India’s experience offers hope to other development latecomers. The process of globalization late in the last century led to a sharp divergence of incomes between those who industrialized and broke into global markets and the “bottom billion” in some 60 countries where incomes stagnated for 20 years. It seemed as if the “bottom billion” would have to wait their turn for development, until giant industrializers like China became rich and uncompetitive in labor-intensive manufacturing.
The globalization of services, however, provides alternative opportunities for developing countries to find niches, beyond manufacturing, where they can specialize, scale up, and achieve explosive growth, just like the industrializers. As the services produced and traded across the world expand with globalization, the possibilities for all countries to develop based on their comparative advantage expand. That comparative advantage can just as easily be in services as in manufacturing or agriculture.
The promise of the service revolution is that countries do not have to wait to get on the path to rapid development. There is a new way ahead.
Ejaz Ghani is an economic adviser on South Asia at the World Bank.
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