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    Trade in Services: Awareness, the First Step

     

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

    Challenges

    National development plans often exclude the service sector.

    The export strategies of many developing countries focus on goods and overlook opportunities to diversify trade and create jobs through services. Global service markets are growing and offer opportunities in offshoring, professional and tourism services. This is due to technological innovation, such as faster, cheaper telecommunications and lower-cost travel, which makes it easier to market to and reach new customers.

    Services are not just important in their own right. They provide the backbone for all trade. Even commodity-exporting countries depend on services. Quality education, finance, logistics and telecommunications services make agricultural and manufacturing producers as well as service firms competitive.

    Boosting service exports also helps development by creating jobs for those less involved in traditional exports, for example, women entrepreneurs or disabled workers offering consulting services. A number of service opportunities require low capital investment and can be delivered online.

    What is holding developing countries and their businesses back? Research shows that they have capacity and export potential in many service sectors. Services account for at least 50% of gross domestic product in most developing countries.

    The main challenge is lack of awareness. In this diverse, fragmented sector, data is hard to capture and trade statistics are understated. Many developing countries are already exporting services, but small firms may not realize they are exporting when they do business with visiting foreigners or deliver services online. Public officials may not be aware of the scope and depth of their services economy.

    In developing countries, service firms face substantial regulatory barriers in neighbouring and regional markets. These can impede their ability to establish offices in export markets of interest, inhibit their ability to reach foreign clients and constrain their growth.

    Building credibility abroad is another challenge. Services are intangible: businesses are selling a promise. Developing countries often have to overcome negative perceptions in international markets. Attention to marketing and quality assurance can improve the standing of service firms from developing countries.




    Solutions

    • Build awareness of service export potential. This ranges from holding workshops to sensitizing government officials and firms about export potential and opportunities, and engaging the media to better inform parliamentarians, academia and support institutions.
    • Mainstream services into national export strategies. Invest in sectors with potential. Improve service trade statistics to guide strategy and build awareness. Organize and coordinate this diverse sector: foster national and regional networking and partnerships.
    • Improve national service export readiness. Prioritize affordable, widespread telecommunications access. Maintain high educational standards to support knowledge industries. Encourage a global perspective to engender an entrepreneurial, export-oriented culture.
    • Build credibility. Consider incorporating services in national branding strategies. Promote quality certification for services. Promote "bundling" of related services as a package. Tap into national and international networks offered by service associations.
    • Think about policy reform. Provide transparency in domestic regulation and work with neighbouring and regional countries to eliminate obstacles to service trade. Consider how to improve access to financing and the movement of workers across borders. Seek better recognition of professional credentials.
    • Encourage business advocacy on service trade talks. Service negotiations are an opportunity to improve domestic rules and negotiate with partners to eliminate barriers to trade. Consult with business to identify their interests and negotiate priorities to improve market access.

    Contributors: Doreen Conrad, Natalie Domeisen, Prema de Sousa, Linda Schmid



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