Sophistication in Service Exports and Economic Growth

Abstract

Services can now be stored and traded digitally, and they are not subject to many of the trade barriers that physical exports have to overcome. Services are no longer exclusively an input for trade in goods, but have become a 'final export' for direct consumption. It is important to note that services not only have become more tradable, but also can be increasingly unbundled: a single service activity in the global supply chain can now be fragmented and done separately at different geographic locations. This has led to a new channel of growth-what we call service exports sophistication.