Manufacturing or service? Market saturation and cycles of over-investment as a clue to future of service economies

Economy and industry need markets. The “tragedy” is that markets are being saturated. Not only are they being saturated, but there has also been a tendency for cyclical over-investment whenever there is a new market opportunity. These backdrops imply a critical question as to whether or not service sectors feature similar growth symptoms of market saturation and cyclical over-investment. To approach this question, this research, which considers data availability, focuses on the Korean service sectors as a critical case, and bears implications for other country cases. This research focuses on performance profiles of service sectors within Korean service industries data from 1999 to 2006. With the data, this research attempts to perform an exponential smoothing to forecast an overview of the service sectors. Judging from the findings, and using a little intuition, it is fair to argue that service sectors are not totally free from the ‘logic of market saturation,’ but whether service sectors are doomed to fall under the realm of overinvestment requires more attention for future research.

Research highlights
► This research showed that service sectors would hint to some possibilities for cyclical over-investment and market saturation, as found in manufacturing cases.
► Depending on each country's positioning in the world economy, the country's competitiveness in service sectors will be different.
► An universal implication is that the competitiveness of individual service sectors mirrors the level of competitiveness of the manufacturing sectors to which the service sectors are related.