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This year’s World Trade Organisation report focuses on the trade of services and in this podcast Alan Beattie from the Financial Times explains why services trade receives so little media coverage. The impact of goods trade is more tangible to most people and also lobby groups of the goods sectors are better organised. Then Stela Rubinova and Roberta Piermartini from the WTO introduce four major modes of services trade: buying services from entities in another country, going in person to another country to purchase services, companies setting up foreign affiliates to sell their services abroad, and finally, individuals going abroad to sell services but not employed by a local subsidiary.
Services trade has grown more quickly than the trade in goods and currently distribution services, banking, and telecommunications are the biggest players. But areas like education, healthcare, and construction – led by China’s Belt-and-Road initiative – have lots of growth potential. Services trade is also the most education-centric area across economies because human capital is extremely important for this sector.
Why does this matter? Against the backdrop of an upcoming global downturn, a growing services trade appears like a strong rope we can hold onto. Maybe it is time for investors to pay a bit more attention to the broader notion of ‘international trade’. The intangible side of this business certainly deserves more credit as it essentially brings together investments, exports, and consumption on a cross-border scale. If the WTO outlooks regarding the potential of services trade are well recognised, it will be worth anticipating how services trade is going to be the next crucial driver of global growth.