Post on 15-Apr-2018
transcript
Sebastián Sáez
Senior Trade Economist
INTERNATIONAL TRADE DEPARTMENT
WORLD BANK
Despite enormous challenges many developing countries are service exporters
Besides traditional activities such as tourism; health, information technology and communication services are among the most successful stories
How did developing countries succeed in increasing key services exports?
This book reviews the literature, conducts some econometric exercises, and
Examines the case of: Brazil, Chile, India, Kenya, Malaysia, and the Philippines.
Because it shows that developing countries can reap the benefits that services exports opportunities are opening.
Because the Philippine’s experience also shows that services are a viable option for export diversification.
-50
0
50
100
150
200
1999 200020012002 200320042005 20062007 2008 2009
Goods Services
Services exports are growing faster than goods (%, growth compared to 1999, 1999=0)
Source: Soonhwa Yi 2011.
Performance critically depends on human capital, the quality of telecom network, and institutions for cross-border services
Success in manufacturing does not seem to be a pre-condition for success in services
Importance of factors that are particularly relevant to services
Importance of complementarities among services and among “modes” of supply
Cost and quality of services is a major determinant of how much countries can benefit from globalization
Firms need efficient and reliable services to compete in the world economy
Effectively integrating services markets is complex because it involves regulatory reform and cooperation wide
Source: World Bank, World Development Indicators
19%
27%
15%
17%
19%
21%
23%
25%
27%
29%
0
200
400
600
800
1000
1200
1400
1600
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
Goods Other Commercial Services Share Services/Goods
1980=100
Source: World Bank, World Development Indicators
31.6
44.9
15.0
20.0
25.0
30.0
35.0
40.0
45.0
50.0
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
Transportation Services
Travel Services
Modern Services
Share of Modern Services/Goods Exports
0%
5%
10%
15%
20%
25%
30%
35%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
South Asia
Developing East Asia The
Philippines
•Infrastructure
•Entrepreneurial and human skills
•Institutions and
•Endowments
Fundamentals
• Policies affecting trade, investment,
and labor mobility in servicesDomestic
Policies
• Special Economic Zones
• Incentives in general
• Export promotion policies
Targeted
policies
A country’s exports of services depend on
relative endowments,
infrastructure, and
institutions
that matter for the service sector
For instance, services traded cross border, rely on telecommunications infrastructure and are sensitive to institutions that influence contract enforcement.
Biased towards exports of goods
CHILE SERVICE PERFORMANCE WORLD PERFORMANCE
37%
55%60%
28%
21%17%
35%25% 24%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1995 2000 2008
Transportation Travel Other commercial services
26% 23% 24%
35%32%
25%
40%45%
51%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1995 2000 2008
Transportation Travel Other commercial services
Inward FDI may help initiate and even sustain services export
In India, multinational firms were among the first to recognize the scope of BPO
In the case of the Philippines, of total equity investment in the BPO industry, about 93 percent represented foreign equity participation
In Malaysia, limitations on equity ownership have limited the FDI inflow, which consequently might have retarded the growth of the services sector (except for Islamic Banking and education services)
Cross-border services exports may also be linked to outward FDI
For instance, Chile has invested heavily in Latin American countries, these investments have promoted cross-border exports of services of wide range of professional services, logistics, human resources, marketing, and ITC-related services.
Likewise in the case of Brazil, first construction firms, then banks, and then ICT companies
In Malaysia, financial services, telecom and utilities are the main sub-sectors in services that are investing abroad
Indian companies are also reaching out through FDI
Means exports strategies are more complex
There are complementarities among modes of supply: inward migration policies promotes services exports
For instance, in order to promote tourism or education services,
To address But
Key infrastructure and regulatory constraints,
Weaknesses in the local business environment ….
…and provide tax incentives
Egypt, India, Malaysia, and the Philippines
But Brazil and Chile as well
It is hard to establish a causal link
There are examples of targeted policies that did not work as well (the Philippines and Malaysia)
Targeted policies pose risks and must be carefully designed
India case
The Philippines
Cooperation by firms through an industry association can in some cases favorably influence policy at home and its image abroad.
Services are an alternative to trade diversification
Success seems to be unrelated to performance in goods
Success exporting goods seems not to ensure success in services
Importance of complementarities
Jury is still out on other policies