Development tendencies of the international trade in services

The economic essence of trade in services, the peculiarities of the development of this process in the conditions of globalization. Research of modern tendencies of functioning of international trade, analysis of its role as a factor of economic growth.

Рубрика Маркетинг, реклама и торговля
Вид статья
Язык английский
Дата добавления 15.12.2017
Размер файла 20,8 K

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Rumiantsev A.P., D.Sc.Economics,

Professor, Head of the International

Economic Activity Management Department

of the Kyiv Economics Institute of Management

Abstract. The paper provides an examination of the economic essense of trade in services, especially the development of this process in the context of globalization. The current trends of the international trade in services are singled out, and its role as a factor of economic growth of the world is considered.

Keywords: service, international trade in services, global service market, export, service import.


РУМЯНЦЕВ А. П., д.е.н., професор, завідувач кафедри менеджменту зовнішньоекономічної діяльності Київського економічного інституту менеджменту

Анотація. У статті досліджується економічна сутність торгівлі послугами, особливості розвитку цього процесу в умовах глобалізації. Виокремлені сучасні тенденції функціонування міжнародної торгівлі послугами, розглянута її роль як фактора економічного зростання країн світу.

Ключові слова: послуга, міжнародна торгівля послугами, світовий ринок послуг, експорт, імпорт послуг.

торгівля міжнародний послуга


Румянцев А.П., д.э.н., профессор заведующий кафедрой менеджмента внешнеэкономической деятельности Киевского экономического института менеджмента

Аннотация. В статье исследуется экономическая сущность торговли услугами, особенности развития этого процесса в условиях глобализации. Выделены современные тенденции функционирования международной торговли услугами, рассмотрена ее роль как фактора экономического роста стран мира.

Ключевые слова: услуга, международная торговля услугами, мировой рынок услуг, экспорт, импорт услуг.

Problem statement. The rapid development of the international trade in services and its consideration as one of the main indicators of national economies, particularly those characterized by the latest technological structures, requires the determination of perspective action directions of this process.

Analysis of recent research and publications. Analysis of the international trade in services is a research subject for a considerable number of scientists. The latest publications mentioning here are those by Kotler F., Blumenau D., Daniels, D., Filipenko A., Sidenko V., Zablotska R., Tsygankova T., Shnyrkov O., Burakivskyi I. et al.

Research objective consists in justification of the main trends of the international trade in services under the conditions of expansion and dynamization of global processes in the world economy.

Presentation of the main material. Among the factors of an accelerated in the contries belonging to the international community, the international trade holds one of the leading places. Especially the role of the international trade becomes more importnant in modern conditions, when the processes of international economic integration, internationalization, international division of labor, globalization of the world economy acquire a more intensive development. However, exactly the globalization first and foremost in our time is an extremely versatile process that covers all the sphere of the international economy - production, distribution, exchange, consumption. The globalization finds its expression in its entirety in the formation of the global market. The directions that are intensively developing and expanding are highlighted in its structure. These are: trade in goods, technologies and raw materials. Along with the international commodity market, the priority role is also played by the international market services. World trade in goods and trade in services are closely linked. During the supply of goods abroadmore services are provided, starting from the market analysis and ending with the goods shipping. Recently, the service market is an area of economy, which plays a significant role in the economic development of many countries. There have emerged a number of new services that are in high demand on the world market. Therefore, the operation of the market of services in different countries is very promising. This trend of the international exchange is now rapidly developing and occupies today an important place among the elements of the world market. It reflects a gradual shift to a higher level of civilization development, where services are the one of the main spheres of social production. The higher the share of services in gross national income, the higher the level of economic development of a country. Therefore, the global service market marks the transition of our civilization to a new level of development. The importance of the service sector is growing.

This is due to increase of its influence on the development of the international relations, as well as to the intensification of the economic situation in the countries and certain regions and the replenishment of currency income of the countries of the globe.

The service market has significantly expanded and modified in the course of the scientific and technological revolution. The structure of services has notably changed. There have increased the volumes of production and professional services, which are characterized by a high degree of centralized management, finance and operational control. The increase in the scale of trade in production and professional services should be seen as a form of integration of different national economies - a form substantially more developed than the economic interdependence resulting from the expansion of trade. In parallel the process of internationalization of production and consumption of services is speeding up.

Nowadays the service market is rapidly developing and diversifying. The welfare growth together with an increased free time and complexity of products that require technological service, enable many countries in the world to occupy a special place in the service sector, which is a very diverse field.

The international trade in services has a number of peculiar features compared to the traditional commodity trade. It has its specificity (impalpability, inseparability of production and consumption, heterogeneity or variability of quality, failure to preserve services). Unlike operations with goods, they are not subject to customs control. At the same time, services may take materialized forms (in the form of computer programs, film or videotapes, and various documentations). Services can be capital-intensive or knowledge-intensive, may have an industrial nature or meet personal needs, may be unskilled or require high-level qualifications of performers.

The services, unlike comodities, are intorduced and consumed mainly simultaniously and are not subject to retention. In this regard, there is a need direct the presence of direct service providers abroad or the availibility of foreign consumers in the country of service production. However, not all types of services, unlike comodities, are suitable for a broad involvement into the international circulation, for example - public utilities.

The functioning of the market in each country has its own specific features. Each country is taking steps to support the market for that element, which has prospects for further development and improvement. Specialization of the countries for certain types of services depends on the level of the economic development. In industrialized countries the preference is given to the financial, telecommunication, information branches and most sectors of business services. The developing countries are characterized by the specialization in transport, financial and tourism services.

The international regulation of services exchange should be focused on the most effective option of the global division of labor and on creating conditions for accelerating progress in the service sector. At the same time, it should encourage the development of the service industry in the countries that are still lagging behind in this sphere. The service industry is generally more protected by the state from a foreign competition than the sphere of material production.

An important present-day development trend in the international trade in services is the increase its organic connection with the global trade in goods. During the supply of goods abroad more services are provided, starting from the market analysis and ending with the transportation of goods. Many of the services provided for the international circulation are either incopletely reflected or included in the export and import of goods.

In this regard the main international services (as defined in the GATS documents) are the main research object. The leading components of the world market of services include transport, tourism, educational services, financial and engineering services [1]. Each of these types of services is characterized by certain features of the development and operation.

The presented international services make up one of the most promising sectors of the economy of the world countries, which is rapidly developing and cover the wide range of activities from tourism to transport and financing, insurance, intermediation etc. The development of the world economy is not possible without the industry, since with the complication of production processes and saturation of the market withgoods there emerge a growing need for services. In many countries, trade in services holds a significant place in the volume of the international trade. This is evidenced by the following data (Table 1).

Table 1

The share of commodities and services in the structure of the international trade in some countries for 2015


Export, billios $

Import, billions $









































Compiled on the materials [2, 3, 4]

According to the data provided in the table, the export potential of China is now the largest in the world. The basis of Chinese exports is formed by ready-made consumer goods. The largest foreign trade partners of China are

Asian countries with more than 2 trillion USD of trade transactions, Europe and the United States with 700 billion and 600 billion USD correspondingly.

The US foreign trade analysis points at the domination of imports over exports. However, the United States having the highest GDP in the world needs substantial supplies of goods and services from outside. It should be noted that the import and export of commodities and services have certain parity.

Considering the indicators of foreign trade in Ukraine it should be noted that it has a clear dependence on import, and raw-material orientation of economy promotes growth of import of goods and services.

The increase in sales of services in the global market is caused by the scientific and technical progress in material production, the international division enhancement and the growing socio-economic needs of many countries. And it is exactly today, under the conditions of the intensification of the global economic life, the international trade in services deserves a full attention and requires sufficient investment as a sector with a significant potential for development.

Referring to specific aspects of transactions' implementation in the international trade in services, it should be noted that they are within the current payment balance operations of any country. For a long time to determine the role of the service sector in the national economy two indicators have been used: the share of this sector in total employment and the share of the services provided in GDP. Today the experts, though they note the imperfections of both indicators, still continue to use them for various economic comparisons, continuing along with it the search for more accurate criteria of the economic analysis and the assess of the service sector's role in the national economy. So, in recent time in order to assess the value of the service sector in the economy of a particular country they are using an index, which is calculated as a ratio of the share of the commodity export to the share of services export in GDP. If this figure is kept at a low level, then the services are essential for the economy of this country. The lowest indexes are in Austria, Belgium, the USA, Spain, France, Singapore, United Kingdom, and Switzerland.

To assess the level of specialization of a country in the export of services a special index is traditionally determined. It reflects the ratio of the export and the import share of services in GDP (1 export / 1 import). The most export-oriented service industries are in Switzerland, the US, Spain, Hong Kong, Austria, Great Britain, Belgium, Luxembourg and Italy. However, a large share of services in total exports of a country does not necessarily reflect the high level of economic development. The international trade in services is not an exclusive prerogative of the industrialized countries. In a number of developing countries the services also constitute a significant part of their exports. Thus, in the sub-group of countries, in which profits from trade in services account for more than 50% of their export earnings, the industrialized countries are represented only Greece; all the other countries in this sub-group belong to the developing ones.

Now the global services market is dominated by eight countries: the USA, UK, France, Germany, Japan, Belgium, the Netherlands and Italy, accounting for 2/3 of the global exports of services and more than 50% of imports. The share of the top five is under 50% of exports, under the condition of a much lower share of imports. Thus, the four countries (USA, UK, Germany, France) account for 44% of the total world exports of services. Export quota of the USA and UK in the world market is 30%, and the import one is significantly lower.

The specialization of countries in certain types of services depends on the level of their economic development. In the industrialized countries the preference is given to the financial, telecommunication, information spheres and to most sectors of business services. The USA, UK, France, Switzerland, Germany are exporting the educational and health care services. The highest level in the number of shows held is reached by US and Western Europe (especially Germany). And the developing countries are characterized by the specialization in transport, tourism and financial services.

In addition, the development of trade in services contributes to the provision of related services. Generally, the countries that provide port services specialize on ship repairing; the USA, as the largest computer producer, used to supply the world market with the computer services; in the countries-exporters of oil there dominates freight with the services on oil transportation.

The developing countries are characterised by the presence of negative balance of foreign trade in services; but this does not exclude the possibility that some of them may be big exporters of services. For example, South Korea is specialized in engineering consulting and construction services, Mexico - in tourism; Singapore is a major financial center. A significant amount of the small island states gains the main part of export income due to tourism.

An accelerated development of services is a prerequisite for a successful completion of the world economy restructuring. As a result of a mass introduction of computers, industrial robots and fully automated systems for the production process design and management, the needs of industry sector in living labor are reduced, and labor forces that are released, are now "injected" into the service sector. At the same time the economic organization of production gets complicated, the demands for quality of the workforce are increasing, which creates an additional demand for services.

The recent years arte determined by a significant increase in the scale of the international trade in services, despite the preservation of all the national barriers which have existed previously. According to the official statistics, the volume of the international trade in services increased six times and has amounted to over 3,600 billion USD over the past ten years.

This phenomenon can be attributed to the influence of the following factors:

First, the revolutionary technological changes in communications and transport converted a number of so- called "non-factor" services into goods. A rapid reduction of transportation costs caused an increase in the degree of mobility of the producers and consumers of services, the application of new means of satellite communication and video technologies made it possible to drop personal contacts between a seller and a buyer of services. Second, an accelerated pace of technological progress in telecommunications and science has led to new forms of trade in services. Here we mean an international commercial exchange of information, in which either databases become the object of foreign trade, or a firm in this way keeps contact with their foreign affiliates. Third, the technological progress made it possible to increase the demand for those services that used to have a commodity form earlier. This includes financial services, bank and insurance companies. The application of modern technologies in this field allows to significantly expand the number of customers for these financial institutions and to increase the range of their services.

The current stage of development of the international trade in services testifies to its continued growth. It remains the main form of the international political relations and is gaining new features that reveal its multifaceted capabilities as an important factor for a stable functioning of the national economies of the world community. The main essential tendencies inherent to the process of international trade in services today, we should include the following:

Firstly, in the recent years we can note an increase in the international trade in services. This is reflected in the growth of the world trade turnover, and an ongoing diversification of goods and services sold in the world market.

Secondly, a rapid expansion of the modern international trade in services' structure. Now the subjects of foreign economic relations are all countries of the globe, as well as integration associations, ministries, agencies of individual states, transnational and multinational companies, businesses and some individuals, together with their various associations. On the other hand, the branch structure of international trade is expanding - it is focused on increasing the coverage ofsectors and types of domestic production of the world countries with the foreign trade.

Thirdly, there is the growing intensity of the international trade in services. First of all this is reflected in its dynamics. Now the rate of growth of import and export operations in most countries of the world community is always ahead of, for example, the growth rate of industrial production. Other indicators that mark the presence of this trend in the international trade is the growing share of foreign trade turnover in the gross domestic product of the countries of the world, as well as the share of exports and imports per capita in some countries, their integration associations, and regions.

Fourthly, the interrelation between the international trade in services and the international division of labor is enhanced. Modern foreign trade relations are generally stable and long-lasting. This actually leads to international specialization of production in the countries which supply products or provide services under contracts compiled for a considerable duration. At the same time it should be noted, that there's an increasing supply of goods within the agreements on international cooperation in production of certain types of finished products. The latter is mainly based on the international detailed, aggregate, technological specialization.

Fifthly, the international trade should be made a priority orientation in the present-day development. Here, above all, there should be noted a shift of the global foreign trade center of gravity towards the international trade in services. Another promising area of development for the international trade market are overwhelming sales in global market those goods that determine the scientific and technical progress. Especially we should emphasize an innovation direction of the international trade, which is organically linked to the previous one. It provides, primarily, the business promotion, support of its international forms, where the benefits of the latest achievements, which are concentrated in the global industrial and scientific-technical potential, are used promptly and effectively.

Sixthly, an important role for the development of the mechanism of the international trade in services will further be played by WTO, GATS, UNCTAD and other specialized international organizations.

Seventhly, the development of the international trade in services in modern conditions is one of the essential manifestations of globalization of the world economy. This means that the international trade in services, based on the depth of international division of labor, and on scientific and technological revolution's achievements, is objectively designed as a worldwide network with the signs the systemic formation, which is aimed at the rational use of natural, industrial, scientific, technical, and human resources and the finances of the world community.

The international trade in services is an integral part of the global economic development. All the countries are involved in this process, that allows them to satisfy their production and social needs and to secure a rational use of the national export potential.

Conclusions. Consideration of the development of the current international trade in services gives grounds to single out the main trends of its development. These include an increase diversification of the international trade in services, a high rate of capital turnover in this area, some complications of its material scientific and technical basis, an increase in the share of intellectual services and the number of entities providing them, an increase in the share of banking, insurance, innovative services, as well as the information support intensification for the international trade services. These trends should be considered when justifying the prospective landmarks for the development of the international trade in services.

List of References

1. GATS and the Regulation of International Trade in Services / ed. by M. Panizzon, M. Pohl and P. Sauve. - Cambridge University Press, 2012.

2. UN official website:

3. WTO official website:

4. Філіпенко А.С. Народна, солідарна економіка: концептуальний ескіз / А.С. Філіпенко // Економіка України. - № 6, 2016. - С. 19-28. (Filipenko A.S. Public aligned economy: a conceptual sketch / Filipenko A.S. // Economics of Ukraine. - Nr. 6, 2016. - pp. 19-28.)

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