BDS market development guide.pdf - PACA

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• Potentially, a range of providers offers these services to SMEs. In the most
entrepreneurial situations, private-sector companies and formal and informal networks
are the most important players.
Traditionally a Low Priority…
• The crucial role of services in successful economies is now beginning to be appreciated
after a history of neglect. Services are referred to conventionally as the tertiary sector
following the primary (extractive—agriculture, fishing, mining, and so on) and secondary
(manufacturing) sectors. 3
• The implied priority—with services least important—has been commonly accepted.
Economic writers from Smith to Marx have labeled services as unproductive. They were
referred to as residual—a leftover category of minimal importance compared with the
“real” endeavor of producing commodities and manufacturing goods.
• This sense of what was important has been one that development agencies and
governments have often adopted without much critical attention. The perceived
intangibility of services can be easily (and understandably) interpreted as nebulous and
weak in comparison with the tangible certainties of physical commodities and goods. For
many, production is associated with a kind of moral wholesomeness that renders it
positive—sometimes irrespective of its cost, quality, or appropriateness.
…Despite Their Obvious (and Increasing) Importance
• This lack of priority for services is especially surprising, given their importance in successful
economies. In 1998, services accounted for 61 percent of value added in the world economy
(up from 56 percent in 1980). In high-income countries, this figure was 65 percent (up from
59 percent); in low-income economies, it was 38 percent (up from 30 percent). 4
Focusing on Business Services
• One main reason for agencies’ and governments’ reluctance to make services a priority is
the absence of a pleasingly tight definition. Figure 2 shows one common classification
using the following services:
− Public Administration Services—“core” state functions, such as health, education,
security, and some types of infrastructure;
3
4
The discussion on services draws considerably from Riddle (1992).
Figures are from the World Bank (1999).
Microenterprise Best Practices
Development Alternatives, Inc.