International Trade in Services.pdf - DSpace at Khazar University

1
Assessing the Potential
of Services Trade in
Developing Countries:
An Overview
Olivier Cattaneo, Michael Engman,
Sebastián Sáez, and Robert M. Stern
The potential of the trade in services has remained largely overlooked and
untapped by developing countries. A number of reasons could be evoked, including
the widespread and persistent idea that services, as opposed to goods, are nontradable.
In recent decades, technological obstacles to trade in services have been
removed. Because of the technological gap between developed and developing
countries, the impression has persisted, however, that the service trade is the privilege
of the countries of the Organisation for Economic Co-operation and Development
and that there is nothing or little of value in this trade for the poorest
countries. Recent research and evidence have proven this to be erroneous: any
country, including the least developed, can join the club of service trade exporters
and benefit from increased market opening (Mattoo and Payton 2007). Of course,
not all countries have the same potential, and the benefits of opening could be
overshadowed by the associated costs. Often, success is conditioned by the adoption
of complementary reforms that could become too costly in countries with
limited budgetary and human resources. The sequencing of reforms also matters.
Thus, it is necessary to assess carefully the trade and development potential of
trade opening in different service sectors before building castles in the air: not
every single developing country can become a service hub (for transport, backoffice
functions, tourism, and so on) even if the idea is attracting an increasing
number of developing countries around the world.
1