Services Unbound Technological Change and Policy Reform in East Asia and Pacific

Services will be central to the transition of East Asia and Pacific to a high-income region. Finance, communication, transport, retail, health, and education already generate more than half the output and employment in the region’s economies. But a region that has thrived through openness to trade and investment in manufacturing still maintains innovation-inhibiting barriers to entry and competition in key services sectors. New evidence reveals the transformative impact of the dramatic diffusion of digital technologies and partial reform of policies. The result is higher productivity in services, as well as in the manufacturing sectors that use these services. The new technologies are also creating increased demand for sophisticated skills. At the same time, the improved access to education, health, and finance made possible by reforms and digitalization is equipping people to take advantage of these new opportunities. The report argues that deeper reforms could unleash a virtuous cycle of increasing economic opportunity and enhanced human capacity that would power development in the region.