The Paradox of a Service-Oriented Economy for Sustainability: Co-Evolution Between Innovation and Resources Effectuation by a Global Complement
Summary
A service-oriented economy is expected to play a significant role in relieving the constraints on an economy by means of information substitution for constrained production factors such as energy. However, contrary to such an expectation, the dramatic increase in crude oil prices that emerged in the beginning of the 2000s has revealed the paradox of a service-oriented economy. Japan has been recognized for its notable energy efficiency improvement by means of technology substitution for energy that induced vigorous industry R&D leading to a high-technology miracle in an industrial society. However, its efforts to shift to a service-oriented economy corresponding to a paradigm shift to an information society have produced opposite results by increasing industry's unit energy consumption and decreasing price elasticity to energy consumption. The above phenomenon reveals a paradox with respect to a service-oriented economy for sustainability. Furthermore, while the advancement of information technology is expected to lead to a globalized economy, it also shows the result of increasing constraints by means of less effectuation of energy use. These paradoxes provide a warning with respect to the significant role of a service-oriented economy in constructing co-evolution between innovation and resources effectuation by a global complement. On the basis of an empirical analysis of the energy dependency structure of Japan and other East Asian countries in the context of advancement of a service-oriented economy, this paper attempts to demonstrate the foregoing hypothetical views.
See the full content of this document
Extract
The Paradox of a Service-Oriented Economy for Sustainability: Co-Evolution Between Innovation and Resources Effectuation by a Global Complement
INTRODUCTION
In line with the increasing constraints in the resources and environmental capacity together with the increasing preference in shifting from materials to services, the share of service industry has been increasing substantially in industrialized countries corresponding to their industrial development. A shift to a matured economy in these countries has accelerated such a trend leading to a service-oriented economy. Figure 1 illustrates the share of the output in Japan's industry over the period of 1955-2005 together with the trend in the international oil prices in the same period.Looking at the figure abovewe note that the share of the service industry has shown significant increase particularly after the first energy crisis in 1973 in Japan in which securing the energy resources was the Achilles' heel in its sustainable growth. A service -oriented economy is really expected to play a significant role in relieving such constraints on an economy by means of technology/information substitution for constrained production factors such as energy (Chen, 1994, Watanabe et al., 2004).However, contrary to such an expectation, the dramatic increase in crude oil prices that emerged in the beginning of the 2000s has revealed the paradox of a service-oriented economy. Japan has been recognized for its notable energy efficiency improvement by means of technology substitution for energy that induced vigorous industry R&D leading to a high-technology miracle in an industr...See the full content of this document