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Services

Consumer or producer goods which are mainly intangible and often consumed at the same time as they are produced. The services of an orchestra, a telephone call or a teacher are intangible and are consumed as they are produced. However, financial services or the work of a computing bureau are partially tangible in form, e.g. a computer print-out sheet. Service industries are usually labour-intensive and the measurement of net output and productivity presents special difficulties. Adam Smith, like the physiocrats and the mercantilists and others before him, did not believe that service industries contributed to the creation of national wealth. Even today, because service industries make only an indirect contribution to visible exports or military capability, or for other real or imagined reasons, economic policy is usually biased in favour of manufacturing industry or agriculture in most developed countries.

Reference: The Penguin Dictionary of Economics, 3rd edt.