Although the manufacturing sector is known to play an important role in structural transformation, the potential of other sectors, such as natural resource-based activities and tradable services, to provide exports and drive growth must not be underestimated. More specifically, services that mimic manufacturing’s ability to absorb low- and medium-skilled labor, are tradable, have relatively high value added per worker, exhibit the capacity for technological change and productivity growth, and show some evidence of scale and/or agglomeration economies—termed “industries without smokestacks” (IWOSS)—can provide new opportunities for export development, which can drive economic growth. In Tunisia, such sectors include ICT, tourism, transport, trade, and financial services. The development of these sectors can also provide significant opportunities to build new areas of comparative advantage, including in the manufacturing sector, through optimizing foreign exchange reserves, and improving logistic and infrastructure services. The growth in productivity of services is found to be closely linked with the productivity growth of the manufacturing sector and exports of manufacturing (Lee and McKibbin 2013).
