Geography Reference
In-Depth Information
CHAPTER 5
The service economy
An important part of modern economic development is within the service sector,
including retailing and the sale of goods to the public, but also the provision of
services of all kinds, some of which were treated in the previous chapter as
social provision—education, health, and welfare in general. Another set of
services for individuals and families is in retailing, and the provision of leisure
services, recreation, health and beauty, and tourism. All these are experiencing
growth in countries with advanced economies, but a still more central feature to
current development has been identified as the services provided for firms, called
business services or producer services.
Services as an economic sector have had little treatment by students of
development. This may be attributed to a central tenet of socialist thinking, from
the late nineteenth century, that the production of goods was the only kind of
production with real value, and that services were purely accessory. Viewed from
this angle, it is only necessary to plan manufacturing production and the rest will
follow. Another point is that most development writing has been about Third
World countries, and it is certainly true that for poor countries, service-based
development has not hitherto provided a promising base. With the rise of the
electronic movement of information, this is already changing and will continue
to do so in the future.
Services to firms have a particular importance because they link to
manufacturing generally, and because some kinds of firms make particularly
strong use of services. Global organizations, operating in several continents,
choose as their regional bases, to act as centres for operations, those cities with a
wide range of professional and other specialist services on which they can call.
Often the specialist services have grown to match the growth of the global firms.
In a different kind of case, some industries are composed predominantly of
very small firms, and rely heavily on the provision of services as external
economies: services that they would otherwise have to provide themselves at
higher cost, but whose cost is best shared with other small companies. These
concentrations of business services have their own geography, linked to that of
the relevant industries.
This sector of the economy is taken separately in this chapter, not just because
it involves different activities with a different geography, but because the most
