The service industry plays a very important linkage and support role in economic activities. In recent years, the service industry in Taiwan has grown very fast which, in turn, has significantly changed the traditional methods of production. Currently, the service industry in Taiwan, following the growing path of the service industry in the U.S., Japan and other developed countries, has contributed more than the manufacturing industry to the rate of growth of GNP and to labor absorption. This research discovers that the service industry in Taiwan, like the service industries in other countries, is not as affected by the business cycle as the manufacturing industry is. In terms of industrial linkages, this research finds that wholesale and retail trade, international trade, land transportation, banking, insurance and business services are the most important service industries to promote. It also finds that transportation, communications, banking, business services, hotels and restaurants as well as recreational and cultural services are the service industries with the greatest potential for growth. This research also provides policy recommendations for promoting further growth of the service industry in Taiwan.
