FIGURE 1.7 The Most Prominent Mode of Exporting Services Is Establishing “Commercial Presence” Abroad, but “Cross-Border Supply” and “Consumption Abroad” Matter for Some Subsectors Decomposition of global services exports, by mode of supply and subsector, 2017
Share of world exports (%)
100 80 60 40 20
Pr
h alt He
on uc
W
ho
les
ale
Ed
dr an
ati
il eta
ag tor ds
ort sp Tra n
en nm tai
Ar
ofe
ts,
ss
en
ter
ati
t, a
on
nd
an
rec
an on od
mm co Ac
e
n
df
rea
oo
tio
d
ce ati
an ce an Fin
ion
al,
sc
ien
tifi
c,
an
di
dt
ns
ec
ur
hn
an
ica
ICT
l
0
Global innovators Cross-border (mode 1)
Low-skill tradable services Consumption abroad (mode 2)
FDI (mode 3)
Skill-intensive social services Movement of persons (mode 4)
Source: Trade in Services by Mode of Supply (TiSMoS) database, World Trade Organization (WTO). Note: TiSMoS is an experimental dataset that relies on imputations or assumptions for the breakdown of services trade in most countries between modes 1 (cross-border supply), 2 (consumption abroad), and 4 (movement of persons). Mode 3 trade (commercial presence through foreign direct investment [FDI] that establishes company affiliates in consumers’ countries) is determined from the Foreign Affiliates Statistics (FATS) of the European Union’s statistical office, Eurostat, and can be identified separately for most countries. For further details, see Wettstein et al. (2019). ICT = information and communication technology.
In principle, all services—including low-skill domestic services that are predicated on face-to-face interactions between producers and consumers—can be exported through the movement of producers across borders. This, however, shifts the discussion from services trade using mode 4 to prospects for longer-term migration. Among services that share linkages with other sectors, many are also “embodied” as inputs in the export of goods—a practice often dubbed “mode 5” trade. These services typically include R&D, engineering, design, software, and logistics services that add value during the production of manufactured goods and agricultural commodities and are therefore exported indirectly. For example, with 10 million lines of computer programming code, software-related services constituted 40 percent of the value of General Motors’ 2010 Chevy Volt model, compared with some 5 percent of the value of their cars in the 1980s. For most countries, these embodied services inputs represent about one-third of the total value of their manufactured exports (Antimiani and Cernat 2018). This “servicification” of manufacturing is discussed further in chapter 4. Of Goods and Services: Inside the Black Box
27
