The Role of Services In An Economy
This introductory chapter is intended to motivate students and arouse their interest in the importance of services in our economy and career opportunities in the 21st Century. Material on the "experience economy" illustrates the current economic evolution beyond the postindustrial economy. The nature of the “experience economy” also provides an opportunity for students to discuss their own observations and experiences. The role of information technology, innovation, and changing demographics in service sector growth can lead to speculation about the future.
“The Hitchhiker’s Guide to Cybernomics,” A Survey of the World Economy, The Economist, September 28, 1996.
A 46 page special insert loaded with figures and graphs that present the transformation from an industrial economy to a service economy driven by information technology. The article discusses new jobs, productivity, and the difficulty of measuring economic output when the metrics were designed for industrial production.
Joseph Pine and James Gilmore, "Welcome to the Experience Economy," Harvard Business Review, July-August 1998, pp. 97-105.
The authors describe the features of the emerging experience economy represented by firms such as the Rainforest Café that stage an experience rather than just deliver a service.
I. Service Definitions
II. Facilitating Role of Services in an Economy (Figure 1.1)
III. Economic Evolution (Figure 1.2 and 1.3)
IV. Stages of Economic Development (Table 1.2)
V. Nature of the Service Sector (Figure 1.4 )
The 21st Century Career (Figure 1.5)
VI. New Experience Economy (Table 1.3)
Consumer Service Experience (Figure 1.6)
Business Service Experience (Table 1.4)
VII. Sources of Service Sector Growth
Information Technology (Figure 1.7)
TOPICS FOR DISCUSSION
1. Illustrate how the type of work that he or she does influences a person's lifestyle. For example, contrast a farmer, a factory worker, and a schoolteacher.
A farmer's lifestyle is, to a certain extent, still influenced and conditioned by the elements, the weather, the quality of the soil, and the availability of water. Life is partly a game, but mostly it is a struggle against nature. The rhythm of life is shaped by nature and the pace of work varies with the season.
In the case of the factory worker, the struggle is against a fabricated nature: a world of cities, factories and tenements. Life is machine-paced (or at least appears to be). Efficiency is the watchword and productivity is its measure. The standard of living is measured by the quantity of goods a person has. The worker becomes just a part, a person in the bureaucratic and faceless organizations that spring up to achieve the task of production and distribution of these goods. The individual is the unit of social life, with society considered as the sum of all the individual decisions being made in the marketplace. Protection from the organization is often sought through labor unions.
A schoolteacher interacts on a face-to-face basis with his/her students in an intellectual environment. A career in teaching involves continual reading in the subjects taught and searching for innovative ways to motivate students. Life is reflective, ordinarily not physically demanding, and work is conducted in a pleasant campus environment.
2. Is it possible for an economy to be based entirely on services?
Economies based on services only are exceptions and rare ones at that, e.g., Andorra and Liechtenstein, resort islands in the South Pacific and the Caribbean, and Monte Carlo...
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