International trade dynamics have been significantly altered in this new millennium due to the influence of many factors, including developments in information technology, natural disasters, global wars, financial crises, and geopolitical tensions. This has changed the scenario of trade among countries and commodity prices. Growing the importance of service trade has upgraded the economy and helped in uplifting millions of people from poverty. Over the past several decades, the international trading in commercial services has been less volatile as compared to that in merchandise trade.
Services Exported by Leading Countries
Over the last 20 years, global exports of computer and information services have expanded more rapidly than those of any other service sector, showing as much as 18% growth on average annually in the same time period. Due to rapid technological developments, communication services have seen immense growth over the last few years. Particularly, the telecommunication sector has shown resilience to trade turmoil and has reached estimated growth of USD 115 billion in 2014. Financial service sector is the next dynamic sector but was affected by the financial crisis that hit international trade, particularly in Europe.
According to international trade statistics, the United States of America, the United Kingdom, and China have become the leading exporters in the global commercial service trade.
The United States leads the pack among premier exporters of commercial services. Service sector accounts to 80% of the GDP and creates the highest number of employment opportunities. With the advent of latest technologies, global trade has taken a new shape. Sectors such as travel and tourism, transportation services, education, and banking have rapidly increased with their high export potentials. U.S. services exports to China have recently grown more rapidly than those with any of its other major trading partners.
The United Kingdom's exports of services has continued to rise in recent years, and witnessed its largest annual increase of all time in 2013. Professional, scientific and technical activities sectors are the leading services contributing to the rise in exports. Exports of services to Europe have increased in the last few years, Switzerland being its largest trading partner and Germany taking second place.
China overtook Japan as the leading Asian exporter in 2004, doing so three years after its entry into the World Trade Organization (WTO). China proactively took steps to streamline its trade in services and made efforts to expand exports of high value. Exports of services thereby accelerated rapidly. Export values of transportation, tourism and construction services increased significantly.
Geopolitical Impacts of Commercial Service Exports
The pattern of trade in services suggests that increases in the prices of exports of one country will have an impact on the prices in other countries. The rise in export of services and swift change in the trading economy, government of most of the developed and developing countries have looked into their economic and trade policies making them hassle-free and less complicated.
The share of exports into the developing world has increased considerably over the last two decades. Europe and Asia have been the leading destinations for exports. Opening up of e-commerce has made it easy to improve the trading relations among the countries resulting in the creation of many jobs around the world apart from improving economic relations between nations.