Non-Productive Sectors: A Brief Discussion

Prepared for:

Dr. Abu Yousuf Md. Abdullah
Course Instructor International Marketing

Prepared by:

Imrul Huda (ZR -66)

June 07, 2012

Institute of Business Administration University of Dhaka

out of 163 countries for which data was available. microeconomic theory has ignored the production and consumption of immaterial products. among others. Hence. education. View of Traditional Microeconomics: Traditionally. where innovation takes place. The closeness of producers and consumers. Nature of Non-Productive Sectors’ Activity: Intangibility or immateriality. health. which is an attribute of several consumer services. individual services were not ignored by economic analysis although they were not integrated into general economics. insurance. inseparability of production and consumption. deindustrialization. namely transportation.Non-Productive Sector – Current Scenario and Perception: The non-productive sector. The non-productive sectors are still perceived by some as consisting of low-productivity activities that maintain a parasitic relation with goods-producing industries. accounting and . and energy. In other words. and perishability are perhaps the oldest ideas associated to services. while goods-producing industries account for less than 20 to 30 per cent both in GDP and in employment in advanced economies. while in 82 countries. broadly defined. Textbook of microeconomics describe markets as buyers and sellers were always in direct contact without the chain of intermediate services between them.1 In 2009. accounts for a large proportion of value-added and employment in the majority of countries. as the consequence of the expansion of services. depending on the definition of services. banking and finance. For instance. several services do not fit this characteristic. In the aggregate. the share of the service sector was greater than 60 per cent of GDP (World Bank databank). housing. retail trade is associated with handling of tangible goods. individual service industries. is not present in services such as banking. could drive individual economies to a path of stagnant productivity and low growth. Nevertheless. design. services accounted for less than 50 per cent of the GDP in only 40 predominantly agricultural or mineral-based economies. However. specific attributes rendered services less attractive to quantitative models. have created their own economics. while repair and maintenance services transform or partly transform goods.

education. It is a very crucial place in the Middle East and also an example how a country can flourish with it non-productive sectors. among others. The sector also employs 8% of Dubai's total workforce. administration and health care. proportional to its total contribution to GDP .wholesaling. ii) Transport/Storage/Communication. 14% and 14% respectively. Non-Productive sectors include:            Maintenance and repair services Transport Travel Construction Insurance and pension services Financial services Charges for the use of intellectual property Telecommunications. communication. This job creation is particularly useful as often it provides employment for low skilled labor in the tourism . after i) Wholesale Trade.2%. and iii) Real Estate & Business activities at 30%. Benefits for Developing Countries: Employment is what happens when people leave the agricultural sector to find work in the service economy. cultural. and information services Other business services Personal. indication that the sector functions at relatively reasonable levels of productivity. and recreational services Government goods and services Relation with the Productive Sector: Industrialization was proposed as the principal means at the disposal of developing countries -of obtaining a share of the benefits of technical progress and of progressively raising the standards of living of the masses. Evidently. The manufacturing sector ranked as the fourth highest contributor to GDP of Dubai at 13. Scenario at Dubai: Dubai has been a trading hub for the world for last couple of decades. transportation. it was implicit that the movement from subsistence to market economies or from agricultural to industrial economies could not be achieved without a concurrent expansion of services such as retailing. as intermediate services directed at other services. Retail & Repair.or goods-producing firms.

such as the health sector.and retail sectors. South Africa and Mauritius have experienced rapid growth in IT services.g.service system. and Education The export potential of many of these products is already well understood. the Philippines. Manufacturing will remain important for trade and productivity but highly integrated to services. thus benefiting the poor in particular and representing an overall net increase in employment. such as call centers. The service economy in developing countries is most often made up of the following:      Financial services Tourism Distribution Health. e. financial services and transport. however. in tourism. . back-office functions and software development Conclusion: In the global market the complementarities between services and manufacturing have been expressed in a model of service-oriented manufacturing in which services and physical products can be integrated into one product. new opportunities are arising in other sectors. For example:    Indian companies who provide scanning services for US hospitals South Africa is developing a market for surgery and tourism packages India.

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