Services Exports Open a New Path to Prosperity
IMF Blog, April 5, 2017
Source details
- Canonical URL
- Services Exports Open a New Path to Prosperity
Other formats
Bibliographic details
- Authors: Prakash Loungani, Chris Papageorgiou, Ke Wang
- Published: April 5, 2017
Overview
- Services account for 50 percent of world income and 70 percent of employment.
- Services exports account for nearly one fourth of total exports.
- Advances in technology—rapidly declining telecommunication costs, increasing internet adoption, and proliferation of broadband—have made it possible to deliver many services across long distances (examples in text: insurance, medical diagnoses).
- Virtual trade in services is catching up with exports of goods in many countries and can offer opportunities for new sources of growth that could help raise productivity and jobs, especially in emerging and developing economies.
New source of growth for developing economies
- Services exports from developing countries have grown tenfold since 1990.
- Services exports from developing countries have grown at twice the rate of services exports from advanced economies.
- Developing countries’ share of services exports increased from 3 percent in 1970 to almost 20 percent in 2014.
- Growth is driven not only by traditional services (travel and transport) but also by modern technology-enabled services:
- business services (including research and development, and consultancy),
- computer and information services,
- financial services,
- intellectual property.
- Productivity gains in services reflect mechanisms similar to manufacturing:
- unbundling and fragmentation of service activities across geographic locations (examples: business process outsourcing, online banking services),
- specialization (finer division of labor),
- scale (falling unit costs of production).
New data set to track services exports
- New dataset covers global trade in services for 192 countries from 1970 to 2014.
- Data source: IMF’s Balance of Payments Statistics database.
- Dataset tracks developments in 66 services exports subsectors.
- A web portal provides access to the data and tools to produce charts and stylized facts.
- Global-level findings from the dataset:
- In 2014, world exports of computer and information services reached $300 billion, 10 percent of the total.
- Exports of financial services reached almost $350 billion in 2014 (noting rapid growth and rebound since the Global Recession).
- Country-level observations:
- The United States remained the top services exporter between 1990 and 2014, though its importance declined significantly.
- China became an important services exporter (ranked fifth in 2014).
- India’s share of services exports tripled to over 3 percent of world service exports during 2000–13; India entered the top 10 services exporters.
- Thailand, Brazil, Indonesia, and Egypt are in the top 30 and moving up rapidly.
Implications for growth strategies
- The dataset can be used by researchers and policymakers to study:
- the growing importance of modern services in the global economy,
- the role of services exports in structural transformation.
- Notes on tradability and linkages:
- Traditional services (transport, travel, retail) still often require physical presence but gain from integration into global value chains and lower costs from technology and fuel efficiency.
- The shift to export of modern services has spread across countries at different income levels, making them one of the fastest growing segments of world trade.
- Policy-relevant opportunities and effects:
- Many emerging markets, including China and India, are seeking service-led sources of growth.
- Service-led growth offers opportunities for diversification and competitiveness across the development spectrum, including resource-rich and low-income countries.
- Services contribute significantly to the productivity of many manufacturing industries (example: information and communications technology services improving production efficiency and lowering production cost).
- Trade in services offers opportunities for labor reallocation and job creation and could help address labor-market polarization.
- Preliminary evidence suggests that on average, countries that experience higher growth in services exports also experience faster job growth.
- Services trade has been more resilient than trade in goods to shocks and financial crisis.
- Services exports from developing countries have been generally more resilient than those from advanced economies.
A global win-win
- Export of services may be a game-changer, offering an opportunity to sustain global economic integration.
- Potential benefits by country type:
- Advanced economies: trade in very high-tech services could help retain some global competitive edge.
- Resource-rich countries and low-income countries: growing tradability of services can aid diversification strategies.
- Many countries: services may offer a pathway to inclusive growth (example: offering work opportunities for women).
Source: Services Exports Open a New Path to Prosperity (Prakash Loungani, Chris Papageorgiou, Ke Wang, April 5, 2017).
Content in this bundle
- World Bank Document
- 服务出口开辟新的繁荣之路
- サービス輸出が、繁栄の新たな道を開く: プラカシュ・ラウンガニ、クリス・パパジョージョ、ケ・ワン; IMF ブログ 2014年4月5日掲載
- Экспорт услуг открывает новый путь к процветанию
