Are countries, with large economies and gross domestic product (GDP), based on services like...

Question:

Are countries, with large economies and gross domestic product (GDP), based on services like lawyers, tourism, and entertainment, actually as powerful as countries with the same GDP, but focusing on technology, manufacturing, and tangible goods?

Gross domestic product (GDP)

Economic growth is an increase in real GDP, which presents the national output and income. It is caused by two main factors: an increase in aggregate demand and an increase in aggregate supply (productive capacity)

Answer and Explanation:

Countries, with large economies and gross domestic product (GDP) who based on services like lawyers, tourism, and entertainment can be powerful and rich, but not as countries whose GDP is basing on technology and manufacturing. To this conclusion follows simple answer, lawyers, tourism, and entertainment are services and technology, manufacturing, products are more of a goods.

The service sector gives an important tribute to GDP in most of the countries, by providing jobs, public services, and inputs for the economy. Trade of services can improve economic performance and provide a wide range of containing traditional and making new export opportunities. But, considering the fact that these days everything is based on technology and its products, even for the fulfillment of some of the services, physical goods are needed, let's say transferring money abroad. Banks offer us a service transferring money, but we can't do it without a laptop, phone, or other good that provides us the possibility to finish the action.

So, if we compare Germany, manufacturing and industrialized country and Spain, country where entertainment and tourism are widely developed, we can see that in 2018 Germany has a bit over $ 4 million GDP, and Spain $1.5 million GDP.

The above proves to us that focus on focusing on technology, manufacturing, and tangible goods is always more profitable and beneficiary for GDP.


Learn more about this topic:

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Gross Domestic Product: Definition and Components

from Economics 102: Macroeconomics

Chapter 4 / Lesson 3
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