role of services in economic development geneva, july 2012
TRANSCRIPT
Role of Services in Economic Development
Geneva, July 2012
Main points
• Services and trade in services matter for economic development, employment and competitiveness– Concrete examples for Africa
• Coordinated regulatory reform and liberalization of services– The role of Services Knowledge Platforms– World Bank database on Services Trade
Restrictiveness Indices
Services matter for growth
Source: World Bank, 2010
Services matter for employment
Shares of employment in agriculture, manufacturing and services
Source: ILO Global Employment Trends
Trade in services plays key role
• Increased tradability of services and global value chains• Exports of services can drive diversification
– Potential 18 million new jobs in developing countries from offshoring of services (each job generates a further 3 jobs)
– Exports of services from land-locked LDCs have been growing faster that exports of goods
for countries such as Rwanda and Ethiopia services account for more than half of total exports
• Access to cost-effective services affects competitiveness – Imports of services and FDI can lead to greater competition,
lower prices, higher quality and more variety
Access to professional services matter for productivity
• Higher labor productivity (sales/employees) is associated with greater usage of professional services in all East African countries, especially for small firms
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
Figure 1.5 Productivity of Users vs. Productivity of Non-Users of professional services in East Africa
Productivity of Users and of Non-Users of Professional Services – Average across firms in East Africa
Productivity of users vs. non-users of professional services – Ethiopia’s example
Source: World Bank Survey of Users of Accounting, Legal, Engineering and IT Services in Ethiopia, 2011.
Professional services in Eastern and Southern Africa
• World Bank research - one step towards facilitating more informed choices as East African governments develop a strategy for coordinated reform and liberalization of professional services
• Collection of extensive information - hitherto missing - on market conditions, policies and regulatory regimes in accountancy, engineering, and legal services in East Africa
• Key findings: – national markets for professional services in East Africa remain underdeveloped– regional market is fragmented by restrictive policies and regulatory heterogeneity
• Policy recommendations:– For professional services to make a meaningful contribution to growth in East
Africa policy action is required in four areas: domestic regulatory practices, trade policy, international labor mobility, and education
– Improving and expanding professional services will require both national reform and international cooperation
– Regulatory issues must be addressed to allow for effective competition in an integrated regional market
http://www.worldbank.org/afr/trade
Summing up: Services and trade in services matter
• For growth and competitiveness– Many services are inputs into production and trade -
economy-wide impacts from improvements in services– Lowering costs for firms requires better and cheaper services
• For employment– Services largest contributor to job creation– High employment rates for women
• For poverty reduction– Poverty reduction more strongly correlated with growth of
services than with growth of manufacturing
• Coordinated reform and liberalization of services
Professional services knowledge platform Challenge: integrating markets (expanding trade) while achieving regulatory objectives efficiently
Availability of professionals in Africa
91
48
14
8
3
2
1
0.9
0 20 40 60 80 100
Mauritius
South Africa
Kenya
Tanzania
Malawi
Uganda
Zambia
Rwanda
Panel A: Number of Accountants per 100,000 inhabitants
46
39
19
12
6
5
4
2
2
2
0 20 40 60 80 100
Mauritius
South Africa
Kenya
Botswana
Zambia
Rwanda
Uganda
Mozambique
Tanzania
Malawi
Panel B: Number of Lawyers per 100,000 inhabitants
Regulation of legal services
Entry Regulation Conduct Regulation
Explicit barriers to trade in accounting services
World Bank Services policy database :http://iresearch.worldbank.org/servicestrade/
How will the knowledge platform work?
• Mechanism that brings together regulatory expertise, trade policy makers, the private sectors, think tanks, universities and regional bodies
• Analytical work and advisory services disseminated through:– Online platform with transparent, easily searchable
databases, and social networks – Face-to-face interactions between practitioners,
policymakers, think tanks, regional secretariats
Thank you!Nora Dihel
Africa Region - Poverty Reduction and Economic Management Unit