The service elevator

The Economist article

Development [for poor countries] typically involves moving workers from low-productivity activities such as subsistence farming to high-productivity sectors. That points to a shift into manufacturing because it lends itself to specialisation and economies of scale [..] Services, in contrast, appear to be a graveyard for productivity. Because a haircut or a restaurant meal has to be delivered in person, there is almost no potential to exploit economies of scale and to export [..]

That conventional wisdom is now under fire, in a book edited by Ejaz Ghani of the World Bank [..] The authors argue that technology and outsourcing are enabling services to overcome their former handicaps. Traditional services such as trade, hotels, restaurants and public administration remain largely bound by the old constraints. But [new age] services, such as software development, call centres and outsourced business processes (from insurance claims to transcribing medical records), use skilled workers, exploit economies of scale and can be exported. In other words, they are just like manufacturing. If that is the case, then poor countries should be able to go straight from agriculture to services, leapfrogging manufacturing [..]

In poor countries as a whole, services have contributed more to growth since 1980 than has industry.

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Also industrial production itself tends to become more automated, services-like, less dependent on labor, with higher degree of knowledge input as it develops, hence the political power distribution in the society will shift according to services no matter what.