Integrating Developing Countries in the Global Services Economy
The better integration of developing countries in the global services economy should be a priority for Governments across the world and the international community as a whole. Indeed, there is potential for development-enhancing trade in services, including as promoted through the General Agreement on Trade in Services (GATS). The gains stemming from the liberalization of services could potentially be larger than in all other areas of international trade. It is widely recognized today that carefully designed and prepared liberalization can contribute to improve the economic performance of developing countries through their integration in the world economy. This improved performance is, inter alia, the result of increased competitiveness and market opportunities for developing country exports and accompanying transfers of skills, information and technology. However, in order for developing countries to benefit from these potential gains they will need to strengthen their domestic supply capacity while reconciling trade, development, social and equity considerations.
The potential for gains in trade in services should not conceal the fact that these gains are not automatic. Indeed, developing and least developed countries have not all gained from liberalization and some have remained marginalized in the world economy.2 This points to the fact that some preconditions may be necessary in order for countries to benefit fully from the opportunities offered by participation in the global services economy. These include coherent domestic services and development strategies; adequate regulatory, institutional and competition frameworks; as well as the necessary infrastructure. It also indicates that there may be room for improving the multilateral trading system. Among the reforms of the system that can be imagined are the full implementation of the rules and obligations of the system (as some benefits have not materialized simply because the rules have not been implemented so far); the operationalization and improvement of the special flexibilities in favor of developing and least developed countries; the inclusion of measures effectively addressing developing and least developed countries supply constraints; and the completion of the GATS framework (i.e. the GATS Rules and domestic regulation provisions) in a manner which is supportive of development.