Most of the large economies in the world are already dominated by services. Developed countries are now also becoming information economies; the US is a case in point. The confluence of these trends means that information services are the largest part of the US and other developed economies, with others close behind. This evolution is being accompanied by a revolution: the rapid industrialization of information services. These developments have manifold consequences for the economy as a whole, as well as for productivity, trade, jobs, globalization and competition. At the sector level, many industries are undergoing massive changes in structure. There are also significant implications for management strategies and internal organizational structure for all firms.
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Of the largest 25 economies in the world, all but one are dominated by services, in that services comprise the major part of the GNP. This is even true of countries like India, where although agriculture dominates employment (60%), services still comprise over 50% of the GNP. The sole exception is China, and it could be conjectured that this is a matter of reporting conventions. It seems that even if manufacturing or agriculture play large roles in an economy, no economy can really function without a large service sector. Today it is essential to recognize another important trend: that from a material to an information economy.
Karmarkar Apte rise of the service economy Research at the UCLA Anderson School of Management (Karmarkar & Apte, 2007; Apte, Karmarkar & Nath, 2008) documents the rise of the service economy:
• In 1967, the production of material goods (such as automobiles, chemicals and industrial equipment) and delivery of material services (such as transportation, construction and retailing) accounted for nearly 54 percent of the country’s economic output.
• By 1997, the production of information products (such as computers, books, televisions and software and the provision of information services (such as telecommunications, financial and broadcast services, and education) accounted for 63 percent of the country’s output.
• Information services alone grew from 36 percent to 56 percent of the economy during that 30-year period.
The Business and Information Technologies (BIT) project at UCLA Anderson is a global effort to track and assess these changes through GNP studies, surveys of business practice, and studies of key industry sectors.