CARIFORUM and UK EPA Study

A 2015 study conducted by the WTO’s Economic Research and Statistics Division on the role of services in global value chains, highlights the importance of the international fragmentation of services production in relation to services value chains or services networks 52 . The study suggests that both manufacturing value chains and services networks rely on international sourcing of services or the offshoring of services but notes that the international fragmentation of services is less pronounced than that of goods. Services, which enter value chains either as enablers to the manufacturing process, or as inputs to fragmented services production, account for more than 70% of global GDP, but represent only approximately one-fifth of international trade based on balance of payments measurements. This, however, overlooks the fact that, besides the cross-border trade in services, as captured by the multilaterally recognized four Modes of Supply, services are also incorporated into manufactured goods (referred to as the servicification of manufacturing) and even enter as inputs into other services which, when accounted for, shows that services represent upwards of 40% of world trade. In order to more accurately measure the services value added that are embodied in goods trade, the use of statistics derived from international input-output and supply and use tables, matched against the international flow of goods and services are necessary53. This data, which is available from the OECD Trade in Value Added (TiVA) database, indicates that services value addition represents almost one-third of the gross exports of manufacturing industries in developed countries, compared to just over a quarter (26%) for the same activities in developing countries.

52 Lanz, R. and Maurer, A. (2015), “Services and Global Value Chains – Some Evidence on Servicification of Manufacturing and Services Networks”, WTO Economic Research and Statistics Division, WTO Working Paper ERSD-2015-03. 53 This has been done through the OECD-WTO Trade in Value Added (TiVA) project, which allows for a more in depth analysis of the sectoral contributions of services in global trade, though with significant limitations, given that data is not available for non-OECD countries.

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