and employing four Australians in every five jobs with a high potential for continuing with the upward growth (McLachlan, Clark & Monday, 2002). The key growth hotspots in the service sector are the knowledge-intensive industries such as financial services, biotechnology, information and communication technology (ICT), entertainment and education (Lee, Ribeiro, Oslon, & Roig, 2008). A number of studies have shown that the service industry is a critical sector for economic growth (Nissan, Galindo, & Mendez, 2011; Riedl, 2010; McManus, 2009).

The need for economies to focus on the growth of the service, therefore, has been an issue addressed by both scholars and policymakers. This paper addresses the need for a focus on the growth and development of the service sector and the significance of the service sector’ s contribution to building economic growth. Growth in the services sector has exceeded overall economic performance for years with the growth projected to be on an upward trend especially in view of the continued growth in the knowledge-based service focused sectors within the economies of the developed world (McManus, 2009:17).

Research studies have increasingly shown the need for organizations to continually develop their service offerings in order to enhance their productivity and boost growth. Rust and Huang (2012: 60-61) in their research study posit that firms could increase their growth and productivity to maximize their profitability if they increase the quality and productivity of their service offerings. They note that service productivity can be used as a strategic tool by the organization for competitive advantages where when factors such as higher prices or profits motivate better service quality, then automated services should be lower, while where higher wages and high market concentration discourage better service quality, automation in service provision and productivity should be higher.

This view on improving business processes through the improvement of services is supported by Auguste, Harmon and Pandit (2006:2-3) in work where they note that product companies can gain strong strategic advantages by scaling up their service strategies such as offering services to enhance the value of the products, to defend their services, improve customer satisfaction, and to be able to identify opportunities in the market that would ensure replication of scarce resources as well as foster innovation focused on customer’ s needs in the products being offered.

The fact that service industries enhance innovation in an economy is beyond debate. Ettie and Rosenthal (2011: 294-295) show that when it comes to innovation, service industries lead the pack and they are the ones that are actually responsible for stimulating innovation in other sectors of the economy.

Services play a very key role in finding unique ways to test customer needs and formalize that innovation process. The service sector has been noted to increase economic growth through its impact on a number of variables, for instance, social capital that has been increased through the high tech services which have enhanced networking thereby provide higher chances for economic opportunity (Nissan, Galindo, & Mendez, 2011: 62). McManus (2009:17) for instance shows that a company such as General Electric recognized the significance of the growing services sector and went ahead to invest in GE capital a financial services firm in order to leverage its product and services portfolio, where resources were transferred into the high valued service provision sector.

In essence, services have grown to be critical in improving consumer offerings.

References

Auguste, B G, Harmon, E P, & Pandit, V 2006, “The right Service Strategies for Product Companies,” McKinsey Quarterly, 1: 1-7, Business Source Complete.

Ettlie, J E, Rosenthal, S R 2011, “Services versus Manufacturing Innovation,” Journal of Production Innovation Management, 28: 285-299.

Hamm, S & Ante, S E 2005, “Beyond Blue,” Bloomberg Business week. Retrieved 15 May 2012 from

Lee, S M, Ribeiro, D, Olson, D L, & Roig, S 2008, “The importance of The Activities of Service Business in the Economy,” Service Business: an International Journal. Retrieved 15 May 2012 from

McLachlan, R, Clark, C, & Monday, I 2002, “Australia’s Service Sector: A Study in Diversity,” Productivity Commission Staff Research Paper, AusInfo, Canberra, Retrieved 15 May 2012, from

McManus, J 2009, “The Service Economy,” Management Services.

Nissan, E, Galindo, M A, & Mendez M T 2011, “The Future of Services in a Globalised Economy,” The Services Industries Journal, 31, 1, pp. 59-78.

Riedl, A 2010, “Location Factors of FDI and the Growing Services Economy,” Economics of Transition, 18, 4, pp.741-761.

Rust, R T, & Huang, M H 2012, “Optimising Service Productivity,” Journal of Marketing, 76:47-66.

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