Countries that shift from a manufacturing-oriented economy to a service-oriented economy sometimes see their productivity growth decline over time.This phenomenon is called:
A) Baumol's Disease
B) Deming's Decline
C) State Utility
D) Service Shrink

Question

Quizplus · Accepted Answer

Baumol's Disease, also known as the "cost disease," refers to the economic phenomenon of labor-intensive service sectors experiencing slower productivity growth compared to manufacturing sectors. As a country shifts from a manufacturing-oriented economy to a service-oriented economy, the productivity growth of the overall economy may decline due to the slower productivity growth in the service sector. This is because services are often labor-intensive and difficult to automate, making it harder to increase productivity through technological advancements. As a result, countries may experience slower overall economic growth as they shift to a service-oriented economy.

Countries That Shift from a Manufacturing-Oriented Economy to a Service-Oriented