The Service Sector and Contribution to Gross Domestic Product (GDP)

SUMMARY

Meaning of Service Sector

The service sector refers to the portion of the economy that provides intangible goods or services rather than tangible products. It encompasses a wide range of industries and activities that focus on meeting the needs and preferences of individuals and businesses. The service sector deals with activities that are often knowledge-based, information-driven, and oriented toward customer satisfaction. Examples of service sector activities include financial Services (Banking, insurance, investment, and other financial activities), Healthcare (Medical services, hospitals, clinics, and healthcare-related services), Education (Schools, colleges, universities, and other educational services), Information Technology (Software development, IT consulting, and other tech-related services) Communication Services (Telecommunications, internet services, and broadcasting),  Transportation (Airline, shipping, logistics, and other transportation services) etc. In this assignment Education, Health Care and Information Technology was used as service sector to know the impact of those service sector on Nigeria GDP.

Meaning of GDP

Gross Domestic Product (GDP) is a key indicator of the economic performance of a country. It represents the total market value of all goods and services produced over a specific time period within a country's borders. GDP is often used as a comprehensive measure of a nation's overall economic health and activity.

Importance of Service Sector to the Economy

Employment Generation: it provide wide range of job opportunities

Innovation and Technological Advancement: development of new technologies e.g Information technology, telecommunication etc.

Globalization: Services are often more easily traded across borders compared to tangible goods.

Improving Quality of Life: Many services, such as healthcare, education, and entertainment, directly contribute to an improved quality of life for individuals.

Increased Productivity: Services  often lead to increased productivity in other sectors by providing specialized support.

Analysis of the Sector to GDP

Service Sector on Economic Growth (GDP) in Nigeria from the period 2000 to 2022 using data sourced from the Nigeria Bureau of Statistics and Macro trend. The analysis is based on ordinary least square (OLS)(regression), Augmented- Dickey Fuller test and Granger Causality test. The analysis revealed that the model is statistically significant at 5% level of significance and it revealed that there is positive relationship between health services and information and communication and the GDP, and a negative relationship between the education and the GDP thus there is significant but there is room for improvement on Educational sector in Nigeria. This shows that there is positive impact of health services, information and communication on GDP which cause increase in GDP while there is negative impact of education and GDP. It is recommends that there should be increase in the investment in the service sector with more focus on education to boost the growth of the GDP.