World Trade Report sees increasing role for services trade, need for global cooperation

The 2019 edition of the WTO’s World Trade Report highlights that services have become the most dynamic component of international trade and that its role will continue to expand in the coming decades.

It stresses the need to enhance cooperation in the international community to support this expansion. The report was launched during the WTO Public Forum by Director-General Roberto Azevêdo.

Director-General Roberto Azevêdo presents WTO’s World Trade Report. Photos: © WTO/Jay Louvion

“From logistics, to finance, to informatics, services have become the indispensable backbone of our economies. Services generate more than two-thirds of economic output. They account for more than two-thirds of jobs in developing countries, and four-fifths of employment in developed ones.

“But services also play an increasingly important role in international trade. Global value chains for merchandise could not function without logistics and communications services. And thanks to digitalization, services that once had to be delivered face-to-face, like education, can now be delivered remotely. Yet services are often overlooked in discussions on global trade, and the extent of their contributions to global trade is not always fully appreciated. This report attempts to remedy this oversight.”, said DG Azevêdo in his opening remarks.

The report underlines that trade in services – ranging from distribution to financial services -can help countries boost economic growth, enhance domestic firms’ competitiveness and promote inclusiveness. It illustrates how the share of services in international trade has continued to grow, and how technology, climate change, rising incomes and demographic changes will have an impact on services trade in the future. It also suggests ways to maximize the potential of services trade globally in the years to come.

On average, services account for about half of GDP worldwide. For developed economies, they account for around three-quarters of GDP and their proportion is increasing rapidly in developing economies.

According to the report, services trade has grown 5.4 percent per year since 2005, while trade in goods has grown at 4.6 percent on average. Trade in computer services and research and development have recorded the most rapid annual growth over the past decade.

Many developing economies are becoming increasingly services-based and their share of world services trade has grown by over 10 percentage points since 2005. However, services trade is concentrated in five developing economies – China; Hong-Kong China; India; the Republic of Korea and Singapore – accounting for over 50 percent of developing economies’ services trade in 2017.

The report says that services trade may help women and micro, small and medium-sized enterprises (MSMEs) play a more active role in world trade, particularly in developing economies, helping to reduce economic inequality.

Technologies are key drivers of services trade, enabling cross-border trade of services that have traditionally needed face-to-face interaction. Digital technologies are also reducing the cost of trading services. The report finds that if developing countries are able to adopt digital technologies, their share in world services trade could increase by about 15 percent by 2040.

Read and download the full WTO’s World Trade Report.

Original source: WTO
Published on 09 October 2019