The service sector is gaining importance in the Korean economy, with its share of production and employment increasing 47.0 percent and 42.9 percent in 1989, respectively. As the Korean economy has grown, developed economies, the U.S. in particular, have strengthened regulations against imports to protect their the commodity market, urging for the overall liberalization of trade in finance, insurance, communications, distributions and business services. The liberalization of trade in services may result in improved productivity in other sectors, including manufacturing, due to the resulting access to a broader variety, better quality and lower input costs. Thus, the liberalization of services can bring potential gains in productivity in the service sector.

The study makes a comparative analysis of the productivity in the service industry and gives implications for the liberalization of trade in services.