Tradeinservices—economicconsiderationsandpolicy.pptVIP

Trade in services—economic considerations and policy implications 2007 China Trade in Services Congress, November 27, Shanghai Louis Kuijs, World Bank Office Beijing  China’s trade in services has grown rapidly, but is small compared to trade in goods A wide definition of trade China’s business services are now growing rapidly, although travel and transportation are the largest exports What is driving trade in services? Fragmentation of goods Fragmentation of Services Hospital service fragments Call Centre for customer service, etc. Medical transcription services Payroll management Web hosting services / application service providers (ASPs) Comparative advantage in services trade Interplay between: Endowments Infrastructure Institutions Given today, but changeable tomorrow? Many services tend to be skill intensive Human capital matters: Evidence across Indian states Institutions matter: Evidence across Indian states FDI has had a direct and indirect effect on services exports Trade barriers in services and gains from removing them Types of trade barriers used around the world Tariffs are relatively uncommon. Quotas are pervasive Limits on the number of foreign firms; limits on percent foreign ownership in banking, insurance, etc. Foreign providers completely shut out in some sectors (transport within a country) Foreign exchange restrictions can limit consumption abroad (tourism, education) Limits on movement of foreign personnel Local content requirements in broadcasting Trade Barriers (2) Discriminatory measures Preferential taxes and subsidies Preferential procurement Preferential access to essential facilities Non-discriminatory measures Qualification and licensing requirements Qualification and licensing procedures Technical regulations Successful reform in services is associated with more rapid growth Services reform has an impact on manufacturing productivity Empirical exercise: relating TFP of Czech firms in manufacturing to a measure captu