The promise of services-led development (Gaurav Nayyar, Mary Hallward-Driemeier, and Elwyn Davies, Brookings)

Manufacturing-led growth has been the central development paradigm for centuries, but it is time to shift the spotlight. The share of industry in total employment across low- and middle-income countries (LMICs) has, strikingly, remained almost unchanged in recent decades (Figure 1).  Rather, the share of the services sector increased from 40 percent to 50 percent between 1991 and 2018, offsetting almost the entire decline of agriculture. The most common response to this structural transformation is worries about “premature de-industrialization” and renewed calls for lower-income countries to expand manufacturing. The promise of services-led development is instead overlooked but it should not be as our new book “At Your Service? The Promise of Services-Led Development” shows.

The promise of services-led development (