Two Types of Tertiarization: Household Needs, Production Networks, and the Rise of Services

Using harmonized input-output tables for 76 economies from 1995 to 2022, the study finds that the share of traditional services cannot distinguish the driving type of tertiarization. It is negatively correlated with household orientation, and only about 40% of tertiarization episodes are dominated by household demand. Among the 65 economies that saw rising service shares from 1995 to 2018, 77% experienced declining household orientation, and 73% of the growth in service share can be attributed to the production system channel.