Mme101

Table of Contents

Page

1.0 Reasons to build a service economy 1

2.0 Sectors which are affected by market forces 2

3.0 Future challenges to build the service economy 3

4.0 Recommendations 4

5.0 References List 5

Executive Summary

This report analyses how service industries are important in building economic growth. Furthermore this report goes on to show how service industries help create a better global economy. Firstly we describe and explain reasons that organisations are building service economies for their growth in current and future market places. Next we identify and briefly talk about some sectors that are impacted by the forces of deregulation, regulatory reform and market liberalisation. Subsequently, we talk about future challenges to building a service economy. Lastly, this report has given recommendations on the main reason as to why organisations should build a service economy.

Reasons that organisations are building a services economy for their growth in current and future marketplaces.

* Low installation Costs –

Investment into the services sector has low installation costs compared to the manufacturing organisations. Government interventions to attract Foreign Direct Investment (FDI) are likely to enhance the service sector immediately while having a slower impact on manufacturing FDI. It is learnt that the FDI in a services industry adjusts to its equilibrium level within 2 years compared to a manufacturing FDI which needs around 5 years (Riedl, A, 2010, Economics of Transition, vol 18, no 2).

* Non – tradability of most Services

Services are mostly non-tradable or non storable as they must be produced where they are consumed compared to the manufacturing sector where you need to check the price competitiveness in the international market with regard to the unit labour costs etc (Riedl, A, 2010, Economics of Transition, vol 18, no 2)....