International Trade in Services.pdf - DSpace at Khazar University

248 International Trade in Services
by the inherently complex task of delivering IT services through electronic supply;
others are linked to shortages of human capital. Policy makers can alleviate some of
these constraints to help the private sector harness trade opportunities in the IT
service sector. Effective strategies are likely to focus on initiatives that help attract
private investment from local and foreign investors, reward entrepreneurship by
improving the business environment, and raise educational standards.
In countries with weak infrastructure and poor business environments, a common
approach is to permit private real estate developers to build software and
high-technology parks near population centers with engineering colleges. These
parks provide modern office facilities with a guaranteed power supply and Internet
broadband connectivity. By nurturing clusters, IT service companies can enjoy
economies of scale in procuring input services and overcoming infrastructure
bottlenecks. There is no single best solution, and regulatory flexibility can allow
park operators to experiment with marketable alternatives. The key focus in the
parks is service provision. A streamlined interface to public authorities and readyto-use
facilities are the main attractions. Some high-technology parks offer fiscal
incentives to their export-oriented investors, such as time-limited income tax holidays,
the duty-free importation of capital goods, and grants for training new
employees. However, fiscal incentives are seldom necessary to attract investment
in the IT service sector. Essential incentives include full equity ownership for foreign
investors and the facilitated employment of foreign nationals in supervisory
and technical positions.
Inadequate Internet connectivity is one of the key supply constraints to trade
through electronic supply. Data show that many countries, particularly in Africa,
are restricted in their participation in the international IT service market because
of expensive, unreliable, and low-capacity Internet connectivity. Policy makers in
such countries should investigate local market conditions and assess whether poor
capacity and high prices may be a result of the regulatory environment or the
anticompetitive behavior of local providers. If necessary, they should take action
to improve competition or modify the rules and regulations that cover telecommunications
and Internet broadband providers and thereby stimulate private
investment. Policy makers should also reassess local labor market policies and
telecommunications policies, for example, with regard to restrictions on voice
over Internet protocol services and night shifts, to ensure that the regulatory environment
is conducive to IT service trade.
The greatest challenge in most developing countries revolves around raising
the quality and relevance of technical education. India and Pakistan are two countries
in which private colleagues have played a significant role in increasing access
to technical training and thereby expanded the supply of labor for the IT service
sector. In the education of IT professionals, the responsibility of these governments