Multiplier Effect In Service Industry And The Relation With Economy Development

The 1980s, the global industrial structure has stepped into a new round of major upgrades. The developed countries are gradually transformed into Bell’s "post-industrial society" stage, which are from "industrial-based economy" to "service-based economy" Service industry contributes much more than before and becomes an important impetus of economic growth. Also, service industry could promote the employment of large numbers of people, to maintain the country safety and social stability. At present, the level of development of China’s service industry is far behind the developed countries and some emerging developing countries.At present, domestic and foreign scholars on the service industry are mainly based on empirical studies. Now studies on the definition and classification of services are not unified, and are lack of theoretical analysis for exploration on internal nature of the three major industries. Yet, there are not systematic elaboration and empirical of dialectical relationship between employment and capital, technology and labor-intensive. This article is the study for the above issues on the services industry.Firstly this paper makes a list of the definition of on service industry, and puts forward the author’s own definition on it, then classifies the service. Secondly this paper analyses Bell’s three-stage theory, Rostow’s five-stage theory and Simon Kuznets’theory about industrial structure, then determines the ascription of Chinese economic development by them. And through the analysis of empirical data, this paper finds the limitation in Bell three-stage theory, and also finds the different application scope of these theories. As the development of service industry promotes national economy each other, by setting a mathematical modeling of multiplier theory, the article analyses the promotions of average income of service industry by the agriculture and industrial. Also, through the analysis of multiplier matrix model and value-added mechanism for national economy, the article finds that the improvement of average income of three industries can promote the whole economic development, and that the key factor is the Marginal consumption. The more marginal consumption, the more national income is. With Petty-Clark theorem the article makes analysis of the three industries labor productivity and employment relations, and sums up the characteristics of growth of service industry and how the service industry to absorb employment.Finally, this article concludes with the problems in China’s service economic development, and clears the significance of accelerating the development of the service industry, then summarizes the solutions to promote China’s service industry. As long as China keep going to improve laws and regulations, to promote the urbanization process, to guide the whole society to change their concept of employment, to introduce flexible forms of employment, to develop modern service industry, to strengthen training service personnel, will upgrade the whole level of China’s service industry.