Leveraging Services for Employment, Growth and Equity: Trade in Services: The Global Context

by MAYER, M.J., 2005
Research Report, Employment Growth & Development Initiative, Human Sciences Research Council

Mayer provides a broad overview of global trends in trade in services. The survey of the magnitude and patterns of trade in services, together with an analysis of the drivers of such trade, provides a context for assessing South Africa’s current performance and future prospects in this area. In contrast to goods, the vast majority of services are intangible, invisible and perishable, requiring simultaneous production and consumption. Over the past two decades, due to technological change and globalisation, services have become increasingly tradable. This poses both opportunities and threats for the developmental objectives of a middle-income developing country such as South Africa. For example, how can services trade contribute to the attainment of government’s objective of halving unemployment and poverty by 2014? Can import penetration in services sectors adversely affect the country’s growth prospects? This paper commences by defining the services economy and the complex modalities through which such services are traded. It then analyses trends in global trade flows, as well as the role that the services sectors play in economic development. This is followed by a review of the provisions of the General Agreement on Trade in Services (GATS) and its impact on regulatory reform, as well as the role of domestic regulation as a barrier to trade. Finally, the impact of liberalising services trade is reviewed from both a theoretical and empirical perspective, and case studies of fast-growing services exporters are provided.