A73/208 B. Trade in services: an area of opportunity for developing countries F Exports of services and 2005-2017(2005=100) 260 2005200620072008200920102011201220132014201520162017 Goods in developed economies -g- Services in developed economies -Goods in developing economies -. Services in developing economies Source UNCTAD secretariat. based on data from UNCTADstat 9. Although trade in services is still dominated by developed countries, developing countries have been catching up. As shown in figure V, over the past decade exports of services have grown more than exports of goods, and have grown more in developing countries than in developed countries. Exports of services have also been more resilient than exports of goods, as shown by the much lower declines in the services exports, both in the 2009 global economic and financial crisis and in the 2015 trade downturn. 3 10. The developing economies share in global exports of services increased from 23 per cent in 2005 to 30 per cent in 2017. Among developing regions, Asia registered he fastest growth in exports of services between 2005 and 2017, and Africa the slowest. Despite the focus on transport and travel in the export profiles of developing conomies,between 2005 and 2017, telecommunications, computer and information services, financial services and other business services ranked among the fastest growing categories of services exported from developing economies. These services experienced annual growth rates of 12 per cent, ll per cent and 9 per cent respectively. Although for least developed countries, exports of services remain very low relative to global exports of services, about 0. 7 per cent in 2017, they are rapidly increasing, accounting for 19 per cent of the total exports from least developed countries. This underscores the potential role of exports of services in achieving Sustainable Development Goal target 17.11 11. The contribution of services to development can be enhanced by allowing access to international markets, which provide for more competition and relevant inputs and factors that support national services. This idea is supported by the higher 3 These trends are based on national accounts statistics. which often exclude certain categorizations(such as mode 3 and mode 4 of the WTo modes of supply) and the added value of services incorporated into the exports of goods and of services activities within manufacturing firms. Therefore such trends underestimate the contribution of services to trade 6/22
A/73/208 6/22 18-12039 B. Trade in services: an area of opportunity for developing countries Figure V Exports of services and goods, 2005–2017 (2005 = 100) Source: UNCTAD secretariat, based on data from UNCTADstat. 9. Although trade in services is still dominated by developed countries, developing countries have been catching up. As shown in figure V, over the past decade exports of services have grown more than exports of goods, and have grown more in developing countries than in developed countries. Exports of services have also been more resilient than exports of goods, as shown by the much lower declines in the services exports, both in the 2009 global economic and financial crisis and in the 2015 trade downturn.3 10. The developing economies’ share in global exports of services increased from 23 per cent in 2005 to 30 per cent in 2017. Among developing regions, Asia registered the fastest growth in exports of services between 2005 and 2017, and Africa the slowest. Despite the focus on transport and travel in the export profiles of developing economies, between 2005 and 2017, telecommunications, computer and information services, financial services and other business services ranked among the fastestgrowing categories of services exported from developing economies. These services experienced annual growth rates of 12 per cent, 11 per cent and 9 per cent, respectively. Although for least developed countries, exports of services remain ver y low relative to global exports of services, about 0.7 per cent in 2017, they are rapidly increasing, accounting for 19 per cent of the total exports from least developed countries. This underscores the potential role of exports of services in achieving Sustainable Development Goal target 17.11. 11. The contribution of services to development can be enhanced by allowing access to international markets, which provide for more competition and relevant inputs and factors that support national services. This idea is supported by the higher __________________ 3 These trends are based on national accounts statistics, which often exclude certain categorizations (such as mode 3 and mode 4 of the WTO modes of supply) and the added value of services incorporated into the exports of goods and of services activities within manufacturing firms. Therefore, such trends underestimate the contribution of services to trade. 100 140 180 220 260 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Developed economies Goods Developed economies Services Developing economies Goods Developing economies Services
A73/208 productivity of service-exporting firms than of non-service-exporting firms in low income countries. 4 Still restrictiveness continues to be relevant in the services trade especially in professional services and transport. while some countries are reducing restrictions, particularly in mode 3 of the WTo modes of supply, trade in servi through the temporary movement of people remains with tight restrictions, such as quotas, labour market tests and durations of stay, ' restrictive visa and work permit rules and no recognition of qualifications and licences. Considering that trade costs for services are high and declining more slowly than trade costs for goods, addressing such restrictions should be a critical component of trade policy 12. International trade both in goods and services is increasingly facilitated by e-commerce channels. Although most e-commerce involves business-to-business transactions, the diffusion of information and communications technologies (ICTs among consumers has increased the importance of business-to-consumer e-commerce ransactions UNCTAD valued the total business-to-consumer e-commerce at nearly $3 trillion. Most of those transactions remain within the national economy. Cross border business-to-consumer e-commerce is still relatively low. UNCTAD estimates that cross-border business-to-consumer e-commerce was worth about $189 billion in 2015, which corresponded to 7 per cent of total business-to-consumer e-commerce China, the United States and the European Union are the leaders in cross-border business-to-consumer e-commerce, accounting for about $40 billion each. Cross border business-to-consumer transactions are expected to grow substantially in the coming years, owing mainly to the further diffusion of ICTs. This is likely to have several implications for both trade and the development agenda, including, but not limited to, the development of infrastructure serving business-to-consumer transactions C. An elusive goal: the least developed countries export challenge 13. As a group, least developed countries moved further away from attaining target 17 11 in 2017. Since 2014, their share in global exports has declined, largely as a result of a drop in exports of natural resources. As of 2017, least developed countries represented 0.93 per cent of global exports. For least developed countries to achieve target 17.11, this share would need to increase by about 33 per cent per year (see figure Vi). A coherent policy approach is needed to foster structural ransformation and attain sustainable export growth 4 UNCTAD, Services and Structural Transformation for Development(New York and Geneva, 017) 5 International Monetary Fund, the World Bank and WTo, Making Trade an Engine of Growth for All: The Case for Trade and for Policies to Facilitate Adjustment(2017) Information Economy Report 2017: Digitalization, Trade and Development( United Nations publication, Sales No. E. 17. IL D 8). 18-12039 722
A/73/208 18-12039 7/22 productivity of service-exporting firms than of non-service-exporting firms in lowincome countries.4 Still, restrictiveness continues to be relevant in the services trade, especially in professional services and transport. While some countries are reducing restrictions, particularly in mode 3 of the WTO modes of supply, trade in services through the temporary movement of people remains with tight restrictions, such as quotas, labour market tests and durations of stay, 5 restrictive visa and work permit rules and no recognition of qualifications and licences. Considering that trade costs for services are high and declining more slowly than trade costs for goods, addressing such restrictions should be a critical component of trade policy. 12. International trade both in goods and services is increasingly facilitated by e-commerce channels. Although most e-commerce involves business-to-business transactions, the diffusion of information and communications technologies (ICTs) among consumers has increased the importance of business-to-consumer e-commerce transactions. UNCTAD valued the total business-to-consumer e-commerce at nearly $3 trillion.6 Most of those transactions remain within the national economy. Crossborder business-to-consumer e-commerce is still relatively low. UNCTAD estimates that cross-border business-to-consumer e-commerce was worth about $189 billion in 2015, which corresponded to 7 per cent of total business-to-consumer e-commerce. China, the United States and the European Union are the leaders in cross-border business-to-consumer e-commerce, accounting for about $40 billion each. Crossborder business-to-consumer transactions are expected to grow substantially in the coming years, owing mainly to the further diffusion of ICTs. This is likely to have several implications for both trade and the development agenda, including, but not limited to, the development of infrastructure serving business-to-consumer transactions. C. An elusive goal: the least developed countries export challenge 13. As a group, least developed countries moved further away from attaining target 17.11 in 2017. Since 2014, their share in global exports has declined, largely as a result of a drop in exports of natural resources. As of 2017, least developed countries represented 0.93 per cent of global exports. For least developed countries to achieve target 17.11, this share would need to increase by about 33 per cent per year (see figure VI). A coherent policy approach is needed to foster structural transformation and attain sustainable export growth. __________________ 4 UNCTAD, Services and Structural Transformation for Development (New York and Geneva, 2017). 5 International Monetary Fund, the World Bank and WTO, Making Trade an Engine of Growth for All: The Case for Trade and for Policies to Facilitate Adjustment (2017). 6 Information Economy Report 2017: Digitalization, Trade and Development (United Nations publication, Sales No. E.17.II.D.8)
A73/208 Figure VI Share of least developed countries in global goods export values 2010 2015 2020 2025 Source: UNCTADstat 14. While that challenge is significant for least developed countries as a group, there is considerable heterogeneity among them. Seven least developed countries, situated in Africa and Asia, had already achieved target 17.11 as of 2017 or can be expected to achieve it by 2020 given their current export growth. Another 1l countries have achieved significant growth but stayed below the levels required to double their share by 2020. Of the remaining countries, 6 conserved their 2011 share in global exports rowth 15. An important constraint on exports of least developed countries has been the countries reliance on natural resources. The export value of these goods has declined for all exporters in recent years owing to depressed external demand and falling prices. The exports of commodity-dependent least developed countries have been hit particularly hard by this evolution(see figure Vin). Agricultural exports and the least developed countries' share in such exports have grown modestly. Textiles and apparel were key drivers of progress towards target 17.11: least developed countries increased not only the export value of textiles and apparel, but also their share in global exports, and are on good track to double that share by 2020 Data for three least developed countries(Democratic Republic of the Congo, South Sudan and Timor-Leste)were unavailable at the time of reporting. 8/22
A/73/208 8/22 18-12039 Figure VI Share of least developed countries in global goods export values Source: UNCTADstat. 14. While that challenge is significant for least developed countries as a group, there is considerable heterogeneity among them. Seven least developed countries, situated in Africa and Asia, had already achieved target 17.11 as of 2017 or can be expected to achieve it by 2020 given their current export growth. Another 11 countries have achieved significant growth but stayed below the levels required to double their share by 2020. Of the remaining countries, 6 conserved their 2011 share in global exports and 20 had significant negative growth. 7 15. An important constraint on exports of least developed countries has been the countries’ reliance on natural resources. The export value of these goods has declined for all exporters in recent years owing to depressed external demand and falling prices. The exports of commodity-dependent least developed countries have been hit particularly hard by this evolution (see figure VII). Agricultural exports and the least developed countries’ share in such exports have grown modestly. Textiles and apparel were key drivers of progress towards target 17.11: least developed countries increased not only the export value of textiles and apparel, but also their share in global exports, and are on good track to double that share by 2020. __________________ 7 Data for three least developed countries (Democratic Republic of the Congo, South Sudan and Timor-Leste) were unavailable at the time of reporting. 0 0.5 1 1.5 2 2.5 1995 2000 2005 2010 2015 2020 2025 Percentage