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    Business and Professional Services: Fast-growing Markets

     

     
     
    © International Trade Centre, International Trade Forum - Issue 2/2005 

    Business and professional services form more than a third of global service exports - and their share continues to grow.
     

    According to the International Monetary Fund, business and professional services have been the fastest-growing sector of world trade from an export earnings perspective since the General Agreement on Trade in Services was launched in 1995, with an average annual growth rate of 7.6%. This compares with growth of 4.9% for goods exports and 3.8% for tourism. Since 1999, the average annual growth rate has risen to 8.9%.
     

    Developing and transition economies are already exporting all kinds of business and professional services to more than 25 markets, according to ITC research. Due to lower domestic demand, specialized service firms in developing countries are more likely to depend on exports than firms in more developed markets.
     

    These services are also important to develop the national economy. Competitive business and professional services can help increase export earnings in all sectors. They include professional services such as accounting, engineering and legal services; computer services; research and development; equipment rental and leasing; and real estate services. They also include a range of business support services, such as market research, consultancy, technical testing and security services.
     

    All firms use these services to increase their operational efficiency, enhance the quality of their output, reduce their fixed costs, manage their financial operations and strengthen their market position.

    Encouraging business services

    Business and professional services are typically high-end, value-added activities. This means that countries with good educational systems and a culture of innovation have more potential to benefit from opportunities.

    Innovation is a key factor behind all successful exporters. Since business and professional services are among the easiest to replicate, however, innovation is even more important to help firms protect and expand their market share. Most service ideas cannot be protected through copyright or patent, so firms need to innovate continuously to stay on top. In addition, many customers will pay up to a 10% premium for services that address a previously unmet need.
     

    Governments and trade support institutions can boost export potential by including business and professional services in national strategies, policy reviews and trade promotion initiatives. They can apply specific measures to help service providers in the sector, such as mutual recognition agreements with target markets to facilitate access for professional service providers.

    Finally, as with other service sectors, "e" has a significant impact. Faster, more reliable Internet access, for example, means that many small firms can export business and professional services online.
     


     

    Prema de Sousa prepared the text using material written by Ms Riddle. Contributors: Doreen Conrad, Natalie Domeisen. 

    For more on these topics, several Trade Forum articlesare available. Check the Trade Forum Collection for "Innovation" and "Business and professional services" at http://www.tradeforum.org.