Search

This thesis is concerned with the role of services in international trade and economic development of developing countries. It focuses on India, a large country with a rapidly increasing employment in services at low levels of income. It seeks to explain this growth; it examines the scope for service trade to relieve the employment and balance of payments constraint in the Indian economy; and it analyses the quantity and quality of jobs in the largest service employer - informal services. In doing so it reflects on the nature of growth and structural change in India and other developing countries and draws some analytical and policy implications. Following the introduction, the first essay considers structural changes in the Indian economy in a broader international perspective and in the context of theories of structural change. Have services replaced manufacturing as the new engine of growth? Are there systematic differences in this respect between developed and developing countries? This essay is based on an econometric exercise using panel data for 28 developed and developing countries over the period 1980 to 1993. Its main conclusions are that (a) in developing countries it is still manufacturing not services that is the leading sector; (b) in developed countries there is no conclusive evidence in this regard; (c) it is mainly due to lack of employment opportunities that service employment is expanding in developing countries - i.e. that shift towards services is unemployment push rather than demand pull. The second essay relates to international trade in services within the framework of the recent Uruguay Round, and its objective to liberalise trade in services. It clarifies conceptual and statistical issues in trade in services. It carries out econometric exercises to analyse India's trade in labour services and travel services, the two sectors in which India has performed well. It finds that the potential for increasing service exports for India depends on the ability of the multilateral negotiating framework to foster exports of labour services in which India has a comparative advantage. It discusses the political economy of labour service exports and shows that export of unskilled labour services, India's main service export, is subject to many barriers within the Uruguay Round multilateral framework. The third essay relates to employment in informal services - a sector that this essay estimates accounts for a considerable share of all urban employment, and all informal employment in India. It notes that it is misleading to study the informal sector as a whole. At least two broad categories within the informal sector - informal manufacturing and informal services, exhibit different structural and behavioural characteristics. It argues that informal services are a feature of growth-constrained economies that have segmented labour markets. Within this framework it studies investment, earnings, returns to human capital, socio economic characteristics and scope for upward mobility of informal service employment based on a survey of street vendors in New Delhi, India, carried out by the author.