Services trade within Central and Eastern Europe region: determinants, barriers, effects
Author:Ph.D. Nela Popescu
JEL:
DOI:
Keywords:services trade; technological
progress; services liberalization;
domestic policies
Abstract:
Under central planning, services industries
were generally neglected. Marxist thinking
emphasized the importance of tangible
(material) inputs as determinants of economic
development, and classified employment in the
services sector as unproductive. Since 1990,
the services sector has grown rapidly in the
countries of Central-Eastern Europe Region.
Foreign investment, especially foreign direct
investment (FDI), has played an important role
in this process.
But there are some important differences
between goods and services trade. While
much of trade theory has developed around
the trading of goods, less theoretical and
empirical work has focused on trade in services.
While some services (architectural
drawings, consultant reports etc.) are tangible,
visible, and storable and are thus like
many other goods, many services require
direct interaction between producers and
consumers. This proximity requirement means
that for many services, factors of production
(labor and capital) must be mobile for international
transactions to occur. For this reason,
the real barriers to increased trade in
services are not simply tariffs, but rather,
beyond those at the border. Clearly removing
barriers to trade in fundamental services
such as transportation, communications,
information processing etc. will help to facilitate
economy-wide gains.
Nevertheless services themselves are
becoming increasingly tradable as a result of
the greater mobility of people and developments
in information, computer, and telecommunications
industries.The purpose of this
paper is to analyse main factors influencing
services trade.