Servicification and Industrial Exports from Asia and the Pacific (original) (raw)
2015, AARN: Globalization & Transnationalism (Topic)
Highlights "Servicification" is most simply defined as an increased use of services in manufacturing processes. The impact of servicification on the competitiveness of the industrial sector has not been adequately addressed, especially in policy discussions, because of limited data availability. However, the OECD-WTO TiVA database now fills this gap for a selected number of economies. This issue of Trade Insights considers how developments in the service sector have encouraged and promoted industrial exports from Asia-Pacific economies. Key findings: Services accounted for 29.4% of the total value added in the industrial exports of Asia and the Pacific in 2009. OECD-WTO TiVA data shows that the spread of global value chains (GVCs) in the region has also resulted in an expansion of servicification across Asia-Pacific developing economies. The share of intraregional imports of services increased, especially in GVCrelated industrial exports. Republic of Korea and China are the economies that benefited the most in terms of intraregional export growth in services. In contrast, Japan has lost its market share. Distribution-related services and business services are the major elements of service inputs to industrial exports from Asia and the Pacific. These services accounted for 9% and 7.5%, respectively, of industrial exports from the Asia-Pacific region in 2009. Business services contribute extensively to the exports of electrical equipment, machinery, and transport equipment. These happen to be the sectors where multinational corporations (MNCs) have an intensive presence. Although domestic sourcing of services remains dominant, especially in the cases of agriculture and mining exports, the contribution of imported services has been rising. The share of imported services in industrial exports increased from 7.6% in 1995 to 11.1% in 2009. The increase of service imports is particularly rapid in the case of business services. Liberalizing services trade would allow cheaper imports of services inputs and facilitate cost-efficiencies in Asia-Pacific supporting industrial production through GVCs. Liberalization should not be restricted to regional South-South liberalization, as developed economies remain the dominant source of imported service inputs.
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