Service-led growth in South Asia : an exploratory analysis

Abstract

Advancements in information and communications technologies (ICTs) have enabled many developing countries to exploit their comparative advantage in services exports. In developing regions, South Asia has taken the lead in the export of modern services including computer, IT and professional services. During the last decade, South Asia has been able to grow at a reasonable average annual growth rate of almost 7 percent. This growth rate has emanated from the strong performance of South Asia's services sector both in terms of domestic output and exports. This path of service-led growth in South Asia is in sharp contrast to East Asia's high growth, which has been possible through its manufacturing based export orientation. This thesis provides an exploratory analysis of service-led growth in South Asia.

First, it explains the growing role of services in the economic growth and development of South Asia, and provides a comparative evaluation of the growth experience of South Asia and East Asia.

Second, growth of modern services exports from developing countries are explained and supported by the theoretical and empirical literature, to analyze the different sources of these exports.

Third, it explains the growth of modern services exports of South Asia and the export performance of selected modern services of the region, in a global context. Fourth, it provides an objective analysis of the differences in technologies and export potential of selected high performing South and East Asian countries with the developed world. Finally, it examines the intersectoral relationship between the services and agriculture and manufacturing sectors.

The study contributes to the debate on the service-led growth path and export orientation, and the findings have important policy implications. The results show that despite the significant growth of modern services exports from South Asia, the region has large potential to further increase these exports. This potential can provide sustainability to the current services dominated growth in the region. Another important implication for policy makers is that sustained growth of high skilled graduates and high end ICT infrastructure are essential for the continuity of modern services export growth. Finally, performance of manufacturing and agriculture sectors are, to some extent, prerequisites for overall services sector growth. -- provide by Candidate.