specialization splintering


Ajit Kumar AJIT KUMARWISDOM IAS, New Delhi.

On the supply side, the share of services can be boosted by a switch to a more service-input intensive method of organizing production. Such a change in production methods can arise as a result of increasing specialization as the economy matures. For example, over time, industrial firms may make greater use of specialist sub-contractors to provide services that were previously provided by the firms themselves. Legal, accounting, and security services are obvious candidates to be contracted out. Bhagwati (1994) calls this process of specialization splintering. Kravis (1982) points out that splintering will lead to growth in the share of services in GDP, even when GDP itself is not growing.

Thursday, 17th Dec 2015, 10:25:55 PM

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