Published on Jobs and Development

What we’ve been reading about the services sector and economic transformation

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What is the role of the services sector in boosting jobs and economic transformation? Photo credit: Shutterstock What is the role of the services sector in boosting jobs and economic transformation? Photo credit: Shutterstock

This blog is based on the December 2021 edition of the Knowledge4Jobs newsletter, curated by the World Bank’s Jobs Group and Labor and Skills Global Solutions Group. Click here to sign up for the Knowledge4Jobs newsletter.

In this month’s reading list, we examine the role of the services sector in boosting jobs and economic transformation.

Throughout history, industrialization has been synonymous with development. Manufacturing-led development delivered the twin gains of productivity growth and large-scale job creation for the relatively unskilled. Underlying these were economies of scale, access to large international markets, innovation, and intersectoral linkages, combined with the ability to leverage relatively unskilled labor with capital. However, the trend of premature deindustrialization and the spread of automation technologies associated with Industry 4.0 has raised concerns that the development model based on export-led manufacturing seen in East Asia will be harder for hitherto less-industrialized countries to replicate in the future. Can services-led development be an alternative?

Services in the past typically required a simultaneity of production and consumption that precludes accessing larger markets. And their more limited ability to use capital to leverage labor productivity limits both scale economies and incentives to innovate. Conventional wisdom is therefore pessimistic about the prospects for services-led development.

This month’s reading list features the book “At Your Service? The Promise of Services-Led Development,” which tests this conventional wisdom with new evidence that demonstrates expanding opportunities for scale, innovation, and spillovers in the services sector owing to digitalization and growing intersectoral linkages. It also features publications that contribute to the small, but growing literature on the role of the services sector in economic development. Finally, there’s a selection of recent reports and working papers that discuss the broader jobs agenda in several African countries, China, and Uzbekistan, as well as articles on how COVID-19 is re-shaping labor markets.

The Services Sector, Jobs, and Economic Transformation

Essential Readings

Broader Jobs Agenda

  • Ghana rising: Driving sectoral, spatial, and technological transformations by creating an enabling environment for growth will help Ghana generate high quality jobs. (World Bank, November 2021)
  • The findings show that there are economic benefits to upgrading several major regional corridors  in West Africa. (Mathilde Lebrand, World Bank, November 2021)
  • In China, labor-intensive growth in agriculture was the main driver of rural poverty reduction, followed by the expansion of non-agriculture sectors, transfers from migrant workers and public transfers. (Lugo et al., World Bank, November 2021)
  • In Kinshasa, Democratic Republic of the Congo, good quality jobs are scarce and female and young workers are more likely to be unemployed or underemployed. (Batana et al., World Bank, November 2021)
  • Youth employment in Uzbekistan: Opportunities and challenges (Honorati & Marguerie, World Bank, August 2021)

COVID-19 Related Articles

  • A new set of stylized facts on firm recovery, covering 65,000 observations in 38 countries. (Cirera et al., World Bank, October 2021)
  • The combined backward and forward-looking rate of job reallocation has roughly doubled in the US and UK, and sales reallocation has risen, particularly in the UK. (Anayi et al., VoxEU, August 2021)
  • Working for the most vulnerable people: Jobs and economic transformation in the face of COVID-19. (Samuel Munzele Maimbo, World Bank, November 2021)
  • Four in ten Americans who currently work from home at least one day a week would seek another job if employers require a full return to business premises. (Barrero et al., VoxEU, July 2021)
  • The COVID-19 pandemic has introduced huge numbers of employers and employees to remote work. How many of these newly remote jobs will go overseas? The paper offers a rough quantification. (Baldwin & Dingel, CEPR, October 2021)
  • Government support measures implemented in response to the COVID-19 crisis may have adverse effects on competition and productivity growth since support went to less productive and larger firms, regardless of their pre-crisis innovation. (Bruhn et al., World Bank, November 2021)

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