Servicization and the Limits of the Mainstream: Structural Change in Developing Countries

Abstract

The article examines prospects for policy to enhance contemporary economic development. Shortcomings of mainstream economic analyses are evident since the Cold War, with failure to establish policy doctrines engaging with developing countries’ structural transformation: on average, not industrialisation, but servicization: capital and labour moving from agriculture to services. Faster-growing countries show greater servicization, yet overtly services-focused strategies are rare, and policy doctrine and economic analysis focuses on industrialisation. Literature searches show that servicization is largely ignored, reducing possibilities for policy-supported growth. Demonstrating this, the article argues that “internal” aspects of mainstream data and theory create severe confirmation bias, explaining this failure. If the “state” is there to support capitalism, in this area it seems to be doing rather badly.