Growth of service sector in BRIIC economies

Abstract

In recent years, there has been growing attention to service sector in the world economies. This study analyses service sector in Brazil, Russia, India, Indonesia and China (BRIIC), which are five of the largest economies in today’s developing world. We examine how the services links with overall economic activities and what drives its growth in the period 2000-2010. This research finds that in BRIIC economies, final demand in other sectors has not enhanced services output. Furthermore, using structural decomposition analysis, this study investigates various aspects which contribute to the growth of services output, which are final domestic demand, export, and changes in technology. The result suggests that in BRIIC economies, final domestic demand has been the main driver of the growth of services that exceeded more than 70% of overall effect in all economies. Domestic final demand for services contributed higher than the non-services one.

Keywords

• input-output
• structural decomposition analysis
• service sector
• BRIIC