Services Export in Developing Economies

Abstract

This paper examines the structure of services exports in less developed economies. In more developed countries, complex services, such as maintenance and repair or information and communication technologies (ICT), and simple services, such as international tourism, both play an important role. However, in less developed economies, less complex sectors prevail. In the case of the latter, the sectoral structure is associated with a number of disadvantages. First, these sectors are predominantly exported on a regional rather than global scale, and second, as the experience of the COVID-19 pandemic shows, they are sensitive to particular global shocks. This does not imply that developing economies should invest less in these services, as the structure of production factors limits their ability to form viable alternatives. However, developing countries could pay more attention to those service industries that, on the one hand, do not require building a wide variety of complex and costly production ingredients such as innovation systems or large-scale production facilities and, on the other hand, provide more opportunities to export globally, create more high-quality jobs and are more resilient to global shocks. The ICT sector is used as an example of such an industry. This is not to suggest that the ICT sector can become a driving force of prosperity in the developing world; its effect is likely to be modest. Nevertheless, due to the specificities of the ICT sector, it might deliver many more success stories than a typical industrialization strategy.