International Monetary Fund (IMF), World Bank and World Trade Organization have collectively launched report “Reinvigorating Trade and Inclusive Growth”. In this report all three international organisations have sought liberalisation of global service sector, asserting that barriers to these services trade currently is roughly as high as those to trade in goods about a half century ago.
Key Highlights of Report
Services comprise some two-thirds of global GDP and employment. The limited opening of service sectors to foreign competition impedes trade and productivity growth throughout sector and broader economy. Countries should open up to international competition in services provided in other ways, including through foreign direct investment (FDI) and operation of foreign affiliates and temporary movement of workers across borders for the purpose of supplying services.
The full services trade liberalisation can raise manufacturing productivity by average of 22% across sample of 57 countries with larger benefits for countries with stronger institutional environments. Moreover, service sector has enormous contributor to growth and to trade including manufacturing trade.
Improved access to services from trade reform promotes economy-wide productivity and income growth, and given sector’s size, role of services productivity in overall economic performance is evident. There is interplay between services reform and manufacturing performance
Services comprise significant shares of value added of all sectors in economy and this is reflected in trade figures also. Only quarter of global trade is traded as services, on value-added basis half of the value of global trade originates in service sectors.
The trade in services sector has potential of contributing particularly strongly to productivity growth and economic growth overall. Prolonged slowdown in pace of trade reform is leading to widespread trade distortions and putting at risk strength and durability of global economic recovery, despite recent rebound in trade.
Digital economy revolution is opening new opportunities for cross-border trade and investment and this is changing nature of trade, elevating roles of policies relating to electronic commerce, investment and services trade.