LDC Services Exports and Export Potentials Brainstorming meeting of the LDC Group 3-4 October 2013 WMO, Geneva

Transcription

1 LDC Services Exports and Export Potentials Brainstorming meeting of the LDC Group 3-4 October 2013 WMO, Geneva Jane Drake-Brockman Senior Services Adviser

2 What is ITC? 2 ITC is a trade-related technical assistance agency under the joint auspices of UNCTAD and WTO, focussed on support for the private sector. The objectives of ITC s revitalised programme on trade in services. are to help services enterprises, especially SMEs, become more competitive strengthen local trade support institutions, especially business associations/services industry coalitions and export promotion agencies facilitate dialogue between policymakers and private sector stakeholders on the enabling business environment for services export

3 3 Importance of the Services Sector for LDCs Services have become a dominant driver of economic growth in developing counties, delivering both GDP growth and poverty reduction. In 2011 services accounted for 47% of GDP for the LDCs. Developing countries are shifting towards services sooner, at at a lower per capita GDP than had been the case in the traditional development trajectory. This suggests that services could provide an alternative engine for development, enabling some latecomers to leapfrog the traditional approach.

4 4 Services as a driver for Growth Source: World Bank (2009), The Service Revolu.on in South Asia, Figure 1.3-4, p. 41

5 Higher growth in services output is associated with larger falls in poverty 5 Source: World Bank World Development Indicators

6 High service shares of employment are associated with high female participation rates 6 Source; Ghani and Kharas (2010)

7 7 Services sector growing faster in LDCs than elsewhere Services, etc., value added (% of GDP) Years LDC Low income Lower middle income Middle income High income World Average Growth Rates LDC 13.06% LIC 9.97% LMIC 7.06% MIC 3.66% HIC 5.43% World 4.86%

8 Key Findings on LDC Services Exports 1. All LDCs export commercial services 2. High degree of diversification in LDC services exports, though Tourism is dominant 3. Typically, individual LDC deficits in services, but LDC group surplus in Travel 4. One quarter of LDCs are net exporters of services 5. Average LDC services export growth nearly double the world growth rate ( ) 6. Recent increase in LDC share in total world services exports (still under 0.6%) 7. For the LDC group as a whole, services exports as a share of total exports is not much more than half the global average (11% compared with19%). For as many as ½ of the LDCs, the share of services in total exports is at or well above the global average. 8. Some LDCs are exporting Other Business Services 9. Contrary to global trends, for the LDCs, Transport and Travel continue to grow, while the relative contribution of Other Commercial Services to overall services exports has declined 10.LDC total services exports contribution to GDP value-added is steadily increasing, but still below the world average 11.There are geographic differences in the LDC s composition of services trade. All trade data relates to commercial services only. Source:UNCTAD-WTO-ITC Trade in Services Database

9 9 All LDCs are exporting services Country Total Services Transportation Travel Communication Computer & Information Construction Financial Insurance Personal, cultural & recreational Royalties & License Fees Other Business Services LDCs Angola Bangladesh Benin Bhutan Burkina Faso Burundi Cambodia Comoros Congo, Dem. Rep. of Djibouti Ethiopia Gambia Guinea Guinea-Bissau Haiti Lao People's Dem. Rep. Lesotho Liberia Madagascar Malawi Mali Mozambique Myanmar Nepal Niger Rwanda Samoa Sao Tome and Principe Senegal Sierra Leone Solomon Islands Sudan Tanzania Timor-Leste Togo Tuvalu Uganda Vanuatu Yemen Zambia

10 10 LDCs export a highly diversified set of services For the group as a whole, exports occur in all the aggregate services categories 6 individual countries (Bangladesh, Burundi, Cambodia, Mozambique, Sudan and Vanuatu) record exports in all ten aggregate Another 4 countries (Uganda, Ethiopia, Guinea, Tanzania) record exports in 8 of the 19 Aggregate categories Export success is most common in Travel, followed by Transport and then Communications 38 LDCs also export Financial Services and/or Insurance

11 LDCs typically run an overall services deficit 11

12 12 but as a group they record a surplus in EXPORTS IMPORTS Travel LDCs Value Average growth % NET EXPORTS (US$,000) (US$,000) LDC 11,300, ,100, ,200,000 Angola 646, , ,076 Bangladesh 86, , ,929 Bhutan 46,917 56,024-9,107 Burundi 2, , ,689 Cambodia 1,616, , ,362,990 Comoros 41, , ,447 Congo, Dem. Rep. of 11, , ,951 Djibouti 19, , ,738 Ethiopia 757, , ,014 Gambia 95, , ,736 Guinea 2,100 33, ,990 Haiti 161, , ,250 Lao People's Dem. Rep. 406, , ,062 Lesotho 25, , ,840 Liberia 232, , ,483 Malawi 33, , ,949 Mozambique 231, , ,540 Myanmar 280, , ,229 Nepal 382, , ,635 Rwanda 251, , ,612 Samoa 133, , ,036 Sao Tome and Principe 15, ,577 Sierra Leone 44, , ,327 Solomon Islands 71, , ,692 Sudan 184, , ,970 Tanzania 1,456, , ,300 Timor- Leste 21,054 47,210-26,156 Uganda 958, , ,368 Vanuatu 225, , ,814 Yemen 782, , ,567 Zambia 146, , ,000 Value Average growth %

13 Nine LDCs are net exporters 13

14 14 LDC services exports growth rates 25.0% 20.0% Growth Rates p.a. 15.0% 10.0% 5.0% LDC WORLD 0.0% % -10.0% Years Big but temporary drop during the global financial downturn

15 15 LDC share in world services exports is increasing 0.70% LDC Share of World Services Exports 0.65% 0.60% 0.55% 0.50% 0.45% 0.40%

16 16 Trend in services share in total exports 25 Commercial Services Share in Total Exports (%) World LDC

17 17 Global and LDC Export Composition 100% 90% 80% 70% 60% 50% 40% 81% 87% 30% 20% 0.33% 1.80% 10% 0% 19% WORLD 11% LDC Merchandise Exports Government Services Commercial services (Services excl. government services)

18 LDCs with services share of exports above the world average & LDCs with services share of exports above the LDC group average 18 Tuvalu 46% Tanzania 25% Vanuatu 44% Sierra Leone 24% Samoa 43% Senegal 22% Comoros 39% Togo 20% Gambia 38% WORLD average 19% Sao Tome and Principe 38% Solomon Islands 19% Ethiopia 31% Cambodia 19% Nepal 30% Lao People's Dem. Rep. 16% Madagascar 27% Haiti 16% Liberia 27% Benin 16% Uganda 27% Mozambique 13% Rwanda 27% Mali 12% Timor- Leste 27% Burkina Faso 12% Djibouti 27% LDC average 11%

19 Global trends in composition of services exports % 90% 80% 70% 60% 50% 23% 23% 28% 26% 40% 30% 20% 31% 25% 10% 0% 23% 20% Other Commercial Services (e.g. finance, communicasons, other business services) Other Business Services Travel Services Transport Services

20 20 Some LDCs are exporting Other Business Services Other Business Services are recorded as exports for Bangladesh, Cambodia, Burundi, Mozambique, Sudan and Vanuatu. Many more LDCS may actually be exporting with out this being picked up in the official statistics. Bangladesh is by far the strongest performer (exporting 4 times more than Cambodia or Mozambique)

21 21 Trends in composition of LDC services exports 100% 90% 16% 14% 80% 70% 60% 50% 40% 30% 20% 16% 48% 10% 52% 10% 0% 21% 24% Other Commercial Services (e.g. finance, communicasons, other business services) Other Business Services Travel Services Transport Services

22 22 Geographic differences (numbers of exporting countries,% of total) ALL LDCs AFRICA (27) ASIA (8) OCEANIA (5) Transportation 75% 70% 100% 60% Travel 78% 70% 100% 60% Communication 68% 63% 88% 40% Computer & Information 30% 30% 25% 40% Construction 33% 22% 50% 60% Financial 40% 37% 50% 40% Insurance 50% 52% 63% 20% Other Business Services 15% 11% 25% 20% Personal, Cultural & Recreational 38% 37% 25% 60% Royalties & License Fees 25% 19% 38% 20% Others 78% 70% 100% 60%

23 23 AFRICA (27) TransportaSon Travel CommunicaSon Computer & InformaSon ConstrucSon Financial Insurance Other Business Services Personal, Cultural & RecreaSonal RoyalSes & License Fees Others

24 24 ASIA (8) TransportaSon Travel CommunicaSon Computer & InformaSon ConstrucSon Financial Insurance Other Business Services Personal, Cultural & RecreaSonal RoyalSes & License Fees Others

25 25 OCEANIA (5) TransportaSon Travel CommunicaSon Computer & InformaSon ConstrucSon Financial Insurance Other Business Services Personal, Cultural & RecreaSonal RoyalSes & License Fees Others

26 LDC services exports contribution to GDP value-added is increasing - and relatively fast, but is still below world average % 7.0% LDC 6.5% 6.0% High income 5.5% 5.0% World 4.5% 4.0%

27 Some nuances: the LDCs are lagging behind the LICs - so there is potential for LDCs to do better % 7.5% LDC 7.0% High income 6.5% 6.0% Low income 5.5% World 5.0% Middle Income 4.5% 4.0%

28 28 More nuances: The impact of Travel receipts on GDP value-added 35% 30% Sevices Exports as % of GDP 25% 20% 15% 10% Samoa Cambodia High income World Uganda LDC Bangladesh 5% 0%

29 Signals of Export Growth Potential? 29 With the services sector contributing 47% to GDP but only 11% to total LDC exports, there is clear untapped export growth potential in the LDCs UNCTAD s World Investment Report 2013 showed that despite an 18% drop in global FDI in 2012, the services was the least affected and FDI inflows to LDCs hit a record high, an increase led by developing country investors. This means that (1) services industries continue to drive FDI growth (2) LDCs remain key services investment destinations (3) South-South flows are very important to LDCs

30 Fundamentals of Services Export Readiness 1.Endowments, especially Human Capital (talent, education, skills, ideas, culture of customer focus) 2.Investment in Intangible Assets (corporate IP e.g. copyright, business methodologies, brands) 3.Enabling Physical and Digital Infrastructure 4.Quality of Institutions 5.Efficiency of Domestic Regulation 6.Connectedness with the International Markets (trade, investment, standards, mutual recognition) 7.Services Business Stakeholder Consultation (CSIs, PPDs) 8. National Strategic Policy Focus 30