What are the major factors responsible for the high growth of the service sector?
The service sector has witnessed high growth primarily because outsourcing has emerged as a major activity. Multinational companies outsource services to countries like India due to the availability of cheap manpower, which significantly boosts the sector.
Additionally, the establishment of the WTO has facilitated the production and trade of services. By removing tariff and non-tariff barriers, the WTO has provided greater market access to member countries, encouraging growth. While agriculture and industry witnessed a slowdown or decline in investment during the reform period, the service sector continued to register robust growth.
Explanation
The answer is derived from the provided context which highlights outsourcing and WTO as key factors. The text explicitly states that 'Outsourcing is emerging as a major activity' and links it to MNCs seeking 'cheap manpower'. It also notes that the WTO covers 'trade in services' to facilitate international trade through 'greater market access'. Finally, the context contrasts the service sector's growth with the decline in agriculture and industry during the reforms.
Solution Steps
Step 1: Identify 'Outsourcing' and 'Cheap manpower' as factors from the context regarding MNC activities.
Step 2: Identify 'WTO', 'Greater market access', and removal of trade barriers as factors facilitating service trade.
Step 3: Contrast the service sector's positive growth with the slowdown in agriculture and industry mentioned in the text.