Download Progressing Research on Service Industry Structure in Major Western Countries

Progressing Research on Service Industry Structure in Major Western
Countries
LIU Yang GUO Huan
School of Economics, Changsha University of Science & Technology, P.R. China, 410076
[email protected]
：
Abstract This article firstly reviews the theories of service industry structure, and then analyzes the
evolutionary rules of American service industry structure. In consideration of the fact that service
industry structure varies under different national economic development levels, this article selectively
chooses countries and regions with economic structure and culture similar to those of China to conduct
an empirical study, and then come to the conclusions on basic rules, which is hopefully to be beneficial
to the future development of Chinese service industry.
Key Words Service Industry, Tertiary Industry, Service Industry Structure
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1
Research Theories of Service Industry Structure
Service industry structure refers to the production technology, the economic relation as well as
the quantity proportion relation of various sub-service industries. It aims to analyze the proportional and
development rules[1] for various sub-service industries, mainly in three areas: 1 research on the quantity
proportions of inputs and outputs, which involve quantity relations. 2 research on quality relation
between various sub-service industries, that is, structure height and benefits. 3 research on the
characteristics of input and output relations.
Service industry should be dated back to the definition of tertiary industry. In western economics,
William Petty put forward his ideas on tertiary industry in 1690. Later, economists such as Say,
Sismondi, List, Senior and Maxis conducted analysis to tertiary industry from different aspects, and to
different extent, revealed the economic rules within tertiary industry category. However, the prosperity
of Tertiary Industry as well as the development and improvement of tertiary industry theory only begin
in recent decades. Among them, there are the following important theories:
1
In 1935, British economist Fisher firstly brought forward the definition of tertiary industry. In
his book Conflicts between Security and Advance, Fisher put forward the concept of tertiary industry,
classified three industries in social and economic revolution, and the role of tertiary industry to
national economic development.
2 In 1957, Clark named the tertiary industry as service industry and discovered Clark Law. The
law, which is also named as Petty-Clark Law in the history of economics, proposed the industrial
structure revolution rule from a historical empirical aspect based on the theory that labor and
employment would transfer with the economic development. Petty-Clark Law means the establishment
of preliminary theory of tertiary industry. After the World War II, the theory of tertiary industry has been
profoundly improved with further development of practice.
3 Economics of Service Industry by American economist Fox. The book mainly described
employment population growth of American service industry and reasons behind it, analyzed the
difference of hourly salary among various industries, compared the difference of cyclical fluctuation
among various sectors, and explored the influence of service industry growth to the whole society and
economy.
4
Tertiary Industry by Japanese economist Isagai Nobuo, which examined the general picture of
modern western tertiary industry from a more extensive aspect. The book mainly concluded various
theories on internal structure classification of Japanese tertiary industry in details, and made an
incisive analysis of the trend of Japanese tertiary industry, particularly of the employment trend. [2]
On the basis of service industry development rules in western developed countries, this article took
account of factors such as imbalance of economic development among all countries, particularly for
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those low-income and high-income countries, as well as big difference of economic structure among all
countries, service industry in particular. There will be offsets by using global data to conduct the
interaction analysis between service industry structure and GDP per capita, which will disguise the rules
we are researching and cause large deviation for research target. Therefore, this article adopts prior
research method and selects countries with economic structure, culture and custom similar to those of
our country.
2
Empirical Studies on Service Industry Structure Variation Rule
2.1 General Rule of Service Industry’s Internal Structure Evolution in Developed Countries
Developed countries had undergone a long industrialization process, and so far they have
developed into the post-industrial stage. Research on their industrialization process will help us
understand the overall picture of industrial structure evolution. After reviewing the tertiary industry’s
internal structure variation of those representative developed countries, most scholars found there
occurred similar stages for almost all the developed countries. Take the US as an example, the
proportion of tertiary industry has taken up a growing trend ever since 1948. However, the growth was
mainly contributed by the social service industry, the finance and insurance industry and the real estate
industry, while the contribution from the traditional wholesale and retail industry, and the transportation
and telecommunication industry were reducing [3]. Below is the structure variation data of American
service industry from 1929 to 1947, from 1948 to 1961 and from 1962 to 2000 respectively.
１ Structure Variation of American Service Industry from 1929 to 1947
Table
Proportion to tertiary industry
Year
1.Commercial,
hotel and
restaurant
2.Transportation and
Communication
Total of
1 and 2
3. Finance
and
Insurance
27.31
34.21
18.47
15.25
45.78
49.45
26.92
16.33
1929
1947
4. Social
Individual
Service
Government
service excluded
17.29
16.42
（
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Structure Variation of American Service Industry from 1948 to 1961
Proportion to tertiary industry
4. Social Individual
3. Finance
1.Commercial,
2.Transportation
Service
Total of 1
and
hotel and
and
Government
and 2
Insurance
restaurant
Communication
service excluded
33.58
15.75
49.33
16.83
16.75
25.57
13.82
39.39
20.37
18.79
Total of
3 and 4
44.2
32.76
Table 2
（
Year
1948
1961
）
33.58
39.16
Table 3
Year
1962
2000
Resource
Structure Variation of American Service Industry from 1962 to 2000
Proportion to tertiary industry
1.Commercial, hotel and
2.Transportation and
3. Finance, Insurance and
restaurant
Communication
Real Estate
25.53
13.66
20.22
18.37
8.78
24.04
Analysis to Tertiary Industry Statistics Data
Total of
3 and 4
：
Industrial
Service
18.96
32.22
Based on Table 1-3, we found:
From 1929 to 1947, industries such as commercial, hotel, restaurant, transportation and
telecommunication had witnessed pretty rapid development and their proportion in tertiary industry
was in the up-trend, while industries such as finance and insurance, real estate, industrial service, social
development and individual service were comparatively slow, and their proportion in tertiary industry
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was somehow declining.
From 1948 to 1961, industries such as finance and insurance, real estate and industrial
service underwent rapid growth and their proportion in increment was increasing, while industries such
as traditional commercial, hotel, restaurant, transportation and telecommunication were relatively slow,
but their proportion was stilly relatively high.
From 1962 to 2000, social and individual service of tertiary industry developed rapidly and
their proportion in increment was remarkably increasing. On the other hand, industries such as
traditional service and government service industry were developing slowing and their proportion was
quickly declining. Meanwhile, industries such as finance and insurance, real estate and industrial service
maintained a stable growth trend.
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2.2
Development Rule of Service Industry Evolution in Similar Countries
There are big differences of economic structure, particular for service industry, among countries
due to imbalance of economic development and income level. There will be offsets by using global data
to conduct an interaction analysis between service industry structure and GDP per capita, which will
disguise the rules we are researching and cause large deviation to research target. Therefore, this article
selects three countries & regions with economic structure, culture and custom similar to our country to
conduct research, namely Japan, South Korea and Taiwan.
1 Japan
Table 4 illustrates weight composition variation of various service industries to GDP in Japan from
1970 to 1991 and from 1990 to 2000 in accordance with new international statistics standard .
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Table 4
Year
GNP
per
capita
(USD)
Structure Evolution Process of Japanese Service Industry from 1970 to 1991
Weight of service structure
Finance,
Proportion
Insurance,
of service Commercial,
Social and
Transportation,
Government
Real Estate
industry to
Individual
hotel and
Storage and
Service
and
GDP
Service
restaurant
Telecommunication
Commercial
Service
47.93
13.90
6.66
11.90
9.34
6.13
％
（％）
1970
1940
1980
10440
54.30
14.77
5.94
14.09
11.27
8.23
1985
10950
55.59
12.70
6.32
14.78
13.90
7.88
1986
13200
56.21
12.54
6.31
15.10
14.33
7.93
1987
17270
56.48
12.51
6.28
15.65
14.25
7.79
1988
23570
56.17
12.36
6.23
15.87
14.16
7.55
1989
25460
56.26
12.05
6.29
16.03
14.49
7.38
1990
26100
56.01
12.16
6.04
15.51
15.02
7.29
15.19
15.34
7.21
1991 26960
56.09
12.22
6.13
Classified in accordance with new international statistics standard
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833
Weight of service structure
％
Education,
Public
Healthcare
Proportion
,
Social
GNI
Individual
of service Wholesale
Year
Transportation,
Work,
per
residents
Financial
Public
industry to
& Retail,
Storage and
Institution
capita
Hiring
Agent
Management
GDP
and Repair Telecommunication
al
and
employees
Individual
Service,
Restaurant
and Hotel
1990 27100
62.50
12.37
6.64
16.83
4.78
21.89
0.00
1998 33310
69.80
15.12
7.37
17.80
5.03
24.49
0.00
1999 35420
70.10
14.36
7.19
18.67
5.17
24.71
0.00
2000 35610
69.70
13.87
7.32
18.40
5.25
24.87
0.00
Resource: International Statistics Yearbook ; Note: the conversion coefficient for GNI per capita and actual
purchasing power is 0.72.
（％）
With the increase of income per capita, the proportion of industries such as commercial, hotel and
restaurant to the overall service industry gradually declined, reducing from 13.9% in 1970 to 12.22%
in 1991; the proportion of industries such as transportation, storage and telecommunication was
relatively stable; the proportion of financial agencies gradually increased, reaching 18.40% in 2000;
while the proportion of industries such as social institutional and individual service was on the rise,
increasing from 9.34% in 1970 to 15.34% in 1991.
2 South Korea
Table 5 illustrates weight composition variation of various service industries to GDP in South
Korea from 1970 to 1991 and from 1990 to 2001 in accordance with new international statistics
standard .
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Table 5
Structure Evolution Process of South Korean Service Industry from 1970 to 1991
Weight of service structure
Finance,
Insurance,
Year
Commercial,
Transportation,
Real Estate
hotel and
Storage and
and
restaurant
Telecommunication
Commercial
Service
1980
2330
42.10
12.68
7.59
10.93
1985
2260
42.86
12.15
7.61
11.75
1986
2620
43.12
12.52
7.63
11.83
1987
3230
43.50
12.89
7.52
12.20
1988
4110
43.23
12.33
7.21
13.02
1989
4850
44.01
11.57
7.22
13.75
1990
5770
44.09
10.87
6.98
14.44
1991
6670
44.51
10.53
7.00
15.03
Classified in accordance with new international statistics standard
GNP
per
capita
(USD)
Proportion of
service
industry to
GDP
（％）
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％
Social and
Individual
Service
Government
Service
3.28
4.12
4.11
3.94
3.83
4.01
4.09
4.15
7.62
7.23
7.03
6.95
6.84
7.45
7.70
7.80
Weight of service structure
％
Education,
Public
Healthcare,
Proportion
Wholesale
Social
GNI
of service
Year
Transportation,
& Retail,
Work,
per
Financial
Public
industry to
Storage
and
Repair,
Institutional
capita
Agent
Management
GDP
and
Restaurant Telecommunication
Individual
and Hotel
Service,
Restaurant
and Hotel
1990 5740
48.04
13.44
6.69
14.66
4.21
8.93
1998
52.28
10.28
7.05
19.46
4.51
10.77
1999 8530
53.02
11.28
6.83
19.74
4.32
10.63
2000 9010
52.86
12.11
6.69
18.96
4.29
10.59
2001 9460
54.54
12.22
6.38
19.44
4.50
11.76
Resource: International Statistics Yearbook
Note: the conversion coefficient for GNI per capita and
purchasing power is 1.59.
（％）
Individual
residents
Hiring
employees
0.11
0.22
0.22
0.22
0.23
actual
With the increase of income per capita, the proportion of industries such as commercial, hotel and
restaurant to the overall service industry gradually declined, reducing from 12.68% in 1980 to 10.53% in
1991; the proportion of industries such as transportation, storage and telecommunication was relatively
stable; the proportion of financial agencies gradually increased, reaching 19.44% in 2000; while the
proportion of industries such as education, healthcare, social work, social institutional and individual
service was on the rise, increasing from 8.93% in 1990 to 11.76% in 2001.
3
Taiwan
Table 6 illustrates weight composition variation of various service industries to GDP in South
Korea from 1992 to 2001.
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Table 6
Structure Evolution Process of Taiwan Service Industry from 1992 to 2001
Weight of service structure
Proportion of
GNP per
Finance, Insurance,
Year
Wholesale,
Transportation,
service industry
capita
Real Estate and
retail and
Storage and
(USD)
to GDP
Commercial
restaurant
Telecommunication
Service
1980
2980
42.07
13.46
5.52
13.37
1985
5840
45.75
12.12
6.01
15.16
1992
10506
56.53
14.98
6.29
18.79
1993
10011
57.01
15.3
6.4
19.4
1994
10812
58.77
15.61
6.55
20.96
1995
12686
60.14
16.35
6.65
21.37
1996
13260
61.09
16.8
6.78
21.69
1997
13592
62.13
17.23
6.74
22.83
1998
12360
62.96
17.77
6.96
22.74
1999
13235
64.26
18.49
6.73
22.9
2000
14188
65.53
19.3
6.71
22.76
2001
12876
66.96
19.29
6.9
20.49
Resource: International Statistics Yearbook
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Government
Service
9.56
10.12
11.02
10.49
10.27
10.35
10.36
10.19
10.02
10.19
10.19
10.64
With the increase of income per capita, the proportion of industries such as wholesale, retail and
restaurant to the overall service industry gradually increased, from 13.46% in 1980 to 19.29% in 2001;
the proportion of industries such as transportation, storage and telecommunication was relatively stable;
the proportion of industries such as finance, insurance, real estate and commercial service was on the
rise, reaching 20.49% in 2001; and the proportion of government service was slightly increased.
3
Research Conclusions
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From the above analyses and data, we found:
１ Service Industry’s Structure Evolution Rule in Developed Countries
3.
The economic development path in western developed countries revealed that in the process of
economic development and income enhancement, the proportion of service industry to GDP is on the
rise. On the whole, service industry has experienced the following three stages:
Stage I: preliminary phase of capitalist industrialization, with industries such as commercial, hotel,
restaurant, transportation and telecommunication taking the leading role.
The major symbol at this stage is the high-speed development of industries such as commercial,
hotel, restaurant, transportation and telecommunication. The expansion of industrial capital market
depends on commercial development; meanwhile commodity sale and shipping rely on fast operation of
transportation and telecommunication industries. In the meanwhile, industries such as hotel and
restaurant experienced rapid development with increasing social activities and enhanced pace of life. In
this phase of the early 18th century, tertiary industry accounted for 40% of GDP, half of which came
from the commercial and telecommunication industry.
Stage II: from the end of 19th century to the beginning of 20th century, with industries such as
finance, insurance, real estate and industrial service developing together with industries such as
commercial, hotel, restaurant, transportation and telecommunication.
The major symbol at this stage is the rapid development of industries such as finance, insurance,
real estate and industrial service. From the end of the 19th century to the beginning of the 20th century,
capitalism developed from free competition to monopoly. The rising of joint stock company and
multi-national corporation need large amount of expansion capital, and the financial industry, an
important capital financing and allocating tool, meet with the above expansion capital need. After World
War II, scientific development shorten the information dissemination and collection time, which
promoted the rapid development of industries such as finance, insurance, real estate and industrial
service. Meanwhile, industries such as commercial, hotel, restaurant, transportation and
telecommunication also underwent considerable development after adopting new technology and service
manner.
Stage III: social and individual service government service excluded achieved rapid development,
finance, insurance, real estate and industrial service maintained stable development, while traditional
service steppped into relatively slow development stage.
With the improvement of living standard and increase of leisure time, consumption need changed
from physiological consumption needs to entertainment consumption needs. Needs of amusement,
leisure, healthcare, education and medical treatment were increasing, which promoted rapid
development of institutional and individual service. Meanwhile, with information industry changing
with each passing day, industries such as finance, insurance, real estate and industrial service maintained
a stable growth rate. On the other hand, traditional service stepped into relatively slow development due
to consumption needs update, which caused the declining proportion of traditional commercial, hotel,
restaurant, transportation to tertiary industry.
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3.
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Service Industry’s Structure Evolution Rule in Countries Similar to China
（1）Transportation, storage and telecommunication took on rapid development trend when GNI
per capita entered the range of $3000 to $8000, and later stepped into a stable development stage.
（2）Commercial and hotel developed in a relatively stable trend when GNI per capita was above
$3000 level. However, Taiwan was a special case, where the proportion of commercial and hotel was the
largest and took on upside trend. We think it is related to national culture and has a pretty good reference
value to the development of China mainland’s service.
3 Finance, insurance, real estate and industrial service exhibited rapid development trend when
GNI per capita was above $3000 level, and accelerating development trend when GNI per capita was
above $5000 level.
4 The proportion of individual industry, including community industry was gradually increasing
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with enhancing GNI per capita.
5 Tourism industry experienced rapid development when GNI per capita entered the range of
$2500 to $9000.
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Reference
[1] Economy Globalization and Modern Service Industry[ M], Fanhua Huang, Nanjing Publishing
House, 2002.1-3
[2] Review on Western Tertiary Industry Theoretical Evolution[J], Shuying Wang, Hunan Social Science
Journal,2003, 5 :85-88
[3] Evolution Rule of American Tertiary Industry’s Internal Structure[J]. Journal of Reform ,2003,
4 :117-121
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Name of Author: Liu Yang
Date of Birth: November, 1969
Place of Birth: Yueyang, Hunan Province
Title: Associate Professor, Institution of Economic, Changsha University of Science&Technology
Doctor of Economics,
Post-doctor of Finance
Major Accomplishment
Compile of Enterprises’ Reorganization & Listing Operation, Published by People Daily
Publishing House, July 1999. The book is highly appreciated by experts and professionals;
Euro’s Smooth Circulation Means Asia-yuan’s Possibility, Shanghai Finance, No.7, 2002;
Factors Influencing Gold Price, Value Maintenance and Investment Value Analyses, World
Economy Situation, No.16, 2002;
East Asia Model with Explanation in Two Aspects and Remark on China’s Status in East Asian
Integrated and Interlocked System, World Economy Situation, No.20, 2002;
Discuss on Listing Corporations’ Non-tradable share reform, World Economy Situation, No.10,
2003;
Strategy Discuss: How to Perfect China’s Independent Directors System, Productivity Research,
No.3, 2003;
Advantages of Corporate Securities Financing :A Comparative Analysis Based on Stock Financing,
Population and Economy, 2005 Special Edition;
Stock Equity Structure and Corporate Performance: A Theoretical Review, World Economy
Situation, No.21, 2005;
Market Liquidity and Majority Shareholder Supervision, World Economy Situation, No.16, 2004;
Theoretical Basis for Strategic Asset Allocation: Comparison and Summary, Economic Review,
No.3, 2007.
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