Abstract: The present paper attempts to examine three types of mechanisms, including specialized division of labor, innovation and demand-induced mechanisms that are crucial in the development of the service industry in the modern economy. The underdevelopment of transacted-through-market services in China is mainly caused by problems with these three mechanisms, and especially by a lower level of specialized division of laboring the market rather than the fact thatChina is still at an earlier economic development stage than many of the economies used as comparisons. Government strategy should be prioritized to reduce obstacles and transaction costs that are inhibiting the evolution of specialization and the division of labor required for the development of a diverse and dynamic services sector that will help China to optimize its economic structure.
Keywords: Service economy, Development mechanisms, Tertiarization, Industrialization, Chinese economy
Source: China Finance and Economic Review, Volume 2, No.1, 2013
About the Author: Cheng Dazhong is professor and doctoral supervisor of the Department of World Economy and the Institute for World Economy at Fudan University in Shanghai, China. His current research areas include international trade & investment, and service economy & trade in services (with a focus on the internationalization of heterogeneous firms). He has been Visiting Professor at University of Technology Sydney (UTS), Australia and Visiting Scholar at University Paris Dauphine, France. He is the author/editor of several books and articles published in professional CSSCI and SSCI journals, and has been in charge of twelve provincial and national-level research projects. He has won several honors and awards at and above the provincial or ministerial levels, and was selected for the Program for New Century Excellent Talents in Chinese Universities (NCET) in 2009.