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6th OECD-Eurostat Meeting of Experts in Trade-in-Services (TIS) Tour Europe, 14th September 2005

6th OECD-Eurostat Meeting of Experts in Trade-in-Services (TIS) Tour Europe, 14th September 2005. The degree of openness of services industries and comparative advantages in services. Isabelle Rabaud Lecturer at University of Orléans Research Affiliate at LEO isabelle.rabaud@univ-orleans.fr.

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6th OECD-Eurostat Meeting of Experts in Trade-in-Services (TIS) Tour Europe, 14th September 2005

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  1. 6th OECD-Eurostat Meeting of Experts in Trade-in-Services (TIS)Tour Europe, 14th September 2005 The degree of openness of services industries and comparative advantages in services Isabelle Rabaud Lecturer at University of Orléans Research Affiliate at LEO isabelle.rabaud@univ-orleans.fr

  2. Services are feebly traded • Services account for 74,2 % of value added created in OCDE in 2002. • Trade in services only represents 21.8 % of exports and 21.2 % of imports en 2002. • Services are traded according to four modes : •  cross-border supply, •  consumption abroad (tourism), •  commercial presence (FDI), •  presence of natural persons. "Degree of openness in services" - OECD-Eurostat TIS - 14th september 2005 - Paris - Isabelle Rabaud - LEO

  3. PURPOSES • Measuring the degree of international openness in each service industry. • Estimate comparative advantage of each country in the different service industries. • Therefore, the inconsistencies of trade in services’ statistics have to be corrected and matching between data on trade and statistics of value added (production) has to been obtained. "Degree of openness in services" - OECD-Eurostat TIS - 14th september 2005 - Paris - Isabelle Rabaud - LEO

  4. The DATA • The joint OECD-Eurostat database of trade in services: • 29 member countries (BLEU versus Belgium and Luxembourg), • 85 heading of services et 6 subdivisions, • Data in millions of dollars from 1970 to 2002. • Services are split into: transportation, travel, other services; the latter are subdivided into 50 items:. • The joint OECD-Eurostat database gathers statistics of national balance of payments. But, countries begin registering in different years and have different sector coverage. "Degree of openness in services" - OECD-Eurostat TIS - 14th september 2005 - Paris - Isabelle Rabaud - LEO

  5. The deficiencies of the joint OECD-Eurostat database(1) The choice of the first year • Only Australia, Canada and New Zealand provide data since 1970. • In 1985, 17 countries register data on trade in services; they represent 74.5 % of credits and 69.1 % of debits of OECD in 2002. • In 1992, 25 countries indicate data, covering 94.8 % of credits and 93.8 % of debits in 2002. • Statistics for Czech Republic are only available from 1993 on, and those of Slovakia only since 1994. • 1992 is retained as first year for measuring comparative advantage "Degree of openness in services" - OECD-Eurostat TIS - 14th september 2005 - Paris - Isabelle Rabaud - LEO

  6. The deficiencies of the joint OECD-Eurostat database(2) The choice of countries • Denmark supplies information only for 3 % of services industries among “other services”; it represents 2 % trade in services in 2002. It will be excluded from the study. • Switzerland provides data only for 19 % of services products, but concentrate a greater share of trade: 2.4 % of credits and 1.3 % of debits. It was retained. "Degree of openness in services" - OECD-Eurostat TIS - 14th september 2005 - Paris - Isabelle Rabaud - LEO

  7. The share of countries in trade in services (2002) "Degree of openness in services" - OECD-Eurostat TIS - 14th september 2005 - Paris - Isabelle Rabaud - LEO

  8. The deficiencies of the joint OECD-Eurostat database(3) The choice of activities • The “other services” are subdivided into 9 industries of non equal weight in international trade. • The degree of subdivision available varie considerably : • “telecommunication services” are in the first subdivision of “communications services”, • “legal services” are in the fourth subdivision of “other business services”. "Degree of openness in services" - OECD-Eurostat TIS - 14th september 2005 - Paris - Isabelle Rabaud - LEO

  9. Share of services in trade (2002) "Degree of openness in services" - OECD-Eurostat TIS - 14th september 2005 - Paris - Isabelle Rabaud - LEO

  10. The deficiencies of the joint OECD-Eurostat database(3) The choice of activities, following • Two criteria to select services industries : • a share in credits and debits of “other services” exceeding 5 %, • statistics supplied by at least 10 countries in 1995 and at least 15 in 2002. • The subdivision of “communications services” is added : • “postal and courier services”, • “telecommunication services”. • Some activities necessary in order to form a partition are alsa included. "Degree of openness in services" - OECD-Eurostat TIS - 14th september 2005 - Paris - Isabelle Rabaud - LEO

  11. (3) The choice of activities, end • 24 activities have been thus selected : • “communication services” are split into “postal and courier services” and “telecommunication services”, • “computer services” are distinguished from “information services”, • “other business services” are broken down into: “merchanting and other related-services” (269), “operational leasing services” (272), “miscellaneous business, professional and technical services” (273): • “ legal, accounting, management consulting, and public relations” (274), • “advertising, market research, and public opinion polling” (278), • “Research and development” (279), • “Architectural, engineering, and other technical services” (280), • “agricultural, mining, and on-site processing services” (281), • “Other business services” (284), • “Services between affiliated enterprises, n. i. e.” (285). • Other services industries are not subdivided. "Degree of openness in services" - OECD-Eurostat TIS - 14th september 2005 - Paris - Isabelle Rabaud - LEO

  12. The inconsistencies of data • Correction are made in statistics of trade in services to insure that the aggregate is equal to the sum of its components. • Sector disaggregation of value added or production in STAN database remains weak: 8 services industries. • Services industries break down differs for value added (production) and trade: • ISIC and EBOPS identify different activities ; • Availability of data, from a sector point of view, differs between STAN database and the joint OECD-Eurostat database of trade in services. "Degree of openness in services" - OECD-Eurostat TIS - 14th september 2005 - Paris - Isabelle Rabaud - LEO

  13. Simplified matching: ISIC-EBOPS "Degree of openness in services" - OECD-Eurostat TIS - 14th september 2005 - Paris - Isabelle Rabaud - LEO

  14. Concomitant availability of trade and VA data "Degree of openness in services" - OECD-Eurostat TIS - 14th september 2005 - Paris - Isabelle Rabaud - LEO

  15. Concomitant availability of trade and production data "Degree of openness in services" - OECD-Eurostat TIS - 14th september 2005 - Paris - Isabelle Rabaud - LEO

  16. Degree of openness (2002) "Degree of openness in services" - OECD-Eurostat TIS - 14th september 2005 - Paris - Isabelle Rabaud - LEO

  17. Communications services (2002) "Degree of openness in services" - OECD-Eurostat TIS - 14th september 2005 - Paris - Isabelle Rabaud - LEO

  18. Financial intermediation (2002) "Degree of openness in services" - OECD-Eurostat TIS - 14th september 2005 - Paris - Isabelle Rabaud - LEO

  19. Computer and information services (2002) "Degree of openness in services" - OECD-Eurostat TIS - 14th september 2005 - Paris - Isabelle Rabaud - LEO

  20. Other business services (2002) "Degree of openness in services" - OECD-Eurostat TIS - 14th september 2005 - Paris - Isabelle Rabaud - LEO

  21. Personal, cultural and recreational serv. (2002) "Degree of openness in services" - OECD-Eurostat TIS - 14th september 2005 - Paris - Isabelle Rabaud - LEO

  22. Degree of openness, conclusion • the degree of openness in services industries remains highest in small countries: Finland, BLEU, Austria and Netherlands, • United Kingdom is systematically more opened than United States, penalised by the size of their internal market, • “research and development” appears as the more opened sector with a rate superior to 20 % in most countries; “computer and information services”, “operational leasing services” are also relatively opened; “communications services” and financial intermediation show a degree of openness slightly smaller; finally, in “personal, cultural and recreational services”, the rate is rarely higher than 1 %, in line with the arbitrated nature of these activities. "Degree of openness in services" - OECD-Eurostat TIS - 14th september 2005 - Paris - Isabelle Rabaud - LEO

  23. Comparative advantage in services "Degree of openness in services" - OECD-Eurostat TIS - 14th september 2005 - Paris - Isabelle Rabaud - LEO

  24. Comparative advantage, summary • Germany and Japan appear neatly specialised in goods and show a comparative disadvantage in services, in particular in travel. • A high specialisation in “other services” is observed in United States and United Kingdom, mostly in “financial services” and “other business services”, but also in “royalties and license fees” for the former, while they have a comparative disadvantage in goods. • Comparative advantage of France in “travel” and, to a lesser extent, in “other services”, is accompanied by an important comparative disadvantage in goods and transport. • Comparative advantage of Ireland in « computer and information services » is associated with important comparative disadvantages in « royalties and license fees » and in « other business services ». • Finally, Mexico is characterised by an important comparative disadvantage in insurance services. • Results are not modified if contribution to balance is reported to trade in services only, excluding goods. "Degree of openness in services" - OECD-Eurostat TIS - 14th september 2005 - Paris - Isabelle Rabaud - LEO

  25. Conclusion • This study allows to propose three recommendation in terms of statistics of international trade in services: • an increase of the degree of sector, geographic and cross sector-geographic detail is desirable ; • this work of sector disaggregation should be undertaken hand in hand for statistics of international trade in services and for national data; • the improvement of sector ventilation should be implemented the same year for a given industry in all EU and OECD countries in order to identify the break-downs occurring at the same time in all countries. "Degree of openness in services" - OECD-Eurostat TIS - 14th september 2005 - Paris - Isabelle Rabaud - LEO

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