The Importance of Service Sector in Value-Added Generation Using Input-Output Analysis

The manufacturing sector had been the catalyst for growth in Malaysia since the eighties and the nineties. However, after the late nineties and post 2000. the service sector had become the major contributing sector to the growth of the Malaysian economy. In 2008, the service sector contributed 55% of the GDP and accounted for 52% of the overall workforce. This paper attempts to investigate the importance of this sector using two approaches of input-output analysis. The first approach is to use economic linkages analysis, in order to determine the appropriate key sub-sectors within the service sector. On the other hand, the second is to use multiplier analysis to analyze the ability of the niche sub-sectors to generate value-added in the economy. In essence, this paper is of benevolence to determine whether Malaysia is in the right track in enhancing her competitive niche in service industries in this global ICT era.