Publication: The Crisis-Resilience of Services Trade
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Published
2010
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0264-2069
Date
2012-03-30
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Much attention has been focused on the impact of the current crisis on goods trade; hardly any on its impact on services trade. Using new trade data from the USA, and more aggregate data from other OECD countries, the authors show that services trade is weathering the current crisis much better than goods trade. On the basis of new evidence from Indian services exporters, it is suggested that services trade is more robust relative to goods trade for three reasons: less cyclical demand; lesser dependence on external finance; and few explicitly protectionist measures so far taken in services.
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Publication The Crisis Resilience of Services Trade(World Bank, Washington, DC, 2009-04)The current gloom and doom about goods trade has obscured the quiet resilience of services trade. Services account for over one fifth of global cross-border trade, and for some countries such as India and the United States close to a third of all exports. New data on cross-border trade from the United States reveals that since mid-2008, trade in goods declined drastically but trade in some services is holding up remarkably well. More aggregate data available for other Organisation for Economic Co-operation and Development (OECD) countries also suggests that services trade has suffered less from the crisis than goods trade. Initial evidence suggests that services trade is buoyant relative to goods trade for two reasons: demand for a range of traded services is less cyclical, and services trade and production are less dependent on external finance. If further investigation confirms that trade in certain services is inherently less affected by crises, then these services could play a more prominent role in developing countries' diversification strategies. The apparent resilience of services trade may be jeopardized by protectionism. Even though few explicitly trade-restrictive measures have so far been taken in services, the changing political climate and the widening boundaries of the state in crisis countries could introduce a national bias in firms' choices regarding procurement and the location of economic activity.Publication The Crisis-Resilience of Services Trade(2009-04-01)Much attention has focused on the impact of the current crisis on goods trade; hardly any on its impact on services trade. Using new trade data from the United States, and more aggregate data from other OECD countries, the authors show that services trade is weathering the current crisis much better than goods trade. As of February 2009, the value of US goods imports had declined year-on-year by 33 percent and the value of goods exports by 21 percent; services imports and exports each had declined by less than 7 percent. Within services, interesting patterns are emerging. Trade in goods-related transport services and crisis-related financial services has shrunk, as has expenditure on tourism abroad. But trade in a range of business, professional, and technical services is still increasing, with US exports growing even faster (at 10 percent) than US imports (at 7 percent). Developing countries like India, which are relatively specialized in business process outsourcing and information technology services, have suffered much smaller declines in total exports to the United States than countries like Brazil and China and regions like Africa, which are specialized in exports of goods, transport services, or tourism services. On the basis of new evidence from Indian services exporters, the authors suggest that services trade is buoyant relative to goods trade for two reasons: demand for a range of traded services is less cyclical, and services trade and production are less dependent on external finance. Even though few explicitly protectionist measures have so far been taken in services, the changing political climate and the widening boundaries of the state in crisis countries may introduce a national bias in firms' procurement and location choices.Publication Policy Barriers to International Trade in Services(Oxford University Press on behalf of the World Bank, 2014-01-23)Surprisingly little is known about policies that affect international trade in services. Previous analyses have focused on policy commitments made by countries in international agreements, but in many cases, these commitments do not reflect actual policy. This paper describes a new initiative to collect comparable information on trade policies for services from 103 countries across a range of service sectors and relevant modes of service delivery. The resulting database reveals interesting policy patterns. Although public monopolies are now rare and few services markets are completely closed, we observe numerous “second-generation” restrictions on entry, ownership, and operations. Even in instances in which there is little explicit discrimination against foreign providers, market access is often unpredictable because the allocation of new licenses remains opaque and highly discretionary in many countries. Across regions, some of the fastest-growing countries in Asia and the oil-rich Gulf states have restrictive policies in services, whereas some of the poorest countries are remarkably open. Across sectors, professional and transportation services are among the most protected industries in both industrial and developing countries, whereas retail, telecommunications, and even finance tend to be more open.Publication Applied Services Trade Policy(World Bank, Washington, DC, 2020-06)This paper describes the Services Trade Policy Database, a joint initiative by the World Bank and the World Trade Organization Secretariat, which builds on a database developed by the World Bank nearly 10 years ago and draws on a recent Organisation for Economic Co-operation and Development database. The Services Trade Policy Database offers comparable information on services trade policies for 68 economies in 23 subsectors across five broad areas -- financial services, telecommunications, distribution, transportation, and professional services. The database features several improvements. First, the data are collected according to a newly developed policy classification, consistent with the earlier World Bank database and the current Organisation for Economic Co-operation and Development database, enabling a comparison of services policies over a significant period and across a large cross-section of industrial and developing economies. Second, in addition to trade policies, the database contains information on licensing conditions and data restrictions. Third, policy restrictiveness is quantified following a more systematic approach that aggregates the information within a single consistent and transparent framework. Building on these innovations will make it possible to identify global patterns of services trade policies and secular trends in policy making over the past decade.Publication Landlocked or Policy Locked? How Services Trade Protection Deepens Economic Isolation(2012-01-01)A new cross-country database on services policy reveals a perverse pattern: many landlocked countries restrict trade in the very services that connect them with the rest of the world. On average, telecommunications and air-transport policies are significantly more restrictive in landlocked countries than elsewhere. The phenomenon is most starkly visible in Sub-Saharan Africa and is associated with lower levels of political accountability. This paper finds evidence that these policies lead to more concentrated market structures and more limited access to services than these countries would otherwise have, even after taking into account the influence of geography and incomes, and the possibility that policy is endogenous. Even moderate liberalization in these sectors could lead to an increase of cellular subscriptions by 7 percentage points and a 20-percent increase in the number of flights. Policies in other countries, industrial and developing alike, also limit competition in international transport services. Hence, "trade-facilitating" investments under various "aid-for-trade" initiatives are likely to earn a low return unless they are accompanied by meaningful reform in these services sectors.
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