Discussion 1

The portion of the economy that produces intangible goods. According to the U.S. Census
Bureau, the service sector primarily consists of truck transportation, messenger services and
warehousing; information sector services; securities, commodities and other financial investment
services; rental and leasing services; professional, scientific and technical services;
administrative and support services; waste management and remediation; health care and social
assistance; and arts, entertainment and recreation services (Investopedia, n.d.). Service sector
has emerged as major contributor to GDP in the world: more than 70 % in developed and around
50% in developing countries. Investment and growth associated with services can contribute to
poverty alleviation and human development if the right policies are in place. In Nepal as well
service sector is very important since, it contributes to the almost half portion of the total GDP.
According to the estimate of 2013, agriculture: 36.8%; industry: 14.5% and services: 48.7%.
(Global Finance, 2013). Nepal has opened up 11 service sectors and 70 services for outside
world to invest 51% to 80% equity in Nepal. In practice some of the sectors are let 100% invest
by foreigners. Nepal is planning to offer additional facilities to SAARC countries in SAARC
Agreement on Trade in Services (SATIS) 2010. In addition to that, the change in the service
sector has been fluctuating, in FY 2009/10 it was 8.2 then change decreased by 8.2 in FY 10/11
and then increased by the 10.1 in FY 11/12 and there was huge decrease in change in growth of
service sector FY 12/13 by 6.5%. However the service sector is in increasing trend. Although we
cannot say with the full assurance that Nepali economy is operating in the service economy.
However we can surely say that it is heading towards being the service oriented economy.
Nepals service sector is also heavily relying on the remittance since, money people get from the
remittance spends on the education and housing. Although remittance is itself not included in the

service sector of Nepal, which if included could contribute to greater portion of economy. In
addition to that in from tourism industry as well hotels and restaurants are only included in the
service sector and other tourism activities are left behind, which could have been included in the
service industry.
Therefore, analyzing all the facts and information provided, Nepal is no yet operating in the
service economy; but has the potential have the service economy if policies regarding service
sector are more clearly defined.
References:
Global Finance. (2013). Nepal GDP and Economic Data. Retrieved from Globa Finance
website: https://www.gfmag.com/global-data/country-data/nepal-gdp-country-report
Investopedia. (n.d.). Service Sector definition. Retrieved from nvestopedia Wedsite:
http://www.investopedia.com/terms/s/service-sector.asp
Economy Survey of Nepal 2014/15