Global Services Forum - Beijing Summit 2013

Services: A new frontier for sustainable development

Global Importance of Services

The services sector plays an increasingly important role in the global economy and the growth and
development of countries.
Services are becoming crucial in a country's development, including for the achievement of the Millennium
Development Goals, such as poverty reduction and access to basic services, including education, water and
health services.
Facts:
International trade in services covers trade in intangibles, such as peoples' skills (1). Services trade is carried
out through four modes of supply namely: cross-border supply, consumption abroad, commercial presence
and presence of a natural person. International trade in services through these modes does not physically
cross national border and thus is not affected by customs tariffs and other taxes applied to merchandise
trade.
Services trade is affected by domestic regulations in force in the sectors concerned in countries.
International trade in services is thus sensitive to behind the border, national regulations that affect the
supply of services.
World Bank has pointed to the higher contribution of growth in the services sector to poverty reduction
than the contribution of growth in the agriculture or manufacturing sectors (2).
Strengthening the domestic services sector by increasing its backward and forward linkages with the
primary and the secondary sectors, as well as its linkage with trade, can be an effective component of a
comprehensive development strategy.
The 2011 World Development Indicators show that the services sector accounted for almost 71% of global
GDP in 2010 and is expanding at a quicker rate than the agriculture and the manufacturing sectors.
Moreover, trade in services is growing at a pace faster than trade in goods since the 1980s. In 2011,
commercial services exports grew 11% to US$ 4.1 trillion(3) 29'82% coming from developing countries
and 2.85% from transition economies(4).
Trade in services demonstrated relative resilience in the latest financial and economic crises in terms of
lower magnitude of decline, less synchronicity across countries and earlier recovery from the crises. Such
resilience has led many countries to incorporate services trade into their post-crisis national trade and
growth strategies.
For developing countries and least developed countries (LDCs), service trade is the new frontier for enhancing
their participation in international trade and, in turn, realizing development gains. However, positively
integrating developing countries, especially LDCs, and Land-Locked Developing Countries (LLDC) into the global
services economy and increasing their participation in services trade, particularly in modes and sectors of
export interest to them, remains a major development challenge.
It is therefore imperative to increase public and private sector advocacy and awareness, to mobilize policy
attention and resources to boost the sector's contribution to growth and development in developing countries
and LDCs.
Given the multifaceted contribution of services to national economy and trade, it is critically important to
design and implement a services-driven development strategy within a coherent and comprehensive policy
framework, ensuring linkages with other policy areas and overall national development objectives.

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(1) Services sectors defined by the WTO cover business services, communication services, construction and related engineering
services, distribution services, education services, environmental services, financial services, health related and social services, tourism
and travel related services, recreational, cultural and sporting services, transport services and others.
(2) World Bank presentation, "Role of Services in Economic Development"; Geneva, July 2012 (Data source: World Bank, 2010)
(3) WTO World Trade Report 2012; Data from WTO and UNCTAD Secretariats for commercial services.
(4) Source: UNCTAD Handbook of Statistics 2012