Development of the Service Sector in Japan and its Implications for the Economy

The rise of the service economy in industrialized countries is having considerable effects on employment and economic activities in Japan. This paper empirically examines the evolution of the service sector in Japan and assesses its impact on employment generation and economic growth. Owing to the heterogeneous nature of the service sector, it is important to further develop the more productive service industries, while making every effort to increase the productivity of the less productive service industries. Policy-makers must take appropriate measures to enhance the productivity of the service sector in order to strengthen overall economic growth. Copyright 2005 Blackwell Publishing Ltd