Growth of service sector in BRIIC economies

Maisya Farhati, Raquel Ortega-Argilés

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

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