Global trade in services has grown more than 60 percent faster that of goods trade over the past decade and given its relatively higher rate of growth it is conceivable that services trade may catch up or even surpass global goods trade in the next decade or so.
We have to discard the old notion that it is only industrialization and goods exports that would lead us to the path of economic wellbeing and strive hard to promote services trade led by digital technology. Services create almost one-third to one-half of the value that goes into traded manufactured goods in the form of R&D, design, engineering, sales and marketing, finance and human resources. An added advantage would be that, unlike goods where subsidies and concessions from the government loom large, the services trade is driven by higher efficiency, cost effectiveness, customer satisfaction and rapid turnaround time.
Efficiency-driven economies require modern machinery, better technical and managerial skills, promotion of a culture of firm level learning, innovation and knowledge. Human capital development, training of scientists and engineers, R&D, and lifelong learning practices are the foundations of the new knowledge economy.
An impetus to the human-capital-technology nexus was received by the endogenous growth theory. Paul Romer, Nobel Prize winner for this theory, opened a new vista in the exploration of economic growth. He argued that traditional inputs like capital and labour which have...
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