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SERVICE SECTOR
BASIC INFORMATION ABOUT THE SERVICE SECTOR
“The service sector produces intangible goods, more precisely services instead of goods,
and according to the U.S. Census Bureau, it comprises various service industries including
warehousing and transportation services; information services; securities and other
investment services; professional services; waste management; health care and social
assistance; and arts, entertainment, and recreation. Countries with economies centered
around the service sector are considered more advanced than industrial or agricultural
economies.
KEY TAKEAWAYS
The service sector is the third sector of the economy, after raw materials
production and manufacturing.
The service sector includes a wide variety of tangible and intangible services from
office cleaning to rock concerts to brain surgery.
The service sector is the largest sector of the global economy in terms of value-
added and is especially important in more advanced economies.
Understanding Service Sector
The service sector, also known as the tertiary sector, is the third tier in the three sector
economy. Instead of the product production, this sector produces services maintenance
and repairs, training, or consulting. Examples of service sector jobs include housekeeping,
tours, nursing, and teaching. By contrast, individuals employed in the industrial or
manufacturing sectors produce tangible goods, such as cars, clothes, or equipment.
The Service Sector in the Three-Part Economy
The service or tertiary sector is the third piece of a three-part economy. The first
economic sector, the primary sector, covers the farming, mining, and agricultural
business activities in the economy. The secondary sector covers manufacturing and
business activities that facilitate the production of tangible goods from the raw materials
produced by the primary sector. The service sector, though classified as the third
economic sector, is responsible for the largest portion of the global economy’s business
activity.
Technology in the Service Industry
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Technology, specifically information technology systems, is shaping the way businesses in
the service sector operate. Businesses in this sector are rapidly placing more focus on
what is becoming known as the knowledge economy, or the ability to surpass
competitors by understanding what target customers want and need, and operate in a
way that meets those wants and needs quickly with minimal cost. In nearly all industries
within the sector, businesses adopt new technology to bolster production, increase
speed and efficiency, and cut down on the number of employees required for operation.
This cuts down on costs and improves incoming revenue streams.”
SERVICE SECTOR IN THE PHILIPPINES
“Services has been one of the strongest and fast-growing sectors of the Philippine
economy. Its gross value added contribution reached to 57% in 2014 (from 36.6% in the
1970s), and it also grows by an average of 6.3% from 2000 to 2014.
While this performance is considered as stellar by most analysts, there is still huge
potential for increasing value-added in services outputs, as well as deepening
participation in global value chains. Taking advantage of this unique competitive
advantage in the services sector, the Philippines aims to position itself as the core of
services trade in Southeast Asia and the Asia-Pacific region.
According to the National Economic and Development Authority (NEDA):
Growth potential. The Philippines is widely acknowledged as a source of high quality
human resources in services trade. For one, the country is a net exporter of services due
to a strong IT-BPM (Information Technology-Business Process Management) sector,
especially in legal, accounting, tax consultancy, bookkeeping and auditing, business and
management consultancy, engineering services, and computer and information services.”
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