International Trade in Services.pdf - DSpace at Khazar University

260 International Trade in Services
Notes
1. A generic definition of IT services is provided in Gartner (2004), which states that IT services
refer to the application of business and technical expertise to enable organizations in the creation,
management, optimization of or access to information and business processes. The Services Sectoral
Classification List of the General Agreement on Trade in Services (GATS) includes computer services
as a subsector (designated 1B) of business and professional services (see WTO 1991). The subsector
covers five subcategories: consultancy services related to the installation of computer hardware, software
implementation services, data processing services, database services, and other. The subcategories,
which are outlined in annex table 7A.1, are defined in greater detail in the corresponding items
of the Provisional Central Product Classification (UN 1991). According to this classification, software
implementation services include systems and software consulting services, systems analysis services,
systems design services, programming services, and systems maintenance services. Most IT service
exports from developing countries fall under the software implementation services item.
2. The reader should thus interpret the trade data presented here with caution and as rough estimates,
given the differences in definitions and in coverage across the available data sources. The information
is often collected from industry associations or through targeted surveys. For the balance of
payments statistics of the International Monetary Fund, see http://www.imf.org/external/np/sta/
bop/bop.htm.
3. The GATS recognizes four modes of service delivery. Mode 1 refers to crossborder supply, Mode
2 to consumption abroad, Mode 3 to commercial presence, and Mode 4 to the temporary movement
of natural persons.
4. See also McKinsey’s locational readiness index, Hewitt’s international benchmarking model,
and Gartner’s 10 criteria. The common approach is to rank countries based on a number of variables,
including the price, quality, and accessibility of necessary inputs such as labor and capital. International
benchmarking exercises are subject to criticism, and this may be their main strength: many
industry representatives and policy makers care passionately about their relative ranking and strive to
improve their results. In general, simplicity is inversely related to objectivity, and results should be
interpreted with caution. For example, movements in foreign exchange rates can have a strong impact
on measures of cost and therefore lead to significant shifts in relative rankings from year to year.
5. Satellite connections exist, but are not cost-effective options for IT service exporters.
6. The OECD average is highly inflated because of Luxembourg, while the South Asia average is
highly inflated because of the Maldives.
7. See http://go.worldbank.org/GKHOFFDJB0.
8. See http://www.stpi.in/, http://www.peza.gov.ph/, and http://www.smart-villages.com/docs/front.aspx.
9. The plurilateral Information Technology Agreement of the WTO covers 97 percent of the trade
in IT products and has reduced the attraction of duty-free imports of IT products in the 72 countries
and customs territories in which duties on IT equipment have been reduced to zero. See http://
www.wto.org/english/tratop_E/inftec_e/inftec_e.htm.
10. IT-related fields include computer science, computer engineering, electrical engineering, electronics
engineering, communications, and IT.
11. See http://sas.sei.cmu.edu/pars/pars.aspx for published appraisal results by company name.
12. OECD (2006) provides a more extensive overview of data security and privacy issues.
References
Aron, Ravi. 2005. “Move Over, India: The Shifting Geography of Offshore Outsourcing Creates New
Challengers.” India Knowledge@Wharton, January 14, Wharton School, University of Pennsylvania,
Philadelphia. http://knowledge.wharton.upenn.edu/india/article.cfmarticleid=4035.
A. T. Kearney. 2007. “Offshoring for Long-Term Advantage: The 2007 A.T. Kearney Global Services
Location Index.” A.T. Kearney, Inc., Chicago.