Growth and Impact of the Service Sector in Australia

Marketing Services and Other Social Issues Macroeconomics
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Service sector 1
Introduction
Notably, the Australian services sector has grown over recent years. Due to the less capital
intensive nature of the services, the sector has created more employment opportunities and
contributed massively to the country’s economic growth rate. More specifically, the growth has
been attributed to the decline of the manufacturing industry due to the high costs of
manufacturing, favorable government regulation and the growing affluence for privatization. In
the next five years, the service industry will be affected by technological advancement, forces of
demand and supply of the service sector and government regulation or deregulation. The survival
of the service sector is due to the importance of the service industry to the Australian and global
economy. Particularly, the service sector has created employment opportunities and contributed
to the growth of the Australian economy due to its substantive industry contribution to the gross
domestic product. Overall, the service sector is improving the economic wellbeing of individuals
and the country.
Factors Responsible for the Growth of the Service sector
Unfortunately, the decline of the manufacturing sector in Australia in the 2016-17 period
by 3.4 percent goes to show the industry is struggling(ABS,2018). For some economists, the
decline in the manufacturing industry is due to the high costs of production. Whereas the
manufacturing industry experienced a decline, the service industry grew by 9.1 percent in the
year 2012-16(ABS, 2018). Also, due to the high manufacturing costs, most economies are
shifting to the service sector since it is less capital intensive(Heath,2017). Currently, services are
making much more contribution to the gross domestic product than the manufacturing industry
in most countries. It is my assertion that the decline of other industries such as the mining and
manufacturing industry decline has led to the growth and demand in the service sector in

Service sector 2
Australia and other economies (Schutt, 2018). Due to privatization and favorable government
regulatory measures, the Australian service industry has blossomed. For the Indian economy, the
growth of the service sector has been attributed to the growing affluence and the growth of the
information and technology sector (Gupte, 2015).
Factors Likely to Impact the service sector in the next 5 years
. Undoubtedly, the technological revolution will affect the performance of the service sector
This is due to the fact that technology creates new opportunities. With the technological
development of the information, communication and technology sector, more employment
opportunities have been created across borders without the employees being at the same physical
location globally. Currently, technology has enabled persons to work online providing services
such as ticket booking, hotel, and accommodation services online among other services. With the
invention of newer technologies, newer employment opportunities for the service industry are
made possible. Due to the dynamic nature of technology and the service industry, major
technology-based changes will be effected in the service sector of the global economy (Kuznar,
N. d). Undoubtedly, regulation is an essential part of any economy. Currently, most governments
have put into place regulations that support service sector hence the fast-growing trend in which
the service sector is thriving and expanding globally(World Bank Group,2016).In addition,
privatization has contributed to the growth of the services due to the flexibility of regulatory
measures in the private corporate sector and the growing affluence for privatization.
Also, in the event that manufacturing costs go down in the Australian economy, the
demand for service sector might be affected. It is believed that part success of the service sector
is due to the fact that the manufacturing industry is in recession. Arguably, if the raw materials
for the manufacturing industry go down then the service industry performance will be affected.