The service sector represents a smaller share of the national economy in the Soviet Union than in other countries at similar levels. This gap is found in trade, in private and business services, and, surprisingly, in public administration. Gur Ofer provides a twofold examination of this phenomenon. He uses cross country comparisons to study the “normal” relationships between the size of the service institutions and economic development. At the same time he investigates specific factors operating in Socialist and Soviet countries, thus uniting the special Soviet case with general development theory.