Research Paper: International Trade in Services

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[. . .] Apart from all the BRIC countries, India has relatively high shares of other business services -- which comprise such types of services as merchandising, and other trade-related services, accounting, legal, advertising, architectural, engineering services and some others (Soo, 2012).

Apart from services exports, BRIC countries also possess a diverse structure of import services. China and Hong Kong possess relatively high share in transport import services, while travel services are more intensively imported by Russia and Hong Kong. Construction services hold a high share in services imports and exports of Russia. India has a share of 32% in imports which outperforms the others in terms of other business services imports (Soo, 2012).

Services Trade in China and India

China and India are ranked as the most dynamic economies in the world. In 2009, China was the second-largest economy in the world, and India was the 11th largest one, according to the survey of WTO (Soo, 2012). Liberalization began in 1978 in China and in 1991 in India by the governments existing in both the countries. The economic growth of both these countries is majorly attributed to this implementation of liberalization policies.

From the perspective of international trade China became the world's largest exporter of merchandise and the second-largest importer in the year 2009, whilst India was the twenty first largest exporter and fourteenth largest importer. According to the survey of 2009 China was ranked as the fifth largest exporter and fourth largest importer of services, whilst India was the twelfth largest exporter and importer. Thus China was more indulged in trades in services than does India. India possessed a higher share of both services exports and imports than the world average, with a rapid increase in the share of export services and decrease in the share in imports (Wu, 2007). On the contrary, China has a lower share of both services exports and imports than the world average. Commercial services were majorly exported by India, while transportation services were majorly imported by it. It also exported travel services at a small scale. On the other hand, China was a net importer of commercial services and transportation services. Considering export services sector, China is the world's third largest exporter of construction services, with its exports amounting to over U.S.$10 billion in 2008 (Wu, 2007). India dominates China in the domain of both finance and computing and information systems. India is thus ranked as the world's second largest exporter of computing and information systems services.

Trade Balances and Specialization Indices

High Specialization Indices were attained by China, Hong Kong and Russia in transport services on the EU15 market. Similarly Russia was successful in attaining additional strong specialization in construction services. Brazil and India did not earn any strong SIs at the EU15 market during the period of 2000-2007 (Havlik et al., 2009). Considering the NMS12 market China and Hong Kong have strong SIs in transport services while Russia possesses high Sis in construction but not in transport. Brazil succeeds in having a strong specialization in personal, cultural, and recreational services sector on the NMS12 market.

BRIC Countries and EU Trade in Services

BRIC countries played a significant role in EU trade in services. BRIC countries experienced an increase of total EU export services from 9.1% in 2004 to 10.4% in 2006. Considering total EU imports, the share of BRIC countries increased to 10.4% in 2006 from 8.6% in 2004. The EU was able to increase its surplus in trade in services due to the drastic increase in total exports and imports value to BRIC countries. The United Kingdom was the principal exporter to BRIC countries among the EU member states as it accounted for 19% of total EU exports in services. Germany, Netherlands, Denmark, and France are some other countries which are responsible for almost two-thirds of exports of services to BRIC (Hussain and Cannito, 2008).

India -- The Leading BRIC nation in Services Trade with UK

Amongst all four BRIC nations India tops the services trade with the UK. There exists an interesting analysis regarding UK's service trade with India compared with other BRIC countries. The analysis has gained significant importance due to the growing clout of India as service exporter to rest of the world and the dominance of UK as a traditional service exporter.

According to the statistics of 2008, the services trade between UK and India was GBP 4056mn ahead of China (GBP 3743 mn), Russia (GBP 3290 mn) with Brazil in the last position grossing only GBP 942mn. UK's services trade with India grew steadily at the rate of 16.2% CAGR since the year 2000. Services trade with other BRIC nations has also grown at a steady pace with China measuring 22.4% CAGR; Russia 23.6% CAGR and Brazil 7.6% CAGR for the same time period (Hussain and Canitto, 2008).

International trade in services lends a hand in improving economic performance and provides a range of traditional and new export opportunities. It makes a significant contribution to employment growth, productivity, and innovation in most economies, and has become the most dynamic sector in the BRIC countries too. The share of services in the economy of BRIC countries has increased considerably in the past three decades. Communication, transportation, travel and commercial services tend to be the major components of services trade in a country. International trade in services is deeply affected by financial crises prevalent all over the globe, as it leads to the reduction in investments, which affects the physical economy of the country.

The economic rise of BRIC countries has brought about significant changes in the outlook of global economy. The share of services sector in the GDPs of BRIC countries has grown at a consistent pace since the 1990s. Technological advancements in these countries have enhanced the growth of services sector which has made BRIC countries a center of attention for the entire world. The rapid economic expansion in China has made it a global player and is ranked as the second largest economy of the world. Among the BRIC countries, China and India dominate the services trade sector as they constitute 60% of the total services imports and exports of the BRIC countries. Considering the geographical structure of international trade in services of BRIC countries, the EU tends to be a more significant market for them in comparison to the U.S. Or Japan. China and Russia possess heavy services export shares of EU in the EU27 market, while Japan holds high BRIC imports services share, due to increased imports from Hong Kong and China. India tops the export of computer and information services while Russia and China dominate transport and travel services. China has extended its construction services exports and India and China are considered as the most dynamic economies of the BRIC countries. India depicted a rapid increase in the share of export services and a gradual decline in import services. The drastic economic growth of India and China is attributed to the implementation of liberalization policies by their government policies. Moreover, among all the four BRIC countries, India tops in rendering international trade in services with UK. Apart from this, BRIC countries have played a major role in EU trade in services. The drastic increase in total exports and imports value to BRIC countries enabled EU to increase its surplus in trade in services. China, Russia and Hong Kong attained high specialization indices in transport services in the EU15 market.

Despite the above mentioned milestones achieved by various BRIC countries in the domain of international trade in services, there exists a room for further improvement for each of the BRIC countries in its respective domain. Brazil and Russia are required to attain a higher degree of specialization in any of the services trade category, following the footsteps of drastic economic growth of China and India. The pivotal role played by BRICS in the global economy is well depicted by the rapid recovery of these economies from the global financial crisis. This is an indicative of the fact that optimal global economic policy-making cannot be undertaken without including the BRICS economies at the highest levels of decision making.

References

Cattaneo, O., Engman, M., Saez, S. And Stern, R., M. (2010). International Trade in Services

New Trends and Opportunities for Developing Countries. Washington, DC: The World Bank.

Havlik, P., Stollinger, R., Pindyuk, O., Hunya, G., Dachs, B., Lennon, C., Ribeiro, P., M.,

Ghosh, J., Urban, W., Astrov, V., and Christie, E. (2009). EU and BRICs: Challenges and Opportunities for European Competitiveness and Cooperation. Industrial Policy and Economic Reform, 13, Pp. 2 -- 95, Retrieved November 22, 2012, from http://ec.europa.eu/enterprise/newsroom/cf/_getdocument.cfm?doc_id=5586

Hussain, M., and Faes-Cannito, F. (2008). Surplus in EU trade in services with BRIC Countries

in 2006. Statistics in focus - Eurostat, 40, Pp. 1 -- 3, Retrieved November 21, 2012, from http://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-SF-08-040/EN/KS-SF-08-040-

EN.PDF

Lipsey, R. (2006), 'Measuring International Trade in Services', NBER Working Paper 12271,

Pp. 1-70, Retrieved November 23, 2012, from http://www.f-integral.com/forhemcom/Measuring_International_Trade_in_Services_May06.pdf

Soo, T., K. (2012). Services Trade in China… [END OF PREVIEW]

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International Trade in Services.  (2012, November 26).  Retrieved April 20, 2019, from https://www.essaytown.com/subjects/paper/international-trade-services/8929387

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"International Trade in Services."  Essaytown.com.  November 26, 2012.  Accessed April 20, 2019.
https://www.essaytown.com/subjects/paper/international-trade-services/8929387.