World trade in services
Data extracted in May-June 2017
Planned article update: June 2019
In 2016, the EU was the world’s largest exporter and importer of services.
In 2016, EU international trade in services accounted for 31 % of the total value of trade in goods and services.
Globalisation patterns in EU trade and investment is an online Eurostat publication presenting a summary of recent European Union (EU) statistics on economic aspects of globalisation, focusing on patterns of EU trade and investment.
Services are an increasingly important part of the global economy and play a central role in each of the EU Member States. The services sector contributes considerably more (than the industrial economy) to gross domestic product (GDP) and job creation within the EU-28, accounting for approximately three quarters of total economic activity. However, as described above, the global value of international trade in goods is slightly more than three times as high as that for trade in services. This imbalance in levels of international trade may be attributed, among others, to the intangible nature of services, for example:
- some services are non-transportable and can only be consumed at their point-of-sale requiring either producer or consumer to cross a border in order to be exported;
- many countries regulate areas like professional services — for example, the legal profession, tax consultants or accountants — which are bound by national legislation;
- there are a range of services (at least in Europe) which are largely supplied by the public sector, for example, health or education services and trade in these areas is often restricted;
- services cover a heterogeneous range of products/activities that are difficult to encapsulate within a simple definition, often these are tailored specifically to a client’s needs and so unlike goods, they have a tendency not to be homogeneous, mass-produced items; as such they are sometimes difficult to separate from the goods with which they may be associated or bundled.
Box 1.1 Four modes of service supply
An important distinction should be made between international trade in goods and trade in services, insofar as the latter may be provided via different ‘modes of supply’. For trade in services to take place, it is often necessary for the service provider and the end-consumer to be within close physical proximity (for example, when an individual goes to get their hair cut, or when a gardener visits someone’s house to remove a tree). The general agreement on trade in services (GATS) defines four ways (or modes) for trade in services to take place:
- those services supplied from one country to another (for example, an international telephone call), which are referred to as ‘cross-border supply’ (mode 1);
- consumers or enterprises making use of a service in another country (for example, tourism), referred to as ‘consumption abroad’ (mode 2);
- a foreign enterprise setting-up a subsidiary or branch to provide services in another country (for example, a foreign bank), referred to as a ‘commercial presence’ (mode 3);
- individuals who may travel from their own country to supply services in another (for example, an economic consultant), referred to as the ‘presence of natural persons’ (mode 4).
By contrast, technological developments have increased the tradability of some services, for example, in areas such as retail trade, finance or entertainment, where digital services have been used to extend the reach of services and improve consumer access.
International trade in services - overview
Statistics on international trade in services
The main methodological reference used for the production of statistics on international trade in services are:
- the International Monetary Fund’s (IMF’s) Balance of Payments and International Investment Position Manual (BPM6);
- the IMF’s Balance of Payments and International Investment Position Compilation Guide (BPM6 CG);
- Eurostat’s BoP Vademecum reference document for the transmission of data on international trade in services;
- the United Nations’ manual on statistics of international trade in services (MSITS 2010);
- the balance of payments services classification (EBOPS 2010).
All of the international trade in services statistics presented in this publication are based upon the BPM6 methodology, adopted by the EU Member States from reference year 2013 onwards. A time series exists starting in 2010 for the EU-28 aggregate as Eurostat have estimated missing values prior to 2013 when they have not been provided by Member States. Less detailed services data, used as components for the quarterly balance of payments are available for the EU-28 since 1999, with even longer time series available from some Member States.
Statistics on international trade in services provide the monetary value of such trade for three different modes of supply identified in the GATS (the first, second and fourth - see section 'Box 1.1 Four modes of service supply' above). As such, the information presented in this section excludes services provided by foreign affiliates (mode 3) to other economies, as they are considered non-residents in the compiling country/economic area. The data are produced from transactions recorded under a country’s balance of payments (based on the trade that takes place between an economy’s residents and non-residents).
In 2016, the EU-28 was the world’s largest exporter and importer of services
The EU-28 is the world’s largest trader of services: in 2016, it accounted for almost one quarter (23.9 %) of global exports and just over one fifth (20.8 %) of global imports; for comparison, the shares of the United States were 19.8 % for exports and 13.7 % of imports, while those for China were 5.5 % for exports and 12.3 % for imports (see Table 1).
The United States ran the largest trade surplus for trade in services among the leading trading nations that are shown in Table 2 — some EUR 224 billion in 2016— while the EU-28 had the second largest surplus (EUR 130 billion); there were only three other countries that recorded trade surpluses for international trade in services in 2016, namely, India, Hong Kong and Turkey.
The highest cover ratios — the value of exports divided by the value of imports, expressed as a percentage — for trade in services were recorded for Turkey (169.8 %) and India (168.7 %), suggesting that the relative importance of service exports was particularly high for each of these economies, in particular, transport services and personal, cultural and recreational services in Turkey and telecoms, computer and information services in India.
China had a sizeable trade deficit for services in 2016
By contrast, the biggest deficit for international trade in services was recorded by China (EUR 221 billion in 2016), as the value of its services exports (EUR 188 billion) was less than half the value of its imports (EUR 409 billion); this trade gap was also depicted through the value of the Chinese cover ratio for services (46.0 % in 2016), which was the lowest among the 15 countries for which data are shown.
In 2016, EU-28 international trade in services accounted for 30.7 % of the total value of trade in goods and services — this share has been rising in recent years
Figure 1 provides an alternative analysis of aggregate figures for total services, presenting the relative importance of international trade in services compared with the overall value of trade in goods and services. In 2016, services accounted for an average share of 23.3 % of the world’s trade in goods and services; this could be compared with a share of 20.0 % some six years earlier, confirming that services were a growing part of world trade.
Within the EU-28, the relative share of services in total trade for goods and services also rose between 2010 and 2016, from 26.8 % to 30.7 %, as international transactions for services became increasingly important to the performance of the EU economy. Using this same measure, the relative importance of services in total trade for goods and services grew at a slightly faster pace (than in the EU-28) in Russia and Japan, and at a quicker pace still in China and Singapore. By contrast, the share of services in total trade fell modestly between 2010 and 2016 in South Africa, Turkey and Hong Kong; the only countries to record a contraction.
Between 2010 and 2016, China recorded the fastest growth for trade in services
During the period 2010-2015, the value of EU-28 exports of services increased every year, rising from EUR 569 billion in 2010 to EUR 832 billion in 2015 (an overall increase of 46.2 %); this pattern ended in 2016, as the value of exports fell slightly (down 1.4 %) to EUR 820 billion.
During the same period, the value of EU-28 imports of services grew each and every year, rising from EUR 461 billion in 2010 to EUR 690 billion in 2016, equivalent to an overall increase of 49.7 % (see Figure 2).
Some of the EU’s global competitors reported even faster rates of growth for the value of their international trade in services. Nowhere was this more apparent than in China, as imports grew almost four-fold between 2010 and 2016, while the value of services exports more than doubled.
International trade in services - by service category
Statistics on international trade in services by service category
Since the adoption of the sixth edition of the Balance of Payments and International Investment Position Manual (BPM6), international trade statistics for services have been grouped into 12 main categories: manufacturing services on physical inputs owned by others; maintenance and repair services; transport; travel; construction; insurance and pension services; financial services; charges for the use of intellectual property; telecommunications, computer and information services; other business services; personal, cultural and recreational services; government goods and services. Note that more detailed information is collected for 97 different services and that these data are available in Eurostat’s online database for more in-depth analyses.
In 2016, the EU-28 was particularly specialised in exporting other business services …
Table 3 shows the countries which recorded the highest levels of trade across each of the 12 main service categories in 2016. As for international trade in goods, the leading global exporters and importers of services, in absolute terms, are unsurprisingly some of the largest economies. The EU-28 had the highest value of exports for half of the service categories shown (6 out of the 12). However, the size of the export markets for these different services varied considerably: EU-28 exports of other business services (which include, among others, research and development services, legal, accounting, business and management consulting services, advertising, architectural, engineering, scientific and other technical services) were valued at EUR 224 billion (equivalent to 27.3 % of all EU-28 exports of services in 2016), while at the other end of the range, exports of personal, cultural and recreational services were valued at EUR 9.7 billion (1.2 % of the EU-28 total). The four other services where the EU-28 recorded the highest global levels of exports in 2016 were: transport services; telecommunication, computer and information services; insurance and pension services; manufacturing services.
The EU-28 recorded the highest value of imports for 7 out of the 12 service categories shown in Table 3 — maintenance and repair services; transport; financial services; the use of intellectual property; telecommunications, computer and information services; other business services; personal, cultural and recreational services — with imports peaking at EUR 222 billion for other business services, which was almost one third (32.2 %) of the total value of services imported into the EU-28 in 2016.
… while emerging economies often recorded the highest export specialisation rates across different service categories
Table 4 provides an alternative analysis focusing on relative specialisation ratios. The highest ratios were often recorded for emerging economies and were spread across a broad range of economies. For example, China had the highest specialisation ratio in 2016 for manufacturing services, whereas India was the most specialised country for exporting telecommunication, computer and information services (the relative share of this category in Indian exports was four times as high as the average for the 15 leading trading nations for which this analysis is presented). Turkey (transport services; personal, cultural and recreational services) and Mexico (travel services; insurance and pension services) were the only countries to appear more than once in the ranking of the most specialised exporters for these 12 different service categories.
The information presented in Table 5 reverses the focus of the analysis, detailing for each country where its relative trade specialisation (among the 12 service categories which form the basis of this analysis) lies. In 2016, the highest specialisation ratios for the EU-28, for both exports and imports, were recorded for personal, cultural and recreational services. Results for some of the other countries confirm, for example, the relative importance of exports of: travel services from Australia and South Africa; financial services from Hong Kong; telecommunication, computer and information services from India; or charges for the use of intellectual property from the United States.
Source data for tables and graphs
- Balance of payments, see:
- Balance of payments - International transactions (BPM6)
- Balance of payments, see:
- Balance of payments - International transactions (BPM6)
- International trade in services, geographical breakdown (BPM6)
- Balance of payments
- Balance of payments - international transactions (BPM6) (ESMS metadata file — bop_6_esms)
- International trade in services