Abstract
The service industry is the main driving force behind the global economy, responsible for creating the most employment opportunities and stimulating the most economic growth in both developed and developing countries. However, there is concern among policymakers regarding whether an increasing emphasis on the service industry will actually lead to job creation or not. Therefore, the purpose of this study is to investigate the impact of service sector growth on economic expansion and job creation in six developing nations of South Asia: Bangladesh, Pakistan, Iran, India, Nepal, and Sri Lanka. The study collected data over a period of 30 years, from 1990 to 2020, and utilized two models, with the generalized method of moments (GMM) being employed to estimate the findings. The results demonstrate a significant and favorable relationship between the expansion of the service industry and economic growth, as well as employment levels. To enhance the growth rate of developing economies and increase exports of service-related products, it is recommended to foster a favorable environment in the service sector. This can include creating conditions that are supportive of business, enabling greater ease of operation, and providing a stable political climate.
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