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Benefits of Trade in Services |
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Thursday, 20 November 2008 19:16 |
The economic contribution of service industries
Although often "invisible" to policy makers, services play a vital role in facilitating all aspects of economic activity. Infrastructural services (transportation, communications, financial services) provide the support necessary for any type of business. Educational, health, and recreational services influence the quality of labour available to firms. Professional services provide specialized expertise to increase firms' competitiveness. The quality of available governmental services determines the relative efficiency of the economic environment in which firms must operate.
Increasingly, even in goods production, the major portion of value-added (up to 70 percent) comes from services inputs: upstream (such as feasibility studies and research and development activities); on stream (such as accounting, engineering, and administrative services); and downstream (such as advertising, warehousing, and distribution).
Services make up a major portion of world economies, including developing countries, ranging from 39 per cent of gross domestic production (GDP) in a country like Nigeria, to 89 per cent in economies such as Hong Kong (China). Service industries are already increasing in importance in most developing countries and particularly in least developed countries (LDCs), and usually contribute to at least 45 per cent of the GDP. In general, the service sector is expanding faster (with attendant job creation) than other sectors such as agriculture or manufacturing. For efficient value-added primary industries, services usually make up one-quarter of inputs.
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