Goods and Services Once Again

Abstract

Six years ago, two articles were published in the District Bank Review on the subject of the growth of services in the economy.¹ The background of these articles was the notion that in advanced economies, as real income per head rises, so the share of services, as distinct from goods, in the national output rises. This, it was thought, would have two consequences: first it would increase the stability of economies; secondly, it would tend to slow down the overall rate of growth of the economy, on the alleged grounds that the level, and the rate of growth, of productivity is lower in services than in goods. The two articles examined this thesis in the light of facts available up to the year 1959, mainly for the United Kingdom but with some data for the United States.

First published 1967.