The service industry is the economic sector, which deals with the provision of intangible services as opposed to tangible goods and commodities. The industry deals with professional services such as banking, insurance, transport, communication, engineering, defense, justice, medicine, education, hospitality, entertainment among others. Service industries mainly either rely on the use of equipment or people to provide their services. The 20th century saw the increased growth of the service sector particularly due to increased mechanization of the primary sector. Some countries have evolved into service sector economies with the industry contributing to a significant percentage of the GDP. Currently, the service industry contributes more than 70% of the GDP in the global economy.
Countries Most Reliant On The Service Industry
The microstate of Monaco enjoys a well-developed economy that is heavily based on the service sector, particularly tourism and banking. Monaco draws 95.1% of its GDP from service-related industries. The service industry provides employment to the largest percentage of the people of Monaco. Like most countries reliant on the service industry, Monaco experienced a negative growth in the Euro-zone due to the European crisis where most of its consumers are located. Monaco is currently trying to diversify the economy through focusing on small value added industries.
The economy of Hong Kong relies heavily on the service industry with 93.2% of its GDP accounted for by the service sector. Top service industries in the country include financial services, trading, real estate, logistics, and professional services. Overseas clients are the top consumers of most of Hong Kong’s services. The overreliance of the service industry in Hong Kong makes the economy vulnerable to global market dynamics and eventually affects its competitiveness. Diversification of the Hong Kong economy is paramount if growth and long-term stability are to be developed.
The Bahamas Island is one of the top economies in the Caribbean with a service-dependent economy. The service sector mainly the tourism and finance industries generate about 91.3% of the GDP and employs about 90% of the labor force. Tourism is the leading industry contributing to more than 45% of the GDP followed by financial services (especially offshore banking). The growth of the tourism industry in the Bahamas is directly linked to the growth of tourism infrastructure and hospitality outlets. The tourism industry relies on the stability of the US and Canada from which most of its visitors come.
Slovenia is a central European country strategically located between the Balkans and Western Europe. Slovenia has one of the highest GDP in Central Europe, 90.5% of which is derived from the service industry. The service industry employs more than 60% of the Slovenians. Slovenia depends mainly on foreign trade. During financial recessions and the Eurozone crisis Slovenia was hit hard due to her overreliance on exports to western and European countries.
Role Of The Service Industry In The Economy
Countries are increasingly focusing more on their economic efforts in the service industry. A well-developed service industry is a major factor in developed countries. The service industry provides employment opportunities to the majority of the population through its various sections. Emerging economies are increasingly seeking to improve their service industries to reap the benefits associated with investing in services such as tourism, banking, and education. For developing countries, investments in the service sector are critical to overall economic development.