Technology in Services Policies for Growth, Trade, and Employment (1988) / Chapter Skim
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Changing Economics of International Trade in Services
Changing Economics of International Trade in Services
Pages 167-186
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From page 167... ...
Many services employ the same technical operations, equipment, and skills as manufacturing sectors, but instead of mass-producing standard goods before marketing them, they put their productive resources into use according to the needs and specifications of their customers (tailors' services versus cloth manufacturing, computer services versus software products, mechanical engineering services versus heavy machinery production, etc.~. Also, a number of services consist of the shared use of large manufactured equipment which, in alternative organizational settings, would be produced, marketed, and used as consumer durables or producers' goods (electricity-supply services versus electricity-producing equipment, air and sea cargo services versus private transportation equipment, telecommunications services versus private network supply, movie theater services versus film display equipment, etc.~.
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From page 168... ...
Certain services are based on a more diversified combination of land, capital, and labor resources: retail banking services based on facilities, equipment, and qualified personnel at a given location; hotel services combining location in privileged sites, specific accommodation facilities, and the know-how of their personnel. What is common to all these activities and distinguishes them from traditional manufacturing is that instead of offering any final product, they supply the productive resources themselves and create value and utility through access to, and interaction with, the customers.
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From page 169... ...
This area is certainly a long way from having the wealth of detail and precision found in the famous Organization for Economic Cooperation and Development (OECD) Trade Statistics Series the "Red Books." Nevertheless, to the extent that services transactions generate international payments, they are captured in national balance of payment statistics.
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From page 172... ...
billionja United States 57.5 (20%) Iceland 0.4 Japan 35.4 (12%)
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From page 173... ...
CHANGING ECONOMICS OF SERVICES TRADE Three Categories of Services Three categories of services can be distinguished with regard to their potential for international trade. All services, possibly various segments of one services sector, can be distributed among these three categories: 1.
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From page 174... ...
The difference in international trade potential for each of these categories helps explain the remarkable asymmetry between the structure of domestic services output and the structure of international services flows. As Tables 1 and 2 show, international trade in services is still dominated by infrastructure-based services (i.e.
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From page 175... ...
At the same time, in traditional manufacturing sectors, competitive rivalry encourages firms to develop services activities such as marketing and retail
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From page 176... ...
In particular, possibilities offered by information technology in retail and wholesale trade, financial and insurance services, engineering, design and consultancy services, etc., offer new channels for productive resource supply, services differentiation, and competitive advantage building, nationally and internationally . The Case of Financial Services Financial and banking services are particularly illustrative of the depth of these changes in the supply-side and competitive policies in services industries.
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From page 177... ...
or a gentlemen's club ("borrow at 3 percent, add 3 percent margin, play golf at 3 p.m.") only a decade ago, financial services are today being transformed into the archetype of a relentlessly innovating and fiercely competitive Schumpeterian industry.
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From page 178... ...
Liabilities (%) Country 1970 1981 1970 1981 Australiaa 0.6 1.1 Austrian 10.7 24.5 9.8 27.8 BelgiumC 33.4 57.8 39.0 68.7 Canadaa 19.8 17.3 14.3 27.1 DenmarkC 6.7 29.1 7.0 28.1 Finlandb 4.4 11.5 5.6 17.5 Franceb 15.9 33.7 17.0 32.3 Federal Republic of Germanyb 8.8 10.2 5.6 8.1 GreeceC 3.5 7.8 4.7 22.0 Icelandb 1.0 2.9 2.7 17.2 IrelandC 36.0 47.1 29.8 49.2 Italyb 12.6 12.6 12.6 15.9 Japanb 3.7 6.6 3.1 7.9 Luxembourg, 84.2 97.5 57.5 90.4 Netherlands 27.0 39.8 25.9 39.2 New Zealanda 7.1 7.0 1.1 2.3 Norwayb 7.4 6.0 5.5 10.9 Portu~alb 5.6 7.7 0.8 27.7 Spain 3.5 8.5 4.2 14.9 SwedenC 7.0 9.7 5.4 18.2 Switzerlandd 33.7 50.1 28.9 42.8 Turkey 4.7 — 0.3 United Kingdomb 46.1 67.9 50.2 69.9 United StatesC 2.6 15.1 6.2 11.3 Total OECD - 12.1 23.7 11.3 23.4 NOTE: Data are not fully comparable across countries.
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From page 179... ...
Borrowing on Euromarkets by big industrial corporations, where regulatory "shadow costs" as well as underwriting fees are minimal, has been the international outcome of this trend. In retail financial services, negative real interest rates offered by deposittaking banks in the inflationary environment of the 1970s have led many households to diversify their financial portfolio and savings patterns.
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From page 180... ...
Their share in total services trade remains limited; they reached approximately 10 percent of U.S. exports in 1985.
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From page 181... ...
This movement has already begun in telecommunications trade, air transportation, and sea cargo transportation (Peat Marwick Mitchell and Co., 19861. Penetration of international competition into domestic deregulated sectors (domestic telecommunications, transport, energy production, etc.)
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From page 182... ...
A nonnegligible share of real estate, capital, and labor resources is already accessible through services markets in manufacturing or indeed even in agricultural economies. This has been, for example, the case in hostel services, ship and railway transportation, and physicians' services.
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From page 183... ...
The growth of international trade in services in this context means that business organizations and households in one country are now gaining a larger access to productive resources available in other countries. The fact that a Turkish electronics company can now solicit the engineering services of a California microchip design company, that a Korean shipbuilder can build on the leasing and other financial/marketing services of a British merchant banker, or that a Bolivian leather manufacturer can possibly use the international marketing services of a Japanese firm in all instances means that resources previously limited to the use of a single company, region, or nation tend to become available for much wider international access and use when they are supplied as services on markets.
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From page 184... ...
1987. Telecommunications and transactional services: A case study of emerging structural and regulatory issues in the financial services sector.
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From page 185... ...
Inman, ed. Cambridge, England: Cambridge University Press.
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From page 186... ...
Cambridge, England: Cambridge University Press. Shelp, R
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