Services
Executive summary
This co-publication by the World Bank and the WTO is motivated by a shared view that the structural changes associated with a more service-centric world economy and the central contribution that expanded trade and investment in services can make to economic growth and development warrant greater policy attention and revived international cooperation. An important aim of the publication, and a key reason for its joint nature, is to recall the benefits of advancing the negotiating agenda on trade in services, and the opportunity costs of not doing so. Accordingly, the publication aims to foster reflection on how best to mobilize additional support – and better assistance – for developing and least-developed economies in implementing services sector reforms and reaping the development gains from expanded trade and investment in services.
Conclusion
The composition of global trade in services has changed markedly in recent years, a period that has seen developing economies register significant export gains in the services sector despite the severe impact of the COVID-19 pandemic. Such gains cover a host of non-traditional, high-value adding, services that can be more readily supplied today through digital means.
Foreword
Services have emerged as the driving force that is shaping the economic landscape of countries at all levels of development. They account for the largest share of global economic activity by generating more than two-thirds of GDP, employ the most workers, and are the source of most new job creation, especially for female and young workers. At the same time, services trade has turned into a key element in growth strategies, becoming the most dynamic component of global trade in recent times, and creating higher value-added jobs.
International Trade in Travel and Tourism Services
In this paper, we investigate tourism-related policy approaches that WTO member countries adopted in the early weeks of the COVID-19 crisis. We highlight the need for stakeholders to coordinate their responses in order to mitigate the negative crisis effects and better prepare the sector for the future. In doing so, we explore the economic impact of potential tourism scenarios, underlining both the demand and supply side effects of the crisis.
The evolution of services trade policy since the great recession
Are changes in services markets provoking reform, restrictions, or inertia? To address this question, we draw upon a new World Bank-WTO Services Trade Policy Database (STPD) to analyse the services trade policies of 68 economies in 23 subsectors across five broad areas—financial services, telecommunications, distribution, transportation and professional services, respectively.
Applied Services Trade Policy
Better information on how services policies vary across economies and sectors over time would improve the empirical analysis of their impact. This paper describes the Services Trade Policy Database (STPD), a joint initiative by the World Bank and the WTO Secretariat, which builds on a database developed by the World Bank nearly ten years ago and draws on a recent OECD database.
Why services trade matters
This section examines the role of trade in services in helping countries to achieve rapid and inclusive growth. Section C.1 discusses and attempts to quantify how services trade benefits the economy and promotes growth. Section C.2 discusses the role trade in services plays in enhancing domestic firms’ competitiveness, not only in the services sector, but also in manufacturing. Section C.3 considers how services trade promotes inclusiveness in a number of areas, such as skills, gender and location of economic activity. Section C.4 concludes.
What role for international cooperation on services trade policy?
Trade in services continues to evolve. Technology and regulatory reforms are driving a fundamental transformation, creating new demand while simultaneously helping to reduce trade costs and opening further opportunities to trade services. Under the impetus of global value chains, demographic trends, rising per capita incomes in emerging markets and environmental concerns, demand for foreign-supplied services is on the rise. The evolving avenues, actors and composition of services trade increase its potential to contribute to inclusive economic growth and development, but also present a number of challenges that need to be addressed to fulfil this potential.
Technical notes
WTO members are frequently referred to as “countries”, although some members are not countries in the usual sense of the word but are officially “customs territories”. The definition of geographical and other groupings in this report does not imply an expression of opinion by the WTO Secretariat concerning the status of any country or territory, the delimitation of its frontiers, nor the rights and obligations of any WTO member in respect of WTO agreements. The colours, boundaries, denominations and classifications in the maps of the publication do not imply, on the part of the WTO, any judgement on the legal or other status of any territory, or any endorsement or acceptance of any boundary.
Introduction
Services have become the most dynamic sector of world trade – but in ways that are not always recognized or understood. Just as services have come to dominate many national economies, they are playing a bigger role in the global economy as well. Many factors are driving this – including consumption, liberalization and investment – but the game-changer is technology. Services that were once difficult to trade, because they could only be delivered in person, are becoming far easier to trade, because they can be delivered digitally. The 2019 World Trade Report explores this globalization of services – why it is happening, how it is impacting economies, and where new policy approaches are needed.
Conclusions
Over the last few decades, services have become the backbone of the global economy and the most dynamic component of international trade. Services are increasingly easier to trade thanks in large part to digitalization. From online education to virtual law firms, technology is penetrating all services sectors, transforming services traditionally delivered face-to-face into remotely tradable services. Trade, long dominated by the exchange of goods, increasingly involves services, transforming the global economy in the process.