1. San José State University 1 The Role of Services in an Economy A Brief Introduction Stephen K. Kwan 2008

2. San José State University 2 NationLabor % A%A% G%G% S%S% Service Growth China21.0501535 191% India17.0601723 28% U.S. 4.8 32770 21% Indonesia 3.9451639 35% Brazil 3.0232453 20% Russia 2.5122365 38% Japan 2.4 52570 40% Nigeria 2.2701020 30% Bangladesh 2.2631126 30% Germany 1.4 33364 44% Ten Nations Total 50% of World Wide Labor A = Agriculture, G = Goods, S = Services 1980-2005 PC Age 2005 United States The largest labor force migration in human history is underway, driven by global communications, business and technology growth, urbanization and low cost labor (A) Agriculture: Value from harvesting nature (G) Goods: Value from making products (S) Services: Value from enhancing the capabilities of things (customizing, distributing, etc.) and interactions between things Where science and engineering demand is growing… International Labor Organization US Employment History & Trends cf. Figure 1.2 in F&F

3. San José State University 3 “The labor of some of the most respectable orders in society is like that of menial servants, unproductive of any value, and does not fix or realize itself in any vendible commodity which endures after that labor is past. In the same class must be ranked some both of the gravest and most important, and some of the most frivolous professions: churchmen, lawyers, physicians, men of letters, players, buffoons, musicians, opera- singers, and so on.” Adam Smith, Wealth of Nations, 1776.

4. San José State University 4 Examples of Services that touch on our daily lives: Business Services Business Services Communication Services Communication Services Construction Services Construction Services Distribution Services Distribution Services Educational Services Educational Services Environmental Services Environmental Services Financial Services Financial Services Health-related and Social Services Health-related and Social Services Tourism, Cultural and Sporting Services Tourism, Cultural and Sporting Services Transport Services Transport Services Armed Services Armed Services ….. ….. How many did you engage today?

5. San José State University 5 “There are no such thins as service industries. There are only industries whose service components are greater or lesser than those of other industries. Everybody is in service.” Theodore Levitt, “Production-line Approach to Service”, Harvard Business Review, Sept/Oct 1972.

6. San José State University 6 http://www.usnews.com/usnews/edu/grad/articles/brief/gbeng_brief_2.php

7. San José State University 7 http://www.ilo.org/public/english/region/asro/bangkok/public/releases/yr2007/pr07_02sa.htm

8. San José State University 8 “America Competes Act” Public Law 110-69 110 th Congress “To invest in innovation through research and development, and to improve the competitiveness of the United States.” SEC. 1005. STUDY OF SERVICE SCIENCE. (a) Sense of Congress.--It is the sense of Congress that, in order to strengthen the competitiveness of United States enterprises and institutions and to prepare the people of the United States for high-wage, high-skill employment, the Federal Government should better understand and respond strategically to the emerging management and learning discipline known as service science. (b) Study. No later than 1 year after the date of the enactment of this of Sciences, conduct a study and report to Congress on how the Federal Government should support, through research, education, and training, the emerging management and learning discipline known as service science. (c) Outside Resources.--In conducting the study under subsection (b), the National Academy of Sciences shall consult with leaders from 2- and 4-year institutions of higher education, as defined in section 101(a) of the Higher Education Act of 1965 (20 U.S.C. 1001(a)), leaders from corporations, and other relevant parties. (d) Service Science Defined.--In this section, the term “service science” means curricula, training, and research programs [[Page 121 STAT. 578]]that are designed to teach individuals to apply scientific, engineering, and management disciplines that integrate elements of computer science, operations research, industrial engineering, business strategy, management sciences, and social and legal sciences, in order to encourage innovation in how organizations create value for customers and shareholders that could not be achieved through such disciplines working in isolation. http://thomas.loc.gov/cgi-bin/bdquery/z?d110:HR02272:@@@T

9. San José State University 9 Note: This is not an endorsement

10. San José State University 10

11. San José State University 11 Barriers for Trade in Services? re: Page 7 in F&F

12. San José State University 12 Modes of TradeSome Examples Cross Border TradeSoftware, Insurance, telediagnosis from country B into A Consumption AbroadA’s residents obtain education or hospital treatment in B Commercial PresenceBank, telecommunications firm, hospital from B set up subsidiary in A. Movement of Natural PersonsEngineers, doctors from B provide services in A Adapted from WTO definitions Implications for eServices and Global Services Competition