International Trade Outlook for Latin America and the Caribbean: Recovery in an uncertain context

International Trade Outlook for Latin America and the Caribbean • 2017
Chapter II
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Wolfmayr (2008) looks at the determinants of export market shares of 18 manufacturing
industries for 16 OECD countries from 1995 to 2000. She shows that services value added
increased as a share of gross output in most countries over this period and reached over
20% in Ireland, Sweden and the United Kingdom. In addition, manufacturing sectors in these
countries purchased most services at home and imported little from abroad. Using regression
analysis and controlling for unit labour cost, R&D intensity and patent performance at the
industry level, Wolfmayr shows that total and domestic services value added do not significantly
contribute to the export market shares of manufacturing industries, whereas imported services
do. Separate regressions for technology-driven industries show that total services inputs
and imported services inputs significantly affect market shares, whereas domestic services
have no impact. In the case of other industries, regressions show that services, whether total,
domestic or imported, have no impact on market shares. Another set of regressions focused
exclusively on links between export market shares and purchases of a subset of services:
computer and related activities, R&D and business services, all knowledge-intensive business
services (KIBS) that are more crucial for shaping international competitiveness. In this case,
total and imported —but not domestic— KIBS significantly affected market shares.
Evangelista, Lucchese and Meliciani (2015) looked into the role of three types of business
services (postal services and telecoms, computer services and other business services) to
explain changes in export market shares between 2000 and 2007 in five European countries
(France, Germany, Italy, Spain and the United Kingdom). They confirm that all three types
of business services contribute significantly to each country’s industrial competitiveness,
controlling for unit labour cost and innovation expenditure. Separate regressions show that
communication and computer-related services significantly affect market shares of both
medium-high-tech sectors and medium-low-tech sectors, whereas other business services
contribute to medium-high-tech manufacturing industries only.
Source: Economic Commission for Latin America and the Caribbean, on the basis of K. De Backer, I. Desnoyers-James and
L. Moussiegt, “‘Manufacturing or services: that is (not) the question’. The role of manufacturing and services in
OECD economies”, OECD Science, Technology and Industry Policy Papers, No. 19, Paris, Organization for Economic
Cooperation and Development (OECD), 2015; R. Evangelista, M. Lucchese and V. Meliciani, “Business services and
the export performances of manufacturing industries”, Journal of Evolutionary Economics, vol. 25, No. 5, Berlin,
Springer, 2015; J. Francois and J. Woerz, “Producer services, manufacturing linkages, and trade”, Journal of Industry,
Competition and Trade, vol. 8, No. 3-4, Berlin, Springer, 2008; S. Miroudot and C. Cadestin, “Services in global value
chains: from inputs to value-creating activities”, OECD Trade Policy Papers, No. 197, Paris, Organization for Economic
Cooperation and Development (OECD), 2017; Y. Wolfmayr, “Producer services and competitiveness of manufacturing
exports”, FIW Research Report, No. 009, Austrian Institute of Economic Research (WIFO), Vienna, 2008.
Box II.2 (concluded)
2. Countries in the region incorporate mostly domestic
services in manufacturing exports
It is import to analyse the services intensity of the region’s manufacturing exports,
given the low growth of their share in global manufacturing exports. This is evident
in a comparison of the region with China, India and the emerging economies of the
Association of South-East Asian Nations (ASEAN), using two measures from the TiVA
database. The first is gross exports, which shows that Latin America’s share in global
manufacturing exports first increased between 1995 and 2005, but stagnated thereafter.
The market share of ASEAN increased little until 2005, but rose afterwards. China’s
market share rose continuously over this period, as did —to a lesser extent— that of
India (see figure II.14). More recent gross export statistics from the United Nations
Commodity Trade Statistics Database (COMTRADE) until 2016 confirm the stagnation of
Latin America’s market share and the continuous rise of that of China, India and ASEAN.
The first is gross exports,
which shows that Latin
America’s share in global
manufacturing exports
first increased between
1995 and 2005, but
stagnated thereafter.