Servicification and global value chain in Asia empirical analysis

Abstract

The paper examines the servicification (degree of services activities) of economies and its impact on global value chain in Asia. In particular, the paper examines the impact of servicification on economies in the Regional Cooperative Economic Partnership (RCEP) countries. The paper also studies the impact of services on the overall economy as well on the manufacturing sector. The servicification in the domestic economy is defined as the degree of services activities entrenched in the domestic activities including the manufacturing sector. The paper argues that the degree of servicification in the domestic economy is a function of level of the human capital, urban amenities, connectivity and level of institutional support for services delivery and development. The paper also empirically examines the degree of servicification in the manufacturing sector at the RCEP countries. Countries with a wider participation and lower position in GVCs are tend to use more foreign service content in manufacturing, and the effect is larger for developing countries. The study also highlight that institution reform is important for development of services.