Global Inequality in Service Sector Development: Trend and Convergence

Abstract

The COVID-19 pandemic has caused a huge impact on global service sector. In the pandemic background, to understand the disparity in service sector outputs at the global level is crucial for assessing the effectiveness of development policies in different countries. This study investigate the global service sector and it aims to investigate the transitional dynamics of the output from the service sector by adopting stochastic kernel analyses. Distribution dynamics analyses are carried out for all the countries in the world. The data are then divided into different regional and income groups to evaluate the impacts of geographical location and income on the development of the service sector. The results show that the Global North will continue to make greater strides, while the output capacity in many Global South countries struggles to reach the global average. Moreover, it is shown that countries with higher per capita income will perform better in the development of their service sector than those with low per capita income, thereby highlighting the persistence of global inequality. Finally, this study shows that the Sub-Saharan Africa region and the South Asia region both are very important in the alleviation of global inequality.