PHILIPP I NE INSTITUTE FOR DEVELOPMENT STUDIES Surian sa mga Pag-aaral Pangkaunlaran ng Pilipinas
Vol. XXIII No. 5
DEVEL O PMENT RESEARCH NEWS September - October 2005
ISSN 0115-9097
Editor's Notes If agriculture has historically been the engine of economic growth of the Philippines, it looks like a new engine is driving it these days--services. Services is where the real growth is actually coming as this issue's banner article discusses. Not only does it contribute significantly to economic output, it also creates millions of jobs. Services is also where substantial amounts of foreign direct investment are being poured in these days. Whether we are on the road to becoming the second India-today's no. 1 in terms of services, particularly backoffice outsourcing--remains to be seen. But with our relatively developed infrastructure, cost advantage, and skills and creativity, many analysts say that we can even surpass the Indians. Recognizing the vital role of services in the economy, this
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What's Inside The future looks bright for health tourism 7 Outsourcing: the next big thing 11 Narrowing the digital divide: a must for the ICT sector
Services: Today's most prolific industry Gloria O. Pasadilla*
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ervices, by World Trade Organization (WTO) standard, covers a wide range of intangible and heterogeneous products and activities such as transport, telecommunication and computer services, construction, financial services, wholesale and retail distribution, hotel and catering, insurance, real estate, health and education, professional, marketing and other business support, government, community, audiovisual, recreational, and domestic services.
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Due to the intangible nature of services, many are unaware of their contribution to the economy. It does not come as a surprise, therefore, that the prominent role of services in international trade has
not been widely appreciated for a long time. For more than 50 years, multilateral trading rules have focused mainly on creating a free flow of goods across countries. But it was only in the last decade or so that the spotlight has focused on services. This is in recognition of the increased contribution of services to economic output. In the global economy, services sector has emerged as the fastest growing sector, providing more than 60 percent of global output and an even larger share of employment in many *PIDS Senior Research Fellow and Leader, Research Project on Services.