However, in China and the NIEs economies such as Korea, productivity in the tertiary sector is around 70, and that in ASEAN countries such as Thailand and Indonesia is around 60. An increase in the share of the service sectors with lower productivity than manufacturing sectors dampens productivity in the overall economy, which brings about a decline in economic growth rate.
This is a phenomenon known as Baumol's cost disease, in which advanced countries tend to be trapped. Asian countries are probably in the same situation. GVCs and Modern Services I will now discuss the current situation of the service sectors in Asia in detail. The left panel of Chart 6 splits the share of service sector into two categories: "traditional services" and "modern services."