Posts Tagged 'Trade in Services'

Trade in Digitally Enabled Services Shows Strong Growth

U.S. trade in services enabled by digital technologies grew at a faster pace than trade in all other services in recent years, a new analysis by the Bureau of Economic Analysis (BEA) shows. Information and communications technologies (ICT) play an important role in cross-border trade in services, and improvements in these digital technologies and reductions in their costs have played an important role in contributing to growth in trade in services.

Several organizations, including the United Nations and the Organization for Economic Cooperation and Development (OECD), have defined ICT-enabled trade in services. From these definitions, BEA has identified the categories of ICT-enabled services in its own trade in services statistics as royalties and license fees; insurance; financial services; telecommunications; and business, professional, and technical services (except construction). Isolating these categories of services shows that as digital technologies have advanced and become cheaper in recent years, trade in ICT-enabled services has shown strong growth and increased as a share of all services trade.

U.S. exports
From 1998 to 2010, ICT-enabled services exports grew at an average annual rate of 9 percent, compared with a growth rate of 3 percent for all other services exports. During this period:
• The share of private services exports composed of ICT-enabled services increased from 45 to 61 percent.
• The fastest average annual growth was in insurance services (13 percent) and financial services (12 percent).

U.S. imports
From 1998 to 2010, ICT-enabled services imports grew at an average annual rate of 10 percent, compared with a growth rate of 3 percent for all other services imports. During this period:
• The share of all private services imports attributable to ICT-enabled services increased from 34 to 56 percent.
• The fastest average annual growth was in insurance services (17 percent) and business, professional, and technical services (11 percent).

Worldwide
A similar analysis of OECD trade in services data indicates that worldwide trends in ICT-enabled services trade have been moving in the same direction as those of the United States. From 2002 to 2008, for a set of countries responsible for the majority of worldwide trade:
• The share of global services exports attributable to ICT-enabled services grew from 47 to 52 percent.
• The share of global services imports attributable to ICT-enabled services grew from 43 to 46 percent.

For the details behind the analysis and to learn more about the recent trends in ICT-enabled trade in services, read the full report.

New Study Provides Profile of U.S. Firms that Export and Import Services

Chart of trading partnersData from the Bureau of Economic Analysis (BEA) show that the United States has historically maintained a trade surplus in private services.  So what types of firms are involved in this kind of trade abroad?  Thanks to a new BEA study we have a better understanding of the kinds of American companies that export and import services.

Here are some of the key findings:

• Firms in industries typically associated with the production or sales of manufactured goods are significant services traders, accounting for more than 25 percent of exports and imports covered by the study.  Trade in services by manufacturers largely consists of transactions related to the use or creation of intellectual property, the provision of headquarters’ management and support services, or the allocation of expenses.

• Multinational companies, especially U.S. parent companies, are important services traders, accounting for more than 80 percent of trade in services with both affiliated (their own foreign branches) and unaffiliated parties.  U.S. parents tend to have larger transactions, trade with more countries, and trade more service types as compared to U.S. affiliates of foreign parents and non-multinationals.Chart of services types traded

• Business, professional, and technical services, especially research and development, testing services, and management and consulting services, accounted for more than one third of trade by both U.S. parents and U.S. affiliates.

• Many small firms engage in services trade, but large firms dominate the value of trade.

• The trade in services of multinational companies is dominated by transactions with their affiliated parties.  This is especially true for business, professional, and technical services, and royalties and license fees.  Financial services trade, such as brokerage and advisory and management services, is primarily with unaffiliated parties.  Those findings are based on a new data set that combines data from surveys on cross-border trade in services with data on the operations of multinational companies.

In 2008, trade in services included in the study—financial services; insurance; royalties and license fees; telecommunications; and business, professional, and technical services (excluding medical services)—totaled $302.3 billion in exports and $195.6 billion in imports, resulting in a surplus on trade of $106.7 billion.  These services accounted for more than half of total private services exports and imports, and nearly three-quarters of the $148.3 billion U.S. surplus on private services trade in 2008. To learn more about the characteristics of U.S. exporters and importers of services, read the full article.