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LDC Services Exports and Export Potentials
Brainstorming meeting of the LDC Group 3-4 October 2013
WMO, Geneva
Jane Drake-Brockman Senior Services Adviser
What is ITC?
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
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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.
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Services as a driver for Growth
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Source: World Bank (2009), The Service Revolu.on in South Asia, Figure 1.3-‐4, p. 41
Higher growth in services output is associated with larger falls in poverty
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Source: World Bank World Development Indicators
High service shares of employment are associated with high female participation rates
6
Source; Ghani and Kharas (2010)
Services sector growing faster in LDCs than elsewhere
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40
45
50
55
60
65
70
75
80
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Serv
ices
, etc
., va
lue
adde
d (%
of G
DP)
Years
LDC
Low income
Lower middle income
Middle income
High income
World
Average Growth Rates 2000-2010
LDC 13.06%
LIC 9.97%
LMIC 7.06%
MIC 3.66%
HIC 5.43%
World 4.86%
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 (2007-2011)
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
All LDCs are exporting services
9
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 √ √ √ √ √ √
30 31 27 12 13 16 20 15 10 6
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
10
LDCs typically run an overall
services deficit…
11
… but as a group they record a surplus in Travel
12
LDC 11,300,000 135 7,100,000 92 4,200,000Angola 646,471 633 180,395 144 466,076Bangladesh 86,750 24 331,679 143 -‐244,929Bhutan 46,917 56,024 -‐9,107Burundi 2,497 72 31,186 -‐48 -‐28,689Cambodia 1,616,361 93 253,371 162 1,362,990Comoros 41,670 76 20,223 111 21,447Congo, Dem. Rep. of 11,399 258 298,350 458 -‐286,951Djibouti 19,216 171 20,954 636 -‐1,738Ethiopia 757,870 350 169,856 122 588,014Gambia 95,583 64 10,847 98 84,736Guinea 2,100 33,090 15 -‐30,990Haiti 161,930 104 61,680 11 100,250Lao People's Dem. Rep. 406,185 192 237,123 4642 169,062Lesotho 25,552 -‐6 290,392 11 -‐264,840Liberia 232,487 246 60,004 283 172,483Malawi 33,858 16 65,807 22 -‐31,949Mozambique 231,126 78 222,586 26 8,540Myanmar 280,603 319 123,374 300 157,229Nepal 382,737 191 320,102 96 62,635Rwanda 251,800 416 89,188 143 162,612Samoa 133,917 70 12,881 43 121,036Sao Tome and Principe 15,931 118 354 581 15,577Sierra Leone 44,312 -‐31 13,985 -‐57 30,327Solomon Islands 71,521 4517 64,829 1269 6,692Sudan 184,990 108 936,960 40 -‐751,970Tanzania 1,456,900 77 898,600 62 558,300Timor-‐Leste 21,054 47,210 -‐26,156Uganda 958,649 152 393,281 216 565,368Vanuatu 225,889 164 35,075 214 190,814Yemen 782,667 333 182,100 9 600,567Zambia 146,300 49 76,300 32 70,000
NET EXPORTS
EXPORTS IMPORTS
LDCs Value
(US$ ,000) 2011 Value
(US$ ,000) 2011
Average growth % 2011-‐2005
Average growth % 2011-‐2005
Nine LDCs are net
exporters
13
LDC services exports growth rates
14
Big but temporary drop during the global financial downturn
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
2004 2005 2006 2007 2008 2009 2010
Gro
wth
Rat
es p
.a.
Years
LDC
WORLD
LDC share in world services exports is increasing
15
0.40%
0.45%
0.50%
0.55%
0.60%
0.65%
0.70%
2004 2005 2006 2007 2008 2009 2010 2011
LDC
Sha
re o
f Wor
ld S
ervi
ces
Expo
rts
Trend in services share in total exports
16
19.3 19.2
22.2
20 19.2
13.6
9
11.2 10 9.4
0
5
10
15
20
25
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Com
mer
cial
Ser
vice
s Sh
are
in T
otal
Exp
orts
(%
) World
LDC
Global and LDC Export Composition
17
19% 11%
81% 87%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
WORLD LDC
Merchandise Exports
Government Services
Commercial services (Services excl. government services)
0.33% 1.80%
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%
Global trends in composition of services exports
19
23% 20%
31% 25%
23%
26%
23% 28%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2001 2011
Other Commercial Services (e.g. finance, communicaSons, other business services)
Other Business Services
Travel Services
Transport Services
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)
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Trends in composition of LDC services exports
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21% 24%
48% 52%
16% 10%
16% 14%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2001 2011 Other Commercial Services (e.g. finance, communicaSons, other business services)
Other Business Services
Travel Services
Transport Services
Geographic differences (numbers of exporting countries,% of total)
22
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%
AFRICA (27)
23
TransportaSon
Travel
CommunicaSon
Computer & InformaSon
ConstrucSon
Financial
Insurance
Other Business Services
Personal, Cultural & RecreaSonal
RoyalSes & License Fees
Others
ASIA (8)
24
TransportaSon
Travel
CommunicaSon
Computer & InformaSon
ConstrucSon
Financial
Insurance
Other Business Services
Personal, Cultural & RecreaSonal
RoyalSes & License Fees
Others
OCEANIA (5)
25
TransportaSon
Travel
CommunicaSon
Computer & InformaSon
ConstrucSon
Financial
Insurance
Other Business Services
Personal, Cultural & RecreaSonal
RoyalSes & License Fees
Others
LDC services exports contribution to GDP value-added is increasing - and relatively fast, but is still below world average
26
4.0%
4.5%
5.0%
5.5%
6.0%
6.5%
7.0%
7.5%
2005 2006 2007 2008 2009 2010 2011
LDC
High income
World
Some nuances: the LDCs are lagging behind the LICs - so there is potential for LDCs to do better
27
4.0%
4.5%
5.0%
5.5%
6.0%
6.5%
7.0%
7.5%
8.0%
2005 2006 2007 2008 2009 2010 2011
LDC
High income
Low income
World
Middle Income
More nuances: The impact of Travel receipts on GDP value-added
28
0%
5%
10%
15%
20%
25%
30%
35%
2005 2006 2007 2008 2009 2010 2011
Sevices E
xports as %
of G
DP
Samoa
Cambodia
High income
World
Uganda
LDC
Bangladesh
Signals of Export Growth Potential?
• 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
29
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
