Advantage and disadvantage of service based economy

I want to discuss some of the advantage and disadvantage of service based economy and whether it is good for an economy to be fully based on service sector?

Later I shall introduce the service based economy USA and at last, like to conclude this discussion.


It can give faster and more flexible adjustment in times of economic crisis or downturns.
It minimizes environmental degradation from heavy industry
It allows for faster economic development than that which follows the traditional pattern
Reduce the material & energy consumption.
Enhancement of Knowledge.
More customer oriented product for their satisfaction.


More dependability on other country for goods.
Trade deficit is increased because of more import and less export of goods.
manufacturing jobs have been lost to outsourcing of products
More skilled employees & workers are required.

USA Economy is an example of service based economy because nearly 80-90 % of the GDP comes from the service sector.

The US is the largest and most technologically powerful economy in the world. Most of the US population is well educated and their spending power is better than other parts of the world. But, increasing trade deficit is slowing down the growth of U.S. economy as hundreds of billions of dollars are going to the rest of the world. Imported oil accounts for about 60% of US consumption. Long-term problems include inadequate investment in deteriorating infrastructure, rapidly rising medical and pension costs of an aging population, sizable trade and budget deficits.


An economy cannot be totally reliant on services alone. However a service-economy is a sign of economic growth and development of the country and it shows the strength of the economy.

US is service-based economy. It means that they have highly skilled and competent workforces who work in the tertiary sector. US also has primary and secondary sectors- but they’re not that dominant as compared to tertiary sector

A service-based economy will be reliant on other countries for manufacturing products and import goods to fulfill the demand of primary and secondary sectors.