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How-and-why-an-economy-becomes-a-service-economy

Page history last edited by Alex Backer, Ph.D. 11 years ago

As large companies such as hypermarkets replace individual stores and small businesses, two things happen: jobs are lost, and consumers accumulate extra cash due to the savings that are passed on (and which drive the replacement of small businesses by the more efficient larger ones). The extra cash drives people to spend it in services (e.g. massage, fitness), and creates jobs in the service sector. So as productivity goes up and the manufacture and distribution of essential products gets accomplished by less and less people, an increasingly greater sector of the economy goes into non-essential goods and services.


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