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Developing countries struggle to exploit services export opportunities in global value chains

  • Developing countries struggle to exploit services export opportunities in global value chains

    by Trade in Services

    Friday, 02 May. 2014

    International trade is nolonger only about exporting or importing finished goods or services produced by one firm, at one location, in one country and then delivered to an unrelated party in another country.

    Production not only of goods but increasingly also of services often now involves a combination of intermediate inputs sourced on a global basis.

    The new reality is that trade in intermediates now dominates world trade.

    The relevance of intermediate inputs is captured by the WTO/OECD Trade in Value-Added (TiVA) data released in 2013 covering 57 countries over the period 1995 to 2009, in 18 aggregated data sets of goods and services.

    The TiVA data identifies the services value added of gross exports, measuring a composition of both pure services exports and services embodied in goods exports, reflecting the general level of sophistication of a country’s exports.

    The new data, captured in figure 1, shows:

    ➢ The global average services content of gross exports is around 45%

    ➢ As a group, the OECD countries are around the world average

    ➢ Only a handful of countries, mostly in Asia, have services value added in exports well above the global average, and continuing to trend upwards (India, Singapore, Hong Kong, Malta, Latvia)

    ➢ With few exceptions, for example Philippines, Cambodia and Lithuania, most developing countries fall significantly below the global average

    ➢ A number of developing countries (Saudi Arabia, Brunei Darussalam, Indonesia, Vietnam, Thailand, Russia and Argentina) show, moreover, signs of a trend decline in services content of gross exports

    ➢ Countries not included in the TiVA database (Rest of the Word), mainly developing and Least Developed Countries, still face serious difficulties in exporting services value-added.

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