FIGURE 4.19 Business Services’ Exports Are More Unskilled-Labor Intensive When Forward and Backward Linkages to Other Sectors Are Included Unskilled LVA in direct exports of business services versus unskilled LVA in their indirect exports through forward and backward linkages with other sectors, by region, 2015 3.5 3.0
Share of output (%)
2.5 2.0 1.5 1.0 0.5 0
High income
East Asia & Pacific
Europe & Latin America & Middle East & Central Asia Caribbean North Africa
Unskilled LVA indirect (forward and backward linkages)
South Asia
Sub-Saharan Africa
Unskilled LVA direct
Source: Calculations based on World Bank’s Labor Content of Exports (LACEX) database. Note: The dataset covers 141 countries across all income levels and regions. “Unskilled” workers are those employed as clerks (group 4), service and sales workers (group 5), skilled agricultural and fishery workers (group 6), craft and related trade workers (group 7), plant and machine operators and assemblers (group 8), and elementary occupations (group 9) in the International Standard Classification of Occupations (ISCO). Labor value added (LVA) refers to wages, of which “unskilled LVA direct” designates the wages paid directly to unskilled workers for production of the sector’s exports. “Unskilled LVA indirect (forward and backward linkages)” designates the wages paid indirectly to unskilled workers through the production of either (a) inputs for economywide exports (forward linkages), or (b) economywide inputs for the sector’s exports (backward linkages). High-income countries, by World Bank income group classifications, had gross national income exceeding US$8,955 in 1994.
production capacity in other sectors. Even among global innovator services that predominantly cater to domestic intermediate demand from other sectors, there are ample opportunities to export BPO and ICT services. Evidence also suggests that growth opportunities for the services sector in the absence of a manufacturing core are reinforced because intermediate demand also derives from sectors other than manufacturing. Even in the case of global innovator services—where the share of intermediate sales to manufacturing is associated with higher growth—sales to mining, utilities, and construction as well as to other services has also contributed significantly to the sector’s growth. At the same time, the growing complementarities between manufacturing and services also mean that the importance of services to manufacturing cannot be emphasized enough. Manufacturers increasingly use services either for their own production needs (upstream services embodied in goods) or for their customers (downstream
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At Your Service? The Promise of Services-Led Development
