International Trade in Services.pdf - DSpace at Khazar University

Market Structure, Liberalization, and Trade 143
Box 5.2: Estimates of the Economic Scope of the Distribution Sector
In 2007, global retail sales equaled roughly US$12 trillion, having grown, on
average, by 8 percent annually in 2001–07 (Joseph et al. 2008). Grocery sales made
up 40 percent of total retail sales, and 60 percent in poorer African countries. At the
firm level, in 2006, total retail sales of the top 250 multinationals amounted to
US$3.5 trillion. With average retail sales of US$13 billion, all these companies had
retail sales exceeding US$2.7 billion, and companies from the United States
accounted for 45 percent of sales, Germany for 11 percent, France for 9 percent, the
United Kingdom for 8 percent, and Japan for 7 percent (Deloitte 2008). In 2002,
the top 30 retailers were active in 88 countries, or nearly three-quarters more
countries than in 1997 (UNCTAD 2005). Foreign direct investment (FDI) in
distribution services was among the vanguard in FDI until 1990, when it accounted
for a quarter of the total inward stock in services. It subsequently dropped to
18 percent by 2002 (UNCTAD 2004).
In the International Monetary Fund balance of payments statistics, the value of
distribution services is embedded in the value of goods sold through international
channels either in the value of the exports and imports of goods or in the value of the
sales of goods through affiliates. 2 For example, in 2002, about 3 percent of the sales
of U.S. wholesalers were exports, valued at about US$153 billion. Given that the
wholesalers provided an average of some 22 cents worth of distribution services for
each dollar in sales, these exports included US$34 billion in services in the value of
the goods exported. Exports accounted for a much lower proportion of the total sales
of retailers, and under US$1 billion of retailer services were embedded in the value of
the goods retailers exported (Borga 2006).
enforced regulation, may allow consumers not only to benefit from more choice
and lower prices, but also higher-quality products and better safety standards. In
most developing countries, a significant proportion of retail activities is part of
the informal economy, which official statistics fail to capture. (Box 5.2 presents
estimates of the economic scope of the distribution sector.) However, facilitated
market access in the distribution sector may bring foreign participation that
increases the share of the sector anchored in the formal economy and, hence, provide
a broader base for taxation.
From an export perspective, several developing countries are dependent on
tourism, and a more developed retail sector generates more income from purchases
by foreign visitors. The integration of domestic producers in international
supply chains also provides new business opportunities for the producers. Distribution
companies in developing countries such as Mexico and South Africa are
active in expanding their operations in neighboring countries, which demonstrates
the potential for increased levels of South-South trade in distribution
services.
In addition, modernization in the distribution sector will increase the use of
information technology and just-in-time logistics systems, which can greatly