International Trade in Services

International
Trade in Services
NEW TRENDS AND OPPORTUNITIES FOR
DEVELOPING COUNTRIES
5DWWDQHR?0LFKDHO(QJPDQ?6HEDRUVREHUQVWLiQ6iH]?HU2OLYLHU&W06W(GLWInternational
Trade in ServicesInternational
Trade in Services
New Trends and
Opportunities for
Developing Countries
Olivier Cattaneo, Michael Engman,
Sebastián Sáez, and Robert M. Stern,
Editors
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ISBN: 978-0-8213-8353-7
eISBN: 978-0-8213-8354-4
DOI: 10.1596/978-0-8213-8353-7
Library of Congress Cataloging-in-Publication Data
International trade in services : new trends and opportunities for developing countries / edited by Michael
Engman ... [et al.].
p. cm.
Includes bibliographical references and index.
ISBN 978-0-8213-8353-7—ISBN 978-0-8213-8354-4 (electronic)
1. Service industries—Developed countries. 2. International trade. I. Engman, Michael, 1976 -
HD9989.D44I588 2010
382'.45—dc22
2010017084
Cover image: “Purple Door,” by Ahmed Abushariaa, 2005, courtesy of the World Bank Art Program.
Cover design by Tomoko Hirata/World Bank.CONTENTS
About the Editors and Contributors xiii
Foreword xv
Acknowledgments xvii
Abbreviations xix
1 Assessing the Potential of Services Trade
in Developing Countries: An Overview 1
Olivier Cattaneo, Michael Engman, Sebastián Sáez,
and Robert M. Stern
2 Increasing Labor Mobility: Options for Developing
Countries 29
Sherry Stephenson and Gary Hufbauer
3 Legal Services: Does More Trade Rhyme
with Better Justice? 67
Olivier Cattaneo and Peter Walkenhorst
4 Health without Borders: International Trade
for Better Health Systems and Services 99
Olivier Cattaneo
5 Market Structure, Liberalization, and Trade:
The Case of Distribution Services 141
Julian Arkell
6 Building Empires Overseas: Internationalization
in the Construction Services Sector 177
Michael Engman
7 Exporting Information Technology Services:
In the Footsteps of India 219
Michael Engman
vvi Contents
8 Accounting Services: Ensuring Good Governance,
Financial Stability, and Economic Growth
through Trade 263
Olivier Cattaneo and Peter Walkenhorst
9 Engineering Services: How to Compete in the
Most Global of the Professions 293
Olivier Cattaneo, Linda Schmid, and Michael Engman
10 Understanding Trade in Environmental Services:
Key Issues and Prospects 319
Nora Carina Dihel
Index 349Contents vii
Boxes
2.1 Extent of Temporary Labor Migration 31
3.1 Some Key Facts about Legal Services 69
3.2 Growth and Investment Have Created a Viable Market
for Legal Services in Developing Countries 70
3.3 The Four Modes of Supply for Legal Services 72
3.4 Using Foreign Legal Consultants to Facilitate Trade 78
3.5 Self-Regulation Often Results in Cartelization of
the Legal Profession 81
3.6 Professional Bodies Play a Prominent Role in Legal
Skill Development 82
3.7 Cost Pressures Force Clients to Rethink Their Approach
to Legal Services 86
3.8 Negotiating Mutual Recognition Agreements Can
Facilitate Trade in Legal Services 87
3.9 Negotiating Fast-Track Visa Procedures to Facilitate
Crossborder Movement 89
4.1 Case Study: Remedying Health Shortages through Trade
under Modes 4 and 2, Oman 105
4.2 Case Study: Remedying Health Shortages through
Trade under Mode 3, India 108
4.3 Case Study: Travel and Health Industries Commingling,
Thai Airways 114
4.4 Case Study: Exports of Offshore Medical Transcription Services,
the Philippines 115
4.5 Case Study: Exports under Mode 2, ASEAN 118
4.6y:ode 4, Tunisia 122
4.7 Case Study: Mitigating the Distributive and Other Adverse Effects
of Trade in Health Services, Thailand 124
4.8 Case Study: SWOT Analysis, Health Services Trade, Morocco 127
4.9y: Regulatory Audit for Health Services, Tunisia 129
4.10 Seizing Opportunities in the United Kingdom: The Case
of South Africa 131
4.11 Case Study: A Successful Government-Led Strategy to
Develop Medical Tourism, Cuba 132
5.1 Principal Activities in the Distribution Sector 142
5.2 Estimates of the Economic Scope of the Distribution Sector 143
5.3 Selected Developing-Country Experiences in the
Distribution Service Sector 146
5.4 Examples of Multinational Retailers with Foreign Affiliates 148
5.5 Regulatory Reform in the Retail Sector 156
6.1 The Main Characteristics of the Construction Service Sector 178
6.2 What Do Construction Services Cover? 180
6.3 Facilitating the Administration of Building Permits 197viii Contents
6.4 Chinese Construction Companies Dominate the
Infrastructure Market in Africa 198
6.5 Enhancing Transparency: World Bank Guidelines on
Notification and Advertising 199
6.6 Initiatives to Prevent Corruption in Construction Projects 201
6.7 Homegrown Champions Exporting Construction Services 208
7.1 Egypt as an Emerging Offshore Location for IT Services 224
7.2 The Value of Securing an Anchor Investor 227
7.3 Raising Internet Connectivity in Africa 233
7.4 NIIT: A Private Initiative to Train Personnel for IT Service Careers 236
8.1 The Four Modes of Supply of Accounting Services 266
8.2 Affiliations of Developing-Country Accounting Firms
with the Big Four 268
8.3 Examples of Domestic Regulations That May Impede
Trade in Accounting Services 271
8.4 Price Controls: Legitimate Policy Objectives and Adverse Effects 272
8.5 International Accounting and Auditing Standards 274
8.6 Reports on the Observance of Standards and Codes 277
8.7 An Example of a Regional Agreement on the Mutual
Recognition of Qualifications 279
8.8 Investing in Education to Meet International Standards:
The Case of Zambia 280
9.1 Definition of Engineering Services 294
9.2 The Four Modes of Supply of Engineering Services 298
9.3 An Example of Trade Success: Tunisian Engineering Firms 300
9.4 The Contribution of Regionalism to Integration in the
Engineering Service Trade 308
9.5 Addressing the Fears Associated with Trade Opening:
Accompanying Measures 309
9.6 Articulating Microstrategies and Macrostrategies 311
10.1 What Do Environmental Services Cover? 320
10.2 Explaining the Growth Potential of Environmental Markets:
The Environmental Market Development Model 325
10.3 Case Study: Trade in Environmental Services, Mexico, 2001–06 327
10.4 The Participation of Developing Countries in Environmental
Services 328
10.5 Market Challenges Faced by Environmental Service
Firms at Home 336
Figures
1.1 The Expanding Role of the Trade in Services in the World
Economy, 1977–2007 3
1.2 Trade, by Region, 2007 4
1.3 Trade in Services, by Region, 2007 5