ANALYSIS

The Asia-Pacific region prospered by becoming the source of more than half of global factory output, but another transformation to higher-productivity services has the potential to further support growth, write CHIKAKO BABA and KRISHNA SRINIVASAN. Employment and production typically move from agriculture to manufacturing to services, as part of natural progression that comes with rising income. Today, many Asian countries—including China, Indonesia, Korea, and Thailand—are highly industrialized. If history is a guide, industry’s share of production will shrink as more activity passes to services. Indeed, the growth of services has...