Explain the importance of service sector in the economic development of a country by giving three suitable examples from the parts of the world. (CBSE 2004,05,06,07)
Answers
Explanation:
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Explanation:
desires increase leading to the evolution of economic activities. Normally primary activities such as hunting, animal husbandry and agriculture emerged. Later on as science and technological development tookplace which led to the evolution of industrial sector. The expansion of both these sectors made the advancement of service sector.
Fisher (1935) and Colin Clark (1940) have divided the economy into primary sector, secondary sector and tertiary sector. The primary sector which covers tangible goods in agriculture, forestry, fishing, and hunting. The secondary sector includes mining, manufacturing and such activities as gas, electricity and water supply involving activities with a tangible and product. The tertiary sector consists of trade and public services. But this is not a clear cut division on economic activities as economist change the activity in the list and also there is overlapping of economic activities.
Later on the economic activities have been shifted from one sector to other sector. At present the primary sector includes agriculture, forestry, animal and husbandry and fisheries etc., the secondary sector activities incorporate mining, manufacturing, electricity, gas, water supply, construction etc., the service sector activities include trade, commerce, transport, communications, hotel and restaurant, banking and finance, health and education, tourism, share market, film industry, insurance, astrology industry, advertisement industry, sports, legal service, publishing industry, mass media etc.,
Service sector also known as the tertiary sector of the economy is expanding at a faster rate. It is one of the three sectors of the economy. “Soft” part of the economy in the service sector includes all activities which people offer their knowledge and time to improve productivity, performance, potential and sustainability and also known as advice, experience and discussion include the service sector. Service sector involves of activities beginning from the production of goods and service until it reaches to the consumer. For the last 30 years there has been a substantial shift from the primary and secondary sector to the service sector. Now it has become a largest sector of the economy. Further, the service sector activities can be grouped into:
Trade, hotel and restaurants.
Transport, storage and communication. Transport includes roads and railways, airways and inland and overseas, water transport.
Financial institutions, insurance, real estate and business services.
Community, social and personal services. Community services include government establishment and it’s departments and personal services such as health, and education, NGOs etc.
Even though there is a thin margin in distinguishing between private sector and public services, because some services are being provided by both the sectors. We can classify the service sector activities coming under the both sectors. Private services include trade, commerce, transport, communication, hotel and restaurant, tourism, insurance, cinema, advertisement, sports, health and education, level service and NGOs etc. Government sector includes government establishment including legislature, executive, judiciary, its various departments at central and state government and its autonomous bodies and local bodies.
1.1 Role of Service Sector in Economic Development
In any country economic development depends on the growth and evolution of the three sectors of the economy. However in recent years the service sector growing at a very faster rate in the developing countries and is contributing a major share in terms of output, income and employment. Even the productivity per worker is becoming higher in service sector when compared to agriculture and industrial sectors. Already the service sector is dominant in the developed countries. If agriculture sector is stagnant, new service activities are emerging and adding to the service sector making the economy to grow. Hence service sector is playing a major role in economic development of any country.
The importance of the services sector can be gauged by its contributions to different aspects of the economy.
Business include both domestic trade as well as foreign trade. Trade as a service sector activities facilitates the exchange of the goods and services between producers and consumers. Domestic trade refers to the exchange of goods and services with in the country. Which provides income and employment to the people who have engaged in this activities. Foreign trade plays a major role in the development of the country. Imports of machinery and equipment which cannot be produced in the initial stages at home are essential. Such imports which either help to create new capacity in some lines of production or enlarge capacity in the other lines
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