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Services and structural transformation for development

Services and structural transformation for development
Photo credit: World Bank

27 Mar 2018

This report contains papers and contributions delivered at the fifth session of UNCTAD’s multi-year expert meeting on trade, services and development: the role of the services economy and trade in structural transformation and inclusive development, held on 17-19 July 2017.

The Nairobi Maafikiano, adopted at UNCTAD XIV in 2016, called upon the United Nations Conference on Trade and Development (UNCTAD) to “(c)ontinue and reinforce its work on trade in services, services data and statistics and analysis of trade and services for development”. It also mandated UNCTAD to “(c)ontinue and further enhance its work on infrastructure services and support developing countries in the establishment of policy, regulatory and institutional frameworks that contribute to infrastructure development”.

Based on this mandate and also on the outcome of the Trade and Development Board, UNCTAD convened the fifth session of the multi-year expert meeting on trade, services and development to focus on the role of the services economy and trade in structural transformation and inclusive development, as key issues for trade and development. Particular attention was given to infrastructure services such as energy, financial, telecommunications and information and communication technology (ICT), and transport services.

This session builds on the outcomes of the previous four sessions of the multi-year expert meeting on trade, services and development (2013-2016) and on the four sessions of the multi-year expert meeting on services, development and trade (2009-2012).

This was therefore the ninth edition of this unique platform to develop an extended network of experts and partnerships, to improve understanding and generate policy insights to support countries’ efforts to formulate and implement suitable and coherent policy, regulatory and institutional frameworks and engage in international trade, negotiations, trade agreements and cooperative frameworks, at multilateral and regional levels, which enable the development potential of services.

The platform has served for policy options, exchange of experiences and lessons learned between countries and to enhance the coherent contribution of services to the 2030 agenda for sustainable development and its sustainable development goals (SDGs). Achieving these global goals is, to a great degree, a services agenda.

The potential of the services economy and trade for economic transformation, growth, poverty eradication and job creation, is recognised in several goals and targets of these global goals. Many presume efficient and equitable services and their achievement relies on universal access to basic services and infrastructure, including health, education, water and sanitation, energy, financial, transport, telecommunication and ICT services.

The importance of the services sector derives from the servicification trends, where services have major contributions to output, employment and investment and an increasing relevance in international trade, where it has grown more than goods, more resiliently, and more in developing countries.

In addition, services can provide intermediate inputs to all economic activities, be bundled with goods, and be developed within manufacturing companies. Through all these effects, the services sector induces efficiency, effectiveness, productivity and productive and export capacity, particularly in micro, small and medium enterprises. It can thus promote a structural transformation that can support diversification and upgrading aspirations.

Harvesting this potential requires sound and evidence-based policy, regulatory and institutional frameworks. With these regulations as a precondition, international trade can strengthen services sectors and enhance this potential for a services-led growth through pro-development economic adjustment. It is therefore crucial to address domestic-supply constraints and to achieve coherence between several policy areas, as well as between these areas and trade liberalization.

This publication reflects the deliberations and results of the fifth session of the multi-year expert meeting on trade, services and development on services, structural transformation and inclusive development. Together with the multi-year expert meeting, this publication is part of UNCTAD’s overall toolbox to assist countries in developing regulatory and institutional frameworks to allow harvesting the benefits of services for economic transformation and development.

The Global Services Forum, also a part of this toolbox on services, is another important platform to share best practices and form partnerships in trade in services. UNCTAD has also developed country surveys, case studies and dedicated research.

Services Policy Reviews, another central element of this toolbox, provide support to policymakers and regulators in assessing the potential of services productive capacities and trade and the robustness of regulations and institutions. This allows identifying constraints for the development of the services economy and trade and also practical solutions and policy options for best-fit practices to improve services performance. Services Policy Reviews draw on UNCTAD’s longstanding experience of more than 20 years supporting the national assessment of services.

This publication also draws from the results of this toolbox with a view to assist developing and least-developed countries to pursue their development objectives by strengthening their services economy and trade.

This publication was edited and prepared by Mina Mashayekhi, Head of the Trade Negotiations and Commercial Diplomacy Branch (TNCDB) of the Division on International Trade in Goods and Services, and Commodities (DITC) of UNCTAD, and Bruno Antunes, Economic Affairs Officer of the TNCDB, DITC of UNCTAD.