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The development of the service industry in the modern economy: mechanisms and implications for China
... Additionally, critical examination of elements of services reveals that services permeate every facet of humanity and influence economic activities in the world. Service firms should appreciate the criticality of services in the economy so as to stimulate the need to provide excellent service quality (Cheng (2013) [7] . While excellent service quality may be the keystone in marketing services, there are specific strategies which may be adopted by service firms. ...
... Additionally, critical examination of elements of services reveals that services permeate every facet of humanity and influence economic activities in the world. Service firms should appreciate the criticality of services in the economy so as to stimulate the need to provide excellent service quality (Cheng (2013) [7] . While excellent service quality may be the keystone in marketing services, there are specific strategies which may be adopted by service firms. ...
... In view of the unique characteristics of services, marketers should design different strategies in order to satisfy the requirements of customers/clients, while standing up to competition from competitors. The criticality and the importance of services in the economy of a country cannot be overemphasised-contributing greatly to the overall economic performance of the country (Cheng (2013) [7] . While challenges may exist in marketing service(s) because of their uniqueness, marketers and practitioners may adopt some the recommendations proposed in this article to effectively market service(s) to customers/clients. ...
... İngiltere'de ortaya çıkarak hızla Fransa, Almanya, Rusya ve birçok Avrupa ülkesine yayılıp ardından on dokuzuncu yüzyılda ABD ve Japonya'ya sıçrayan sanayi devrimi sonucu, geleneksel tarım ekonomisi yerini endüstriye bırakmaya başlamıştır (Cheng, 2013). Başlayan yeni ekonomik çağla birlikte gelir düzeyinde değişimler meydana gelmiş, böylece sağlık, eğitim, eğlence gibi birçok alanda daha fazla hizmet talep edilmesine ortam hazırlamıştır (Soubbotina ve Sheram, 2000;Das ve Raut, 2014). ...
... Yirminci yüzyılın ortalarına gelindiğinde hizmet ekonomisinin ABD'de egemen olmaya başlamasıyla birlikte özellikle gelişmiş ülkelerin hizmet ekonomisine geçmesi, dünya ekonomisinde üçüncülleşme sürecini başlatmıştır (Cheng, 2013). Tarım ve sanayi başta olmak üzere üç sektörden meydana gelen ekonominin üçüncü sektörü olan ve sanayi sonrası dönem olarak adlandırılan hizmet sektörü, küresel ticaretin önemli bir itici gücü haline gelmeye başlamıştır 1 (Das ve Raut, 2014;Shanmugam ve Latha, 2014). ...
... Currently, most OECD countries have already transformed into predominantly service economies. The first transition occurred in the US in the middle of the twentieth century (Cheng, 2013). The driving force behind expansion of the service sector in developed countries stems from the cost advantages of emerging economies. ...
... According to their results, role ambiguity, competency, and person-job fit have statistically significant interactions. Cheng (2013) analyzes the elements essential to the development and growth of the service sector. This author defines these components as a specialized division of labor, innovation, and demand-induced mechanisms. ...
This study investigates the impact of COVID-19 social distancing on the US service sector. Results from four industry indexes (hotels, entertainment, restaurants and airlines) indicate that conditional correlations among index pairs exhibited substantial increases. Iterated Cumulative Sums of Squares (ICSS) tests in dynamic conditional correlations show that while the relationship between airlines and entertainment venues is unstable, restaurants and hotels demonstrate stable co-movement. Markov regime-switching regression analysis suggests the pandemic is affecting mainly the entertainment and airline industries, with gradual deterioration in the hotel industry, led by small-market-cap companies. However, we see no evidence of a negative impact on the restaurant industry from the pandemic in our analysis period. This may be related to Maslow's hierarchy of needs. Based on our results, we recommend employment of effective working capital and supply chain management methods in the service sector to streamline the operations of affected companies. In addition, all other sectors should utilize appropriate methods of risk measurement and should take 'Black Swans' into account to incorporate a more accurate probability of unexpected events.
... The service industry is playing an increasingly important role in economic growth, which is an inevitable result of the upward shift of China's value chain (Cheng, 2013). The development of China's service industry is in an important period of strategic opportunities, and the requirement to promote HQDSI with institutional innovation is more urgent and more relevant. ...
To realize the transition from high-speed growth to high-quality development, it is necessary not only to change the way and path of economic growth, but also to speed up the improvement of the institutional system that is compatible with high-quality development. China has unique institutional advantages in promoting the high-quality development of the service industry (HQDSI), but the service industry is a typical institution-intensive industry that faces higher institutional barriers than the manufacturing industry. Therefore, institutional reform and business environment optimization are particularly important to the promotion of HQDSI, and the effect is also very prominent. Facing the future, we should lead HQDSI by building a high-standard socialist market economy, promote the high-quality and efficient development of the service industry by standardizing it, and encourage the innovation and entrepreneurship of the industry by improving the institutional environment, thus steadily boosting HQDSI in the new era of reform and opening up.
... The increasing intensity of steel use is supported by the success of industrialization and infrastructure development. Economists mentioned that developed countries had experienced a shift from industrial societies to services, information, and knowledge [32]. Thus, they incline to use steel and its derivative steel products more selectively [33]. ...
This paper identifies statistical relationships between the Steel-Intensity-of-Use and the Gross Domestic Product per Capita based on the data of ten selected countries based on judgmental sampling from the World Steel Association. Economic data such as Gross Domestic Product, Gross National Income, Gross Domestic Product per Capita, government spending, investment, Export of Goods and Services, and manufacturing are obtained. Based on regression analysis and exploration of economic data, the relationship differs in terms of economic development stratification. We find a pattern of a waveform in terms of Correlation and Significance between Steel-Intensity-of-Use and the Gross Domestic Product per Capita along the country’s economic classification. Each classification implies that the country needs to enhance the economy related to the required steel or non-steel-related industry and the accompanying government policy.
... So, for example, due to the advent of new digital technologies and industry expansion, mining firms, service and engineering subcontractors, public sector regulatory agencies and local communities all engage in the exploitation of the natural resources, and all play major roles in conditioning the long-term growth path of the O&G industry (Katz and Pietrobelli, 2018). With resource extraction gradually being tertiarized, both the primary and tertiary sectors have become increasingly integrated and interactive (Cheng, 2013). In Kazakhstan, services have been found to contribute significantly to petroleum sector inputs, as an average of 42% of the industry's intermediate expenditure is on services (Atakhanova, 2021). ...
This paper responds to the growing need to be aware of the opportunities presented by technology spillovers resulting from value co-creation supported by diversification policies in resource-abundant host countries. It examines the effects of such a policy on both the local market strategies of multinational enterprises (MNEs) and on technological upgrades of local companies, where such policies require international oil and gas companies to build linkages to induce spillover. We argue that the effects of the policy with regard to spillovers can depend on the actors’ approach to collaboration. To suggest a theoretical foundation for such a collaborative approach, we integrate the value co-creation perspective with the concept of spillovers. The resulting approach is based on win-win strategies: the internationalization of the resource sector, and a shift towards the provision of service-based economy aid in an attempt to develop opportunities for sustainable operations on the part of multinationals in resource-abundant host countries. The development of local capabilities resulting from technological spillovers can enable local businesses to have access to international expertise in technology, create strategic opportunities and introduce long-term benefits for both local and international companies. This study adopts an abductive method as the basis for logical reasoning, employing an analysis of multilevel longitudinal case studies based on interviews with experts and multiple sources of industry documentation.
... Finally, China is going through a quick transformation, into an urban society. This is another transformation that forces a deep change in its economic structure: the economy of China will soon require a much larger fraction of services, according to the expected trend observed in other developed countries [4][5][6]. ...
This paper presents a multiscale integrated analysis comparing changes in the energy metabolic pattern of China and the European Union between 2000 and 2016. The MuSIASEM method is used to explore and illustrate the entanglement over different factors, across dimensions and levels of analysis. Demographic factors observed at the level of the whole are linked to changes in the economic structure, the pattern of energy uses and the level of outsourcing (imports). When analyzing these issues for the selected case studies we found that: (i) due to their lower dependency ratio and higher workloads China presents now about 1260 h in paid work per capita, while the EU presents just 720; (ii) economic structure in China evolved rapidly moving almost 300 h per capita per year from agriculture to service, construction and industrial sectors, while it remained quite stable in the EU; (iii) the metabolic pattern of China changed dramatically by expanding its capital goods in all sectors (almost 4 times in agriculture and more than doubling in industry and services) while the EU just increased them around 10%. The quick industrialization of China (going from 20 to 60 MJ/h in paid work sector) required an extraordinary investment in the construction sector, which arrived to allocate almost 3 times more workforce and 5 times more cement per capita than the EU (already industrialized). The simultaneous reading of all these changes confirms known trends and identifies a few challenges. The apparent decoupling of economic growth from resource consumption in the EU economy is due to the outsourcing of industrial production (identified and quantified at the level of subsectors). The trajectory of economic development of China, still in the phase of industrialization, spells troubles in terms of future consumption of natural resources and pollution. The metabolic perspective used in the comparison enables to identify policy-relevant factors determining both temporary comparative advantages and dangerous locks-in. On the methodological side, the paper illustrates a few innovative features introduced in the MuSIASEM accounting framework improving the characterization of demographic and other societal aspects affecting the overall energy metabolic patterns of societies.
... After Chinese civil war, Republic of China collapsed and communist party established modern China named as the People's Republic of China in 1949 (Zhu, 2012;Govt. of China, 2016). China adopted agriculture development-led industrialization strategy and transformed from traditional agricultural to an industrial and finally service economy (Briones & Felipe, 2013;Cheng, 2013). China's trade reforms were not based on any pre-determined blueprint rather they were the result of experimental changes promoted by Deng Xiaoping (Purushottam, 1999;Chow, 2004). ...
Using time series data from 1980 to 2014, this study examines the relationship between trade, investment and economic growth in India and China. The present study attempts to assess the contributions of not only foreign direct investment and exports as done by the previous studies but also incorporates domestic direct investment and imports. The study uses more comprehensive and recent autoregressive distributed lag (ARDL) bound testing approach to examine the existence of short-run and long-run relationships. The main advantage of this approach is that it can be used regardless of the stationarity properties of the variables in the sample. The study gives different results for both countries. In case of China, exports, FDI and domestic investment have positive impact on economic growth whereas for India only the variable of domestic investment has been found to be significant. China is a world leader in merchandise exports and its services exports have complemented its goods exports. The main weakness of Indian economy is the poor performance of manufacturing sector as a result of which India’s merchandise exports are concentrated around a few categories. Though India is a leader in IT related services exports but these exports are unable to compensate for poor performance of merchandise exports.
... In today's competitive advantage and dynamic environment, the service sector has become the key drivers for global economy development. According to Cheng [1], the economic development history of mankind had evolved from an agricultural to an industrial-based. The evolution continues then to a service economy. ...
Presently service organizations are challenged by fierce global competition, new technology and changing customer demands. These trends force service sectors to adapt environmental factors and places innovation at the core of their competitive strategy. On the other hand, service sectors challenge to deliver value memorable experiences and complete “service solutions” while lowering costs and keep sustainable. Despite, many studies have attempted to explore the factors that help toward environmental sustainability in the manufacturing sector, the service sector has not yet received a considerable attention in all world countries generally and in developing countries particularly. Thus, this paper aims to explore the factors that help to attain environmental sustainability in the service sector. A qualitative case study through semi-structured interview conducted with twenty managers from AirAsia to explore the factors that are related to environmental sustainability and green services. Besides, secondary data from document analysis was reviewed to gain more comprehensive understanding and triangulate the interview data. The finding of this paper emphasizes to three important factors namely institutional factors, process factors and result factors that each factor contain sustainability and innovations to promote competitive green service in the marketplace.
FDI plays crucial role in stimulating development of various sectors in economy such as provision of skilled labour, employment creation, source of capital, management and technological transfer. Over the past 30 years, the share of FDI in World’s economy has been transformed from manufacturing sector to service sector thus creating various emerging sectors.The study employed time series secondary data for 22 years from 1999 to 2020, then used dickey-fuller and Philips perron tests for stationarity, Auto Regressive Distributed Lag (ARDL) bound test for co-integration, ARDL model to estimates long-run relationship lastly, diagnostic tests were applied to check validity and reliability of variables. The study revealed that FDI inflow in transport and storage sector have weak positive impact on economic growth while FDI inflow to other sectors have insignificant impact to economic growth. Thus, to combat such outcomes, the government is advised to attract more foreign investment to sectors with undesirable impacts with productive strategies to improve sectors performance on economic growth through establishment of favourable investment policies such as tax policies to avoid double taxation, capital account liberalization policies and financial institution policies to create conducive investment environment.
The share of the tertiary sector in China’s value added has increased steadily, overtaking the share of the
secondary sector in 2013. With increasing incomes, the share of services is expected to grow further as at higher
incomes a larger share of income is spent on services. In addition to final demand, intermediate demand can be
another driving force for service industries. As liberalisation leads to a greater role for the market in allocating
resources, service industries are expected to become more competitive and therefore it may become cheaper to
outsource services than to produce them in-house. Liberalisation will likely also lead to greater specialisation to
remain competitive, thereby making specialised services available for outsourcing. This will likely spur the
development of some high value-added logistics services such as warehousing or order handling. By the same token,
professional services such as accounting or engineering are also likely to benefit from a greater reliance on the market
and greater competition. In the envisaged transition from “made in China” to “created in China”, the service sector is
expected to play a prominent role. To that end, the service sector is gradually being provided a more even playing
field as privileges for manufacturing industries are being withdrawn and a more equal treatment of producers across
sectors is being adopted. This paper provides a snapshot of the service sector, its size, the ownership of its firms, and
productivity across types of firms depending on ownership, sector, age, size and geographical region.
A substantial body of research has taken shape on trade in services since the mid-1980s. Much of this is inspired by the WTO and regional trade agreements. However, an increasing number of papers focus on the impacts of unilateral services sector liberalization. The literature touches on important linkages between trade and FDI in services and the general pattern of productivity growth and economic development. This paper surveys the literature on services trade, focusing on contributions that investigate the determinants of international trade and investment in services, the potential gains from greater trade, and efforts to cooperate to achieve such liberalization through trade agreements. There is increasing evidence that services liberalization is a major potential source of gains in economic performance, including productivity in manufacturing and the coordination of activities both between and within firms. The performance of service sectors, and thus services policies, may also be an important determinant of trade volumes, the distributional effects of trade, and overall patterns of economic growth and development. At the same time, services trade is also a source of increasing political unease about the impacts of globalization on labor markets, linked to worries about offshoring and the potential pressure this places on wages in high income countries.
Drawing upon output, employment, consumption and trade data, this article examines whether there is an economic tertiarization trend in China 's economy and evaluates the common factors driving current trends. It shows that the tertiarization trend is evident for the overall economy and most regions in terms of the service nominal value-added ratio and service employment and consumption. However, the tertiarization trend is not significant in terms of the service real value-added ratio, and there is even some concurrent "detertiarization" because of the decreasing proportion of services in imports and exports. Indeed, China's tertiarization trend is far behind its industrialization trend. The rise in the relative prices of services explains the rising proportion of household service consumption expenditure and further illuminates why the service real value-added ratio has not grown. The main cause for the growing percentage of service employment is the lag in service labor productivity growth in interaction with the price inelasticity of service demand. "Cost disease" has appeared in service consumption. Copyright (c) 2009 The Authors Journal compilation (c) 2009 Institute of World Economics and Politics, Chinese Academy of Social Sciences.
This paper develops a model in which increasing returns to scale result from increased degrees of specialization at the firm level, and in which services are important to the coordination and control of specialized, interdependent operations. The relationship of the producer services sector to scale, productivity, and the division of labor is then considered. The model lends insight into the growing importance of the producer service sector in industrial economies. It emphasizes the positive contribution of the producer services sector to the realization of returns due to specialization, and highlights services as a complement rather than a substitute to manufacturing. Copyright 1990 by Royal Economic Society.
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doi:10.1186/2095-4638-1-3
Cite this article as: Cheng: The development of the service industry in the modern economy: mechanisms and implications for China
Cite this article as: Cheng: The development of the service industry in the modern economy: mechanisms and
implications for China. China Finance and Economic Review 2013 1:3.