Rules Of Development Of Producer Services

Producer service is not a new economic sector. It has been in existence since the ancient times of barter trading, with the main purpose of providing the transportation and logistics of goods between producers and consumers. With the advent of industrialization in the late 20th century, the producer service sector has rapidly flourished and now plays a significant role in the economy. In fact, the role played by the producer service sector in most developed countries now outweigh that of the manufacturing sector.In fact, producer service sector is an economic activity created for the producers, rather than for consumers. As of today, it has evolved from purely concerning transportation, logistics and security between producers and consumers to become a vessel of knowledge and technology into various economic industrial sectors. It is a technology and knowledge intensive service activity involving a highly specialized division of labour and geographical agglomeration.Research has demonstrated that the division of labour of specialization and the externalization of functional of business services have resulted in the rapid development of the producer service sector. The producer service sector arose internally from the manufacturing sector and flourished as a result of the rapid growth of the manufacturing sector. The growth of the producer service sector may be described as a demand led growth, which implies that the sector will inevitably prosper with the swift advancement of industrialization. In reality however, a large difference exists. In the whole wide world economy, the developing economies which are manufacturing based have its proportion of growth in service economy flourished along with the industrialisation. However, in contrary to the developed economy its growth of producer service sector is relatively weak. Hence, the producer service sector with high value added and deployment capability is still confined in developed economies.In the evolution of world economy, international division of labour is led by developed economy. Whether or not the developing economy can benefit from both the developing process and experiences from developed economy and hence emerge a new developing approach for producer services sector is the focus of this thesis. The content of this thesis views the producer services sector from both theoretical and developing angles. It establishes the roots and ruling used in the development of producer services sector. It aims to serve as a reference for policy making in the developing economy.Besides the introduction as chapter one, the thesis consists of three chapters (of twelve paragraphs) and the conclusion. It can be summarised below:Chapter two:Producer services and the development of modern economicThis chapter defines, characterizes and categorizes of the producer services. It analyses and explains the underlining factors that closely related to the success, direction and development of producer services. It concludes that the development of producer services is the result of highly specialization and technology progress in the world economy. Developing economy positions itself with low value added capability in the international division of labour and value chain. This leads to low value added capability for producer services. On one hand, the rule of international division of labour is the game controlled by multinational corporations from developed economies. On the other hand, developing economies are relatively weak in adopting and accepting state-of-the-art technology and advanced knowledge.Chapter three:Rules of the development of producer servicesThe development of Producer services has rules of its own kind. There are consisted of three rules:Firstly, rules of specialization-the prosperous of specialization in division of labour leads to the development of producer services, industrial organizations tend to outsource and purchase their internal functional services from external suppliers. Owing to the abundance supply of producer services from the market from individual or independence providers, the production efficiency and growth of economy are greatly enhanced. This has both sped up the growth of producer services and gives specialization in division of labour a further push in both depth and breadth. Armed with the huge growing potential, the status in economy activities was further empowered.Secondly, rules of embodied of knowledge:In the current world economy arena, inter-corporation competition advantage is no longer based on things like number and size of factories, scales of production, number of employees and scales of capital. Human capital and knowledge capital which encompassed unlimited energy are the main factors of success. Other important factors include availability of advanced technology and infrastructure likes transport and information and Communication technology.Thirdly, rules of geographical concentration:all economic activities are characteristic to spatial agglomeration. This is because there are differences in cost, externalities, economy of scales and increasing of returns to geographical concentration. From the view point of city development, the technology-and knowledge-intensive producer services sector is characteristic to geographical concentration. It has special needs in quality and quantity in both supply and demand. The ability to attracting foreign direct investment is the paramount important strategy. City management and policy maker have to capitalize on the geo-location characteristics of producer services. Armed with effective policy for producer services, the growth of city economy could then be substantial.Chapter four:Producer Services in SingaporeSingapore is a developed economy. After more than 40 years of economy shaping and national building, the GDP of Singapore has grown 89 fold from $2.9 billion in 1965 to $ 257.4 billion in 2008. Value added of Service sector has grown 36 fold from 1990 to 2007. During the same period of time, the producer services have moved from traditional goods trading services to higher value added financial and business services. For economic point of view, Singapore has successfully transformed itself from developing country to advanced country. The experience of transformation from traditional economy to a most advanced services economy, although it is not a good and emblematical model to other country or city, but at least efforts and experiences of how Singapore develop its economic especially in the aspect of the city development would serve as a good example of reference.This thesis summarizes the successful elements and experiences in Singapore producer services. Firstly, it has political stability, market openness and good international relationship; It possesses outstanding and comprehensive infrastructure; It executes policy and legal transparency with simplified business and approval procedures. It attracts foreign talent and emphasize on talent glooming. This is crucial as the core of competition is indeed among the talent of human capital; It promotes service oriented policy; It excels in converting obstacle to propeller. All these elements serve to promote economic activities, especially producer services and human capitals, to concentrate into Singapore. Secondly, significant invested in technology developments, innovation and R&D, which will promote the transformation of economy structure and upgrading industrial structure as well as promote cooperation among businesses by creating new services and sharing services. Finally, huge investment in education and openness policy on attracting foreign talents, it will help to realize and transform into knowledge-based economy.This thesis consolidates theoretical researches, the experiences and development processes of producer service in developed economy and the transformation of Singapore from developing economy to advanced economy. It concludes with several viable proposals on producer services in developing economy.Firstly, through many years of cooperation with multinational corporations, developing country has the capability to service the them. Hence, developing country should make full use of its opportunities in servicing multinational corporations in producer services to enhance its infrastructure, especially for those with high innovation capability to carter for forward and backward linkages for the intermediate services.Secondly, Producer services are technology-, human-and knowledge-intensive economy activities. Hence there is great need to increase investment in education, research, knowledge and human resources and create attractive environment for foreign talents. Developing country has difficulties in handling outsource services from multinational corporation because of investment in education are generally neglected or insufficient.Thirdly, in the process of making policy in attracting foreign direct investment, developing country should review its own situation and requirements. The ability to work well with international policy would reduce risk and chance of failure...