Under capitalisation, which has traditionally characterised the services sector, is beginning to change with the emergence of more organised service activities. Yet another factor that needs to be taken into account in the assessment of potential growth is the trends in productivity.
While the empirical evidence remains somewhat ambiguous, there are indications that trade liberalization has had a positive impact on total factor productivity since 1991. At the sectoral level, there is evidence of improved productivity for exporting sectors relative to nonexporting sectors. Some studies also throw up evidence of an increase in the growth of labour productivity (Goldman Sachs, 2007 and Economic Intelligence Unit, 2007).