International Trade In Services

International trade in services, which makes up a major share of the invisible account of the Balance of Payments, has been growing fast. It increased from $800 billion in 1990 to about $1435 billion in 2000 and to about $1.8 trillion in 2003. During the 1980‘s trade in services grew faster than that of the goods increasing its share in the total global trade from 17 per cent in 1980 to 20 per cent in 1990. The share of services in the total global trade remained more or less the same (about one-fifth) since then. In 2003, while the merchandise trade grew by 4 per cent, the services trade increased by 12 per cent. The combined trade in goods ($7.3 trillion) and services ($1.8 trillion) crossed $9 trillion in 2003. It is pointed out that the ?internationalization of services is reflected in the growth of both trade and foreign direct investment flows. Both have been driven by innovation in information and communication technology that allowed increasing specialization. As of early 1990s, about 50 per cent of global stock of FDI was in services activities. The services sector which contributes more than 60 per cent of the world GDP is growing fast. It is the largest sector in most of the economies and it is the fastest growing sector in many of them. The development economies are primarily service economies in the sense that the service sector generates bulk of the employment and income. The growth rate of trade in services was faster than that of goods. Travel and transportation account for major share of the services trade. In 1997, travel accounted for about one-third and transportation about one-fourth of the services exports. However, trade in other commercial services has been growing faster than these two categories. Travel and transportation account for major share of the services trade. International trade in many services involves international factor mobility. There are number of international transaction involving temporary factor relocation services such as those requiring temporary residence by foreign labour to execute services transactions.