Nov 2006, Globalization of Services

Conference on Globalization of the Production of Services, Implications for Small Open Economies

Summary of the speeches

Keynote Speaker

Mr Sten Tolgfors,
Minister for Foreign Trade at the Ministry for Foreign Affairs

The Minister of Foreign Trade, Mr Sten Tolgfors opened the conference by presenting the Swedish government’s view on trade in services. Trade in services is becoming increasingly important and he emphasized that the Swedish government prioritizes the GATS negotiations. The government believes that simplification and transparency of legislation are vital issues, as well as giving developing countries access to the European markets for services. Other important priorities are the implementation of the European Commission Services Directive, and working for increased openness and competition within the EU.

Speech, PDF

Globalization of IT Services and White-Collar Jobs: The Next Wave of Productivity Growth

Catherine L Mann,
Ph.D., Institute for International Economics

Dr Catherine Mann explained how investments in IT and the globalization of the services sector interact to change the characteristics of the economy. Firms become more fragmented and specialized, which enhances productivity, but the implications for labor are not entirely positive. Globalization leads to an increased wage and employment gap, where the high-wage IT-services employment increases while the low-wage employment in the same sector decreases. The challenge for policy makers on a national level is to ensure a business environment that is conducive to transformation and a well-functioning matching process on the labor market to share the gains. However, national gains also depend on other countries’ policies, why services liberalization on a global level is important.

Presentation, PowerPoint

Globalization of Services: What do We learn from Trade Theory?
James R Markusen,
Professor, Department of Economics, University of Colorado at Boulder

Professor James Markusen presented a new approach to formally model the effects of trade liberalization on national production and wages in previously non-tradable services. The model indicates that a small, high-skilled economy can benefit from liberalization in a number of ways: Off-shoring the production of downstream parts, which are costly to produce nationally, and access to foreign services increase the competitiveness of skilled-labor intensive production nationally. Domestic services firms gain from the access of foreign markets since it enables them to spread fixed costs over a larger output. However, there is some preliminary evidence that the wage gap increases due to off-shoring.

Presentation, PDF

Published in Journal of Industry, Competition and Trade, No. 3-4 2008, p. 231-246.

 Business Perspective
Peter Lageson,
Senior Vice President, IBX Europe

Peter Lageson sees a large shift from manufacturing to services sourcing. E-sourcing reduces costs by 20-30 percent, and the development of IT technologies gives service providers considerable economies of scale. In the case of delivering software for instance, you can handle several clients on one single server while still being able to customize the product according to each client’s needs. Countries in Eastern Europe are becoming increasingly interesting as producers of services for European companies; in countries such as Romania skills are increasing fast and you can buy entrepreneurial skills at one fifth of the cost in Sweden.

Presentation, PowerPoint

The Importance of Cross-Border Acquisitions in Services

Lars Persson,
Ph.D., Deputy Director of the Research Institute of Industrial Economics

Dr Lars Persson presented a theoretical framework to analyze the impact and welfare effects of cross-border M&As and new ventures in services. Among the main findings is that authorities should ensure competition in the bidding over a firm, enable new entries to reduce market concentration, and be aware of preemptive acquisitions. Cross-border M&As can be welfare enhancing if the merger increases the productivity of the firm, hence there is no reason to employ discriminatory policies towards MNEs

Presentation, PowerPoint

Published in Journal of Industry, Competition and Trade, No. 3-4 2008, p. 269-293.

High-Tech Tradable Services in the United States: Size, Scope, and Implications


J Bradford Jensen,
Ph.D., Institute for International Economics

Dr J. Bradford Jensen presented an empirical study about the prevalence and impact of trade in services. He estimates that 14 percent of U.S. employment is in services that are tradable, and a fair share of occupations is tradable in non-tradable sectors. The average employee in a tradable service is male, white, has a college degree and high earnings. The typical firm that trades in services has higher sales and labor productivity, pays higher wages and is part of a geographically concentrated industry. In conclusion he suggested that we should expect trade in services to have a similar impact as trade in manufacturing had; to encourage reallocation of activities towards the U.S. comparative advantage which will result in productivity growth.

Published in Journal of Industry, Competition and Trade, No. 3-4 2008, p. 181-197  


The Globalization of Intellectual Property

Keith E Maskus,
Professor, Department of Economics, University of Colorado at Boulder

Professor Keith Maskus discussed the protection of intellectual property rights in service industries. Since many of the tradable services are high-tech there is a need for intellectual property protection, but one problem with the globalization is that different countries have different policies. Existing international agreements, such as TRIPS, do not provide enough protection for some services, such as digital content. Intellectual property protection is also considered to encourage innovation, but there exist few studies on cross-country or cross-industry innovation in services. Policy makers are faced by the challenge to provide adequate intellectual property protection that is suitable for the specific characteristics of innovation in services, both nationally and internationally.

Presentation, Powerpoint

Published in Journal of Industry, Competition and Trade, No. 3-4 2008, p. 247-267.

Services Policy Reform and International Trade Agreements

Bernard Hoekman,
Ph.D., The World Bank

Dr Bernard Hoekman discussed the problems of achieving results in the Doha-round of the GATS expansion, and suggested some possible remedies. Some reasons behind the inability to achieve result could be that there in general is less need for trade agreements, there is uncertainty about the resulting costs and benefits, and there is a growing xenophobia preventing public consent for importing foreign labor or trading in services. Dr Hoekman suggests among other things that the remedy involves removing a generally applicable regulation from the agenda, and rather focuses on individual solutions that suits the needs of specific sectors or specific sets of countries.

Presentation, Powerpoint

Published in Journal of Industry, Competition and Trade, No. 3-4 2008, p. 295-318.

Panel: Internationalization of Services: Implications for a Small Open Economy

Mattias Ganslandt,
Ph.D., Research Institute of Industrial Economics

The concluding panel discussion was moderated by the conference chairman, Dr Mattias Ganslandt. The discussion focused on the topics of how Sweden can gain from services globalization, how those gains can be achieved and distributed, and what structural changes are needed.

The panel discussion


Leading Research Environment

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