chapter 3 emergence of new sources for growth · 2018. 11. 21. · chapter 3 emergence of new...

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Chapter 3 Emergence of new sources for growth

【Key points of Part I, Chapter 3】

While goods trade has slowed down around the world, services trade is steadily growing. The size

of the global market is 1.2 trillion U.S. dollars for travel services and 1.1 trillion U.S. dollars for

consulting and other business services. There are also signs of change in the industrial structure, such

as an industrial shift to the platform business model, the entry of IT companies into such sectors as

autonomous driving, healthcare and financial services and the arrival of product-related services using

big data analysis.

In 2014, the ratio of exports of services to GDP in the G20 countries as a whole reached 6.4%. The

ratio is particularly high in the United Kingdom, France and India. Some countries are expanding exports

in specific sectors, such as financial services in the case of the United Kingdom, information and

communications in the case of India, transport in the case of the ROK and tourism in the case of Turkey.

Section 1 Rise of the services industry and expansion of services trade

As has been mentioned in the past White Papers on International Economy and Trade,110 the shift

of priority in trade to services is proceeding at the same time as the shift of the priority in industry to

services in line with the growth of the world economy. In recent years, services trade has become

increasingly active because the constraint of proximity111 between consumers and producers in the

provision of services has been reduced by the spread of the shift of priority in industry and trade from

developed countries to emerging countries and also by the advance of information and communications

technology.

Countries are focusing on sectors where they have an advantage in promoting services trade, but

developed countries tend to increase income from abroad in this way more than emerging countries. In

light of such trends, this section will analyze the current status of the shift of priority to services in

emerging countries, with the main focus on China, where the shift is particularly prominent, and will

also provide an overview of the current status of services trade, which is expanding around the world.

1．Rise of the services industry in emerging countries

(1) Progress in the shift of priority in the economy to services

The phenomena of the priority in economic activities shifting from agriculture, forestry and fishery

(primary industry) to the manufacturing industry (secondary industry, and then to the non-manufacturing

industry (service industry, or tertiary industry) in line with economic development is known as the

110 The shift of priority in industry to services and services trade are challenges that are old but also new,

and they have been discussed in the White Paper on International Economy and Trade in the past few decades. The first appearance of the term “services trade” in the White Paper on International Economy

and Trade’s table of contents is presumably in the 1986 edition of the white paper that was published 30

years ago. However, the specifics of services trade have changed. For example, the White Paper on International Economy and Trade 2006 observed as follows: “In the actual international economy as well, such a shift is observed mainly in advanced countries, while it is not so apparent in developing nations

which are now going through economic developments”. However, as of 2016, the shift is actually ongoing

in developing countries. 111 Tanaka (2015).

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“Petty-Clark’s law.112 Until now, the shift of priority in industry to services has proceeded mainly in

developed countries, but in recent years, it has also made significant progress in emerging countries in

line with their remarkable economic development.

When we look at changes in the share of value added by the services industry in GDP in countries

and regions classified into five groups based on the income level according to the World Bank’s

definition,113 we can see that the share has stayed stable at a high level of around 75% in the OECD

countries (developed countries, including G7 countries and euro-area countries), among high-income

countries. Meanwhile, with respect to all other groups, the share of value added by the services industry

is growing. In particular, since 2011, the share of value added by the services industry has been growing

rapidly in high-income countries that do not belong to the OECD, such as Singapore and Saudi Arabia,

and upper-middle income countries, such as China and Mexico (Figure I-3-1-1).

As was shown in the past White Papers on International Economy and Trade,114 there is a tendency

that the higher a country’s per-capita GDP is, the larger the share of the services industry in its GDP is

(Figure I-3-1-2). Presumably, the shift of priority in industry to services has not only proceeded in

developed countries but is also making progress elsewhere, mainly in emerging countries, in line with

the economic development.

112 The law shows that priority in economic activities gradually moves to the tertiary industry because (i)

labor force moves to industries with higher profitability, while the profitability of the secondary industry is

higher than that of the primary industry, and that of the tertiary industry is higher than that of the secondary

industry, and (2) demand for products produced in the primary and secondary industries, such as foods and

industrial goods, is satisfied when a sufficient amount of products become available in line with economic

development, resulting in increased demand for services provided by the tertiary industry. 113 World Bank (2015). 114 Ministry of Economy, Trade and Industry (2013), Ministry of Economy, Trade and Industry (2015), etc.

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Figure I-3-1-1 Changes in the share of value added by the services industry in nominal GDP

Source: “WDI” (World Bank)

236

Figure I-3-1-2 Relationship between per-capita GDP and the share of the services industry in

GDP (2014)

Note: Figures for Japan and the United States are from 2013. The straight line represents the trend line.

Source: “WDI” (World Bank)

(2) Expansion of the services industry and changes in the demand structure in China

The shift of priority in industry to services in emerging countries is particularly prominent in China.

A look at changes in the industrial structure in China shows that the tertiary industry has surpassed the

primary and secondary industries in terms of value added and the number of employees due to the

progress in the shift of priority in industry to services (Figures I-3-1-3 and I-3-1-4). In particular, in

2015, the share of the tertiary industry exceeded 50% in terms of value added. While the real GDP

growth rate is slowing down, the tertiary industry’s growth is accelerating as a trend (Figure I-3-1-5).

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Figure I-3-1-3 Changes in the industrial structure in China (GDP and the number of

employees)

Source: National Bureau of Statistics of China, Ministry of Human Resources and Social Security of the

People’s Republic of China and CEIC Database

Figure I-3-1-4 Changes in the industrial structure in China (shares)

Source: National Bureau of Statistics of China, Ministry of Human Resources and Social Security of the

People’s Republic of China and CEIC Database.

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Figure I-3-1-5 Changes in China’s real GDP growth rate (by industry)

Note: The share in GDP is 9.0% for the primary industry, 40.5% for the secondary industry, and 50.5%

for the tertiary industry (2015).

Source: National Bureau of Statistics of China and CEIC Database

In line with the shift of priority in industry to services, the Chinese government is promoting a

structural shift from investment to consumption in order to correct the economic structure that has been

overly dependent on investment until now. As was shown earlier, as a result of the economic growth

achieved in the 2000s mainly through investment and external demand, the share of investments in GDP

in China is very high compared with the share in major countries during their periods of high growth,

whereas consumption has remained sluggish (Figure I-3-1-6). The current share of investments in GDP

in China is higher than the highest levels ever observed elsewhere in East Asia, including Japan, the

ROK and Taiwan (Table I-3-1-7).

239

Figure I-3-1-6 Changes in the composition of China’s GDP

Note: Figures for exports are calculated based on the value of exports of good and services provided in

the Balance of Payments.

Source: National Bureau of Statistics of China and CEIC Database.

Table I-3-1-7 Share of capital formation in GDP

(Unit: %)

Highest value Year

Japan 36.4% 1973

ROK 38.0% 1991

Taiwan 30.9% 1980

Source: SNA statistics of each country and CEIC Database

The retail sales value of overall consumer goods has been growing only moderately. However, the

growth rate of sales of communication equipment, for example, rebounded in 2014. Although the

growth rate slowed down somewhat in 2015, the rate remained high. In addition, the growth in sales

of products related to sports and recreational activities has also been robust (Figures I-3-1-8 and I-3-1-

9).

-20

0

20

40

60

80

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Private consumption Government consumption

Gross capital formation Net exports

Exports

(%)

Global economic crisis (2008)

45.9

37.9

2.7

13.5

23.7

Gross capital formation

Exports

Net exports

240

Figure I-3-1-8 Changes in the growth rate of retail sales in China by item

Note: 1. The breakdown of sales by item only covers the sales of companies that are larger than a certain

size. The total of all items was also calculated based on this premise.

2. There are many items whose growth rates are higher than that of the total of all items because the

petroleum products and automobiles, whose shares are high in terms of value (together accounting for

about 40% in 2015), are dragging down the figures for the total of all items.


241

Figure I-3-1-9 Growth rate of retail sales in China by item (2015)

Note: There are many items whose growth rates are higher than that of the total of all items because the

petroleum products and automobiles (together accounting for about 40% in 2015) are dragging down

the figures for the total of all items.


Regarding the sales method, Internet sales are growing rapidly against the backdrop of the diffusion of

smartphones, accounting for around 10% of overall retail sales115 (Table I-3-1-10). In China, unique

mail-order services and communication platforms have emerged because of the special characteristics

of the country’s Internet environment, contributing to the expansion of the service economy.116

115 It has been pointed out that the shakeout of brick-and-mortal stores which have become redundant due

to a rapid increase in the number of stores is ongoing. 116 Regarding the shift of priority in industry to platform businesses, including in emerging countries, refer

to Section 2 of this chapter.

242

Table I-3-1-10 Value and growth rate of Internet sales in China (2015)

(Unit: trillion yuan, %)

Sales Growth rate

Retail sales 30.1 trillion yuan 10.7

Internet sales (goods and services) 3.9 trillion yuan 33.3

Internet sales (goods) 3.2 trillion yuan 31.6

Internet sales (services) 0.6 trillion yuan 42.4

Note: 1. “Internet sales” refers to sales from transactions on public online platforms (regardless of

whether they are self-developed or run by a third party).

2. Since retail sales are basically composed of sales of goods, only Internet sales of goods are included

in retail sales.


On the other hand, on the macro level, the growth of consumption continued to slow down until

early 2015. Although the growth rate of consumption has risen since the second half of 2015 and later,

the growth has been moderate (FigureI-3-1-11). Presumably, one factor behind this trend is a slowdown

in the growth rate of disposable income (FigureI-3-1-12). Among other factors that have been pointed

out are a decline in the popularity of expensive products due to the frugality campaign and the continued

high saving rate.

Figure I-3-1-11 Growth rate of retails sales in China (ratio to the same month of the previous

year)


(Year and month)

243

Figure I-3-1-12 Growth rate of disposable income per capita in Chinese urban areas

(accumulated amount from the beginning of the year, ratio to the same quarter of the previous

year)

Note: Based on nominal values.

Source: National Bureau of Statistics of China and CEIC Database

2．Worldwide expansion in services trade

Services trade, which represents cross-border services transactions, has been expanding at a higher

pace than goods trade in recent years. The growth rate of services trade is higher in emerging countries

than in developed countries, but unlike the case of goods trade, the shares of developed countries in

services trade remain at a high level, and it is assumed that developed countries also have a comparative

advantage. The market size is large for tourism and business services, including research and

development and professional consulting, while the growth rate is notably high for telecommunications,

computer and information services and construction services. In some cases, such as the case of

agricultural exports by the Netherlands, the share of value added by the services industry is so large in

goods exports that goods exports are in effect equivalent to services exports. This paragraph provides

an overview of the state of services trade and growth sectors.

(1) Expansion of services trade mainly in emerging countries and developed countries’

comparative advantage

Although the global value of services trade is lower than the global value of goods trade, the average

growth rate of services trade in the most recent 10 years, at 7.2%, is higher than the average growth rate

244

of goods trade, which was 6.8%.117 A look at changes in the growth rate of the value of services exports

shows that while services exports and goods exports were growing at almost the same rate until the

global economic crisis that was triggered by the Lehman Shock, the decline in services exports in 2009

was smaller than the decline in goods exports. Although the growth of goods exports has been weak

since 2011, services trade has been growing in a stable manner (Figure I-3-1-13).

Figure I-3-1-13 Changes in the value of global exports of goods and services

Source: WTO database

Regarding the ratio to GDP, although the ratio of goods exports to GDP is higher than the ratio of

services exports to GDP, the growth rate of the ratio of goods exports has been slowing down since

2011,118 whereas the ratio of services exports have continued to grow albeit moderately (Figure I-3-1-

14).

117 Between 2005 and 2014, the value of goods trade increased by a factor of 1.81, while the value of

services trade grew by a factor of 1.88. 118 There are international debates as to whether the decline in the ratio of goods export to GDP is due to

structural or cyclical factors. For example, refer to Constantinescu, Mattoo and Ruta (2014).

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

(Billion dollars)

Goods export value Services export value(Year)

Annual average growth rate of goods exports (2005-2014)

6.8%

Annual average growth rate of services exports (2005-2014)

7.2%

245

Figure I-3-1-14 Changes in the value of global exports of goods and services

(ratio to nominal GDP)

Source: WTO Database and "The National Accounts Main Aggregates Database" (UN)

By income level as classified according to the World Bank’s definition,119 the growth rate of services

exports from middle-income countries was 9.3% (the annual average growth rate between 2005 and

2014), higher than the growth rate of 8.9% for high-income countries. However, in middle-income

countries, the growth rate of goods trade, at 10.3%, was higher than the growth rate of services trade.

One presumed factor behind this is the rapid increase in cross-border trade in intermediate goods that

was caused by the expansion of complex production networks in middle-income countries, namely

emerging countries. In high-income countries, the growth rate of services trade (8.9%) was higher than

the growth rate of goods trade (5.6%), and signs of a shift in export from goods to services are apparent

in high-income countries in particular (Figure I-3-1-15).

119 World Bank (2015).

0

5

10

15

20

25

30

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Goods export value Services export value

(%)

Change in goods exports (from 2011 to 2014)

-0.8%

Change in services exports (from 2011 to 2014)

0.4%

(Year)

246

Figure I-3-1-15 Growth rate of goods and services trade (exports)

Note: Average annual growth rate from 2005 to 2014

Source: WTO Database and “WDI” (World Bank)

Regarding imports, a similar trend is observed, but it is notable that in middle-income countries as well,

the growth rate of services imports is higher than the growth rate of goods imports. The growth rate of

services imports in upper-middle-income countries is the highest (12.0%), indicating the possibility that

such countries have become growth markets as destinations of services exports (Figure I-3-1-16).

Figure I-3-1-16 Growth rates of goods and services trade (imports)

Note: Average annual growth rates from 2005 to 2014


5.6

8.9

10.3 9.3

0

2

4

6

8

10

12

Goods Services Goods Services

High-income countries Middle-income countries

(%)

5.1

7.8

10.611.2

0

2

4

6

8

10

12

Goods Services Goods Services

High-income countries Middle-income countries

(%)

247

High-income countries’ services trade balance has constantly been in surplus, with exports

exceeding imports, so it is presumed that such countries have a comparative advantage over middle-

income countries in terms of services trade. Meanwhile, the decline in high-income countries’ global

share in services exports was smaller than the decline in their global share in goods exports, and their

global share in services export started to rise in 2012. Therefore, high-income countries are expected to

continue to play the central role in services exports (Figure I-3-1-17).

Figure I-3-1-17 High-income countries’ shares of goods and services exports and imports in

world

Note: “Shares” represents ratios to the total amount of imports and exports of high-income countries.


By country, in particular, the United States and the United Kingdom, both of which are recording a

trade deficit, are expanding their surplus in the services trade balance. Japan fell into deficit in the

goods trade balance after the Great East Japan Earthquake, while its deficit in the services trade balance

declined albeit moderately (Figure I-3-1-18).

69.9

69.5

80.7

75.8

68

70

72

74

76

78

80

82

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Goods (exports) Goods (imports)Services (exports) Services (imports)

(%)

(Year)

Surplus from services trade

248

Figure I-3-1-18 Changes in goods and services trade balance in major countries

Source: WTO Database

The United States, which is the largest services exporter, has consistently maintained a share of

around 14% in the global value of services exports, indicating its high level of competitiveness. The

United Kingdom and Germany have the second- and third-largest shares, respectively, but their shares

have been declining in recent years. On the other hand, China, Taiwan and the ROK have been gradually

expanding their shares by achieving higher growth than the United States. Japan is lagging behind in

terms of both the share in global services exports and the export growth rate, but exports have been

increasing somewhat in recent years (Figure I-3-1-19).

Figure I-3-1-19 Changes in countries’ shares in global services exports


-1,000

-800

-600

-400

-200

0

200

400

Goods

Serv

ices

Goods

Serv

ices

Good

s

Serv

ices

Goods

Serv

ices

Goods

Serv

ices

Goods

Serv

ices

Goods

Serv

ices

China Taiwan Germany Japan ROK UK US

(Billion dollars)

2005 2008 2011 2014

0

2

4

6

8

10

12

14

16

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

China Taiwan Germany

(%)

(Year)

249

As for the contribution to the growth rate of global services exports (average annual growth rate of

7.2% between 2005 and 2014), the United States, China, France, Germany, the United Kingdom and

India made large contributions, while Japan’s contribution was only 0.2% (Figure I-3-1-20). On the

other hand, regarding the contribution to the growth rate of global services imports, China, the United

States, Germany, France and India made large contributions, indicating that these countries are creating

new markets related to services trade. We can see that these countries are actively engaging in both

services imports and exports and that their markets are expanding (Figure I-3-1-21).

Figure I-3-1-20 Contribution to the growth rate of global services exports by country (2005-

2014) (top 20 countries)

Note: Contribution to the average annual growth rate from 2005 to 2014 by country


250

Figure I-3-1-21 Contribution to the growth rate of global services imports by country (2005-

2014) (top 20 countries)



The above analysis shows that although the scale of services trade is still smaller than that of goods

trade, services trade is continuing to grow by capturing services demand not only in developed countries

but also in emerging countries, where the shift of priority in industry to services is accelerating. Also, it

shows that developed countries likely have a comparative advantage in terms of services trade.

(2) Services trade led by tourism, business services and information and communications

Looking at the market size of services trade by sector,120 we can see that the value of exports is large

for travel services and “other business services” (hereinafter referred to as professional services)121 and

transport services, and the growth rate of exports is high for telecommunications, computer and

information services, construction services and professional services (Figure I-3-1-22).

120 The classification of services trade by sector is based on Balance of Payments and International Investment Position Manual, sixth edition (IMF). The sixth edition is the most recent one. 121 “Professional services” correspond to “Other business services” as referred to in the Balance of Payments Manual (IMF) (which correspond to “Other business services” as referred to in the Balance of

Payments (Ministry of Finance)).

251

Figure I-3-1-22 Changes in the value of global services exports by sector (2005-2014)


The value of exports of travel services, the largest export item in terms of value, amounted to 1.2

trillion U.S. dollars in 2014. The number of foreign travelers in 2015 is estimated to rise 4.4% compared

with the previous year to 1,184 million people,122 with the number of travelers from China recording a

particularly high growth rate. Meanwhile, the share of export of travel services in GDP is large in Turkey

(3.7%), South Africa (2.7%) and Australia (2.2%), indicating that accepting foreign tourists from abroad

is a major industry in these countries123 (Figure I-3-1-23).

122 A press release dated May 6, 2016 by the World Tourism Organization (UNWTO)

(http://media.unwto.org/press-release/2016-05-03/exports-international-tourism-rise-4-2015) 123 Regarding travel services, refer to the analysis in Part II, Chapter 2, Section 2.

1,240 1,120

955

458 417

299

158 131 108 77 45

0

200

400

600

800

1,000

1,200

1,400

Trav

el

Pro

fession

al services

Tran

sport

Teleco

mm

un

ication

s,

com

puter an

d in

form

ation

services

Fin

ancial serv

ices

Royalties an

d licen

se fees

Pro

duct-related

services

Insu

rance an

d p

ensio

n

services

Con

structio

n

Pu

blic serv

ices, etc.

Perso

nal, cu

ltural an

d

recreation

al services

2014 2005

(Billion dollars)(Export value)

252

Figure I-3-1-23 Ratio of the value of exports of travel services to nominal GDP (2014)


The value of exports of “professional services,” including research and development and

professional consulting, which require a relatively high level of skills, amounted to 1.1 trillion U.S.

dollars (2014), surpassing the value of transport services 124 to capture the second-largest share in

services exports (Figure I-3-1-24).

124 As the scale of transport services depends heavily on international trade volume and fares, it has

presumably been affected by the recent decline in shipping fares.

3.7

2.7

2.2 2.12.0

1.61.3 1.3 1.2 1.1 1.1 1.0 1.0 1.0 0.9

0.6 0.50.4 0.3

1.6

0

1

2

3

4

Turk

ey

South

Africa

Australia

Italy

Fran

ce

UK

RO

K

Mex

ico

Indon

esia

Germ

any

Sau

di A

rabia

US

Can

ada

India

Arg

entin

a

Russia

Ch

ina

Japan

Brazil

Glo

bal av

erage

(%)

253

Figure I-3-1-24 Changes in the value of global services exports (share of each sector)


The value of exports of telecommunications, computer and information services, which recorded the

average annual growth rate of 9.7%, the fastest growth among all items in the past 10 years, surpassed

the value of exports of financial services to capture the fourth largest share in services exports, indicating

that global transactions in this sector have expanded rapidly in recent years (Figure I-3-1-24). The

growth of construction services, which is the second highest after the growth of telecommunications,

computer and information services although the value of exports is not large, presumably reflects the

expansion of infrastructure investments around the world (Figure I-3-1-22).

As for the contribution to the value of services exports on a year-on-year basis in recent years, travel

services, professional services, and telecommunications, computer and information services have made

large contributions (Figure I-3-1-25). It can thus be seen that a change is occurring with the emergence

of new markets that are larger or growing more rapidly than the market for transport services, which

have been the mainstay of services trade until now. The details of the emerging items will be examined

in the next paragraph.

0

5

10

15

20

25

30

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Product-relatedTransportTravelConstructionInsurance and pensionFinancialRoyalties and license feesTelecommunications, computer and informationProfessionalPersonal, cultural and recreational servicesPublic services, etc.

(Year)

(%)

254

Figure I-3-1-25 Changes in the value of global services exports (contribution on a year-on-year

basis)


(3) Countries expanding services trade by taking advantage of their strengths

Amid the expansion of the services trade market, the ratio of services exports to global GDP reached

6.4% in 2014. Among the G20 countries, the ratio was high for the United Kingdom (the ratio to GDP

at 11.4%), France (9.5%) and India (7.6%). Some countries expanded services exports in specific sectors,

such as financial services in the case of the United Kingdom, information and communications in the

case of India, transport in the case of the ROK and construction in the case of China (Figure I-3-1-26).

-15

-10

-5

0

5

10

15

20

2006 2007 2008 2009 2010 2011 2012 2013 2014

Product-relatedTransportTravelConstructionInsurance and pensionFinancialRoyalties and license feesTelecommunications, computer and informationProfessionalPersonal, cultural and recreational servicesPublic services, etc.Total of services

(%)

(Year)

255

Figure I-3-1-26 Ratio of services exports to nominal GDP in the G20 countries (2014)

Note: Due to statistical restrictions, the breakdowns of exports of Turkey (royalties), Argentina (product-

related), Mexico (product-related, construction, financial, professional and public services) and Saudi

Arabia (product-related, construction, royalties and individual) are unknown.


In the G20 countries, the ratio of services exports to GDP has a moderate degree of positive

correlation with the share of value added by the services industry. However, the correlation is higher

than the trend line in high-ranking countries in terms of the ratio of services exports to GDP, such as the

United Kingdom, France, India and the ROK, indicating that the services industry in these countries are

closely linked with foreign markets (Figure I-3-1-27).

11.4

9.5

7.6 7.67.0

6.35.5

4.8 4.84.1

3.7 3.6 3.52.6 2.5

2.21.7 1.6 1.6

6.4

0

2

4

6

8

10

12

UK

Fran

ce

India

RO

K

Germ

any

Turk

ey

Italy

Can

ada

Sou

th A

frica

US

Au

stralia

Ru

ssia

Japan

Indon

esia

Arg

entin

a

Ch

ina

Brazil

Mex

ico

Sau

di A

rabia

Glo

bal to

tal

Product-related TravelTransport ConstructionInsurance and pension FinancialRoyalties and license fees Telecommunications, computer and informationProfessional Personal, cultural and recreationalPublic services, etc.

(%)

256

Figure I-3-1-27 Relationship between the value of service exports and share of value added by

the services industry (ratio to nominal GDP) (2014)

Note: The values added by the services industry (ratio to GDP) for the United States and Japan are the

values as of 2013, and that of Canada, 2010.

Source: WTO Database and “World Development Indicators” (World Bank)

Next, we will look at the overview of the status of services trade in individual countries in terms of

the services trade balance, represented by the value of exports minus the value of imports. The United

States and the United Kingdom, which are registering current account deficits, are expanding their

surplus in the services trade balance, while Germany, China and Japan, which are recording a current

account surplus, are in deficit in the services trade balance. However, in the case of Japan, services

exports have been increasing in recent years more than imports, so the deficit has been shrinking. In the

case of China, the deficit has been expanding significantly since 2011 (Figure I-3-1-28).

257

Figure I-3-1-28 Changes in services trade balance in major countries

Note: For Spain, data is available only from 2008 onward. For the Netherlands, data is available only

from 2010 onward.


Looking at individual items in services trade, we can see that some countries are relatively

specialized in some items in services exports. In the case of the United States, which is expanding its

surplus in the services trade balance, the surplus is growing with respect to items for which high value

added may be created through new innovations, such as royalties and license fees, financial services,

and professional services (Figure I-3-1-29).

-400

-300

-200

-100

0

100

200

300

400

500

600

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

(Billion dollars)

US UK Germany France China

Netherlands Japan India Singapore Spain

ROK Taiwan Others

(Year)

258

Figure I-3-1-29 Changes in services exports (United States)

Note: Figures for the “contract manufacturing services” in the United States are not available.


-600

-400

-200

0

200

400

600

800

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

(Billion dollars)

Public services, etc.Individual, cultural and entertainmentProfessionalTelecommunications, computer and informationRoyalties and license feesFinancialInsurance and pensionConstructionTravelTransportMaintenance and repairServices account balance

(Year)

Exports

Imports (rebounded)

(Imports and exports)

-100

-50

0

50

100

150

200

250

300

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

(Billion dollars)

Public services, etc.

Individual, cultural and entertainment

Professional

Telecommunications, computer and information

Royalties and license fees

Financial

Insurance and pension

Construction

Travel

Transport

Maintenance and repair

Total of all services

(Year)

(Trade balance)

259

Meanwhile, some countries are expanding their surplus in sectors where they have an advantage. In

the case of the United Kingdom, the financial industry, which has been competitive since an earlier time,

is the main driver of the surplus, and in the case of the ROK, the construction industry, which is

expanding infrastructure exports through the improvement of public assistance, is the main driver. In

the case of Taiwan, the professional service industry, which is focusing on research and development

and business services through innovation support provided by the authorities, is the main driver of the

surplus (Figures I-3-1-30 to I-3-1-32).

Figure I-3-1-30 Changes in services exports (United Kingdom)

Note: Due to statistical restrictions, figures for “contract manufacturing services” and “maintenance

and repair services” in the United Kingdom are only available in 2005 and 2014.


-50

0

50

100

150

200

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

(Billion dollars)

Public services, etc. Individual, cultural and entertainment

Professional Telecommunications, computer and information

Royalties and license fees Financial

Insurance and pension Construction

Travel Transport

Maintenance and repair Contract manufacturing


(Year)

260

Figure I-3-1-31 Changes in services exports (ROK)


Figure I-3-1-32 Changes in services exports (Taiwan)

Note: Figures for the “contract manufacturing services” in Taiwan are not available.


On the other hand, China’s deficit in the services trade balance has expanded significantly because

of an increase in payments in the tourism and transport sectors, which reflects growth in tourism demand

-40

-30

-20

-10

0

10

20

30

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

(Billion dollars)





Travel Transport



(Year)

-15

-10

-5

0

5

10

15

20

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

(Billion dollars)





Travel Transport

Maintenance and repair Total of all services

(Year)

261

(Figure I-3-1-33). Germany, which is highly competitive in goods trade, has continued to record a deficit

in the services trade balance, reflecting robust tourism demand (Figure I-3-1-34).

Figure I-3-1-33 Changes in services exports (China)

Note: Figures for the “maintenance and repair services” in China were obtained by calculation.


Figure I-3-1-34 Changes in services exports (Germany)

-250

-200

-150

-100

-50

0

50

100

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

(Billion dollars)





Travel Transport



(Year)

-100

-80

-60

-40

-20

0

20

40

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

(Billion dollars)





Travel Transport



(Year)

262

Note: Due to statistical restrictions, figures for “construction services” in Germany are available only

from 2014 onward.


Japan’s services trade balance has recently improved due to the shrinkage of the deficit in the travel

balance and the expansion of the surplus in the balance concerning royalties and license fees, but an

increase in imports of professional services, among other items, has made a negative contribution (the

status of Japan’s services trade and India’s services trade will be analyzed in detail in Part II, Chapter

2 and Part II, Chapter 4, Section 1, respectively) (Figure I-3-1-35).

Figure I-3-1-35 Changes in services exports (Japan)

-200

-150

-100

-50

0

50

100

150

200

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

(Billion dollars)





Travel Transport


Services account balance

(Year)

Exports

Imports (rebounded)

(Imports and exports)

263


(A) Telecommunications, computer and information services growing mainly in India and

developed countries

In principle, services trade requires proximity between consumers and producers, but businesses for

which this constraint is weakening, such as cloud service, are also expanding because of the advance of

information and communications technology.

The value of exports of telecommunications, computer and information services (Table I-3-1-41)125

recorded an average annual growth rate of 9.7% in the past 10 years. Regarding the contribution to the

growth of 9.7% by country, India (2.0%), where the IT sector showed a remarkable growth, the United

States (1.0%), where highly competitive companies in this sector are concentrated, Germany (1.0%) and

China (1.0%) together accounted for more than half of the total contributions to the growth of this new

market. On the other hand, Japan’s contribution, at 0.1% was extremely small (Figure I- 3-1-36). The

value of exports is high for Ireland (57.6 billion U.S. dollars) and India (55.7 billion U.S. dollars),126

while the ratio of exports to GDP was very high for India (2.7%) (Figures I-3-1-37 and I-3-1-38).

125 The definitions of services trade items used in this section are cited from the “Explanation of Balance of

Payments Statistics” (Data Based on the BPM6)” (Bank of Japan (2016)) (the website of the Bank of

Japan). 126 The growth rate of exports of telecommunication, computer and information services from Ireland in

the past 10 years cannot be calculated due to data constraints.

-80

-70

-60

-50

-40

-30

-20

-10

0

10

20

30

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

(Billion dollars)

Public services, etc. Individual, cultural and entertainmentProfessional Telecommunications, computer and informationRoyalties and license fees FinancialInsurance and pension ConstructionTravel TransportMaintenance and repair Contract manufacturingTotal of all services

(Year)

(Trade balance)

264

Figure I-3-1-36 Contribution to the growth rate of the value of exports of

“telecommunications, computer and information services” (9.7%) by country (2005-2014) (top

20 countries)



Figure I-3-1-37 Value of exports of “telecommunications, computer and information services”

(2014) (top 20 countries)


265

Figure I-3-1-38 Ratio of the value of exports of telecommunications, computer and information

services to nominal GDP (2014)

Source: WTO Database and “The National Accounts Main Aggregates Database” (UN)

In this sector, new initiatives using information and communications technology are ongoing at the

government level as well. Estonia and the ROK, for example, have enhanced the versatility of

government systems and are promoting exports of such systems as platforms. The export of such systems

is partly intended to facilitate exports, encourage system use abroad by domestic companies and promote

foreign investments by connecting domestic systems with systems in the importing countries. Therefore,

the export of such systems is expected to bring about complex effects that are not limited to expanding

services exports (Figure I-3-1-39 and Table I-3-1-40).

Figure I-3-1-39 Growth rate of exports of telecommunications, computer and information

services in ROK and Estonia (2005-2014)

Note: Average annual growth rates from 2005 to 2014


2.7

0.8 0.7 0.60.5

0.40.3 0.2 0.2 0.2 0.2 0.2 0.1 0.1 0.1 0.1 0.0 0.0 0.0

0.6

0

1

2

3

India

Germ

any

UK

Fran

ce

Can

ada

Italy

Arg

entin

a

Russia

RO

K

US

Ch

ina

South

Africa

Australia

Ind

on

esia

Japan

Brazil

Turk

ey

Sau

di A

rabia

Mex

ico

Glo

bal av

erage

(%)

28.8

18.7

8.6

0

5

10

15

20

25

30

35

ROK Estonia Japan

(%)

266

Table I-3-1-40 Government systems of the ROK and Estonia

Estonia e-government system

The electronic government system,

“e-Estonia,” has been in operation

since 2001.

The system is planned to be

introduced to Finland in 2016, with

an aim to provide infrastructure for

administrative services and for the

authorization of e-commerce

transactions across national borders.

Source: Website of the Estonian Information System Authority and “Miraigatakokka Estonia no

Chosen: Denshiseifu ga Hiraku Sekai” (Raul, Maeda) (2016)

Korean IP system

By 2015, the ROK’s patent system

has expended to 11 countries and

organizations, including India,

Vietnam and Thailand.

Source: Website of the Korean Intellectual Property Office and “e-Government of Korea Best Practices”

(Ministry of the Interior of the Republic of Korea)

267

Table I-3-1-41 Definition of telecommunications, computer and information services

Telecommunications, computer and information services

This item covers transactions of services related to information technology (IT).

(1) Telecommunications services (domestic classification)

Charges for using communication devices, such as telephones, telex, satellites, and the

Internet; charges for Internet backbone services

(2) Computer services (domestic classification)

Computerized data-processing services; the development of customized software such as

operating systems and applications; web page design and development; hardware

consultancy and maintenance and repairs; hardware and software installation

(3) Information services (domestic classification)

The provision of news by the media; online services that provide content other than audio,

video and computer software; transactions of services concerning database, search engine,

library and archives

Source: “Explanation of ‘Balance of Payments Statistics (Data Based on the BPM6)’” (Bank of Japan)

(B) Professional services in which developed countries have an advantage

Professional services (Table I-3-1-53), including research and development and professional

consulting services, have been supporting the growth of services exports in recent years against the

backdrop of the shift of priority in industry to services and the penetration of information and

communications technology around the world.

The ratio of exports of professional services to GDP is high for developed countries such as the

United Kingdom (3.1%) and France (3.0%). As for emerging countries, India’s ratio of exports of

professional services to GDP (2.3%) is high, as is its ratio of exports of telecommunications, computer

and information services (2.7%). This indicates that the business of undertaking outsourcing services in

IT and various other fields is having a large impact on the Indian economy (Figure I-3-1-42).

268

Figure I-3-1-42 Ratio of the value of exports of professional services to nominal GDP (2014)

Note: Due to statistical restrictions, the breakdown of Mexico’s exports is unknown.


A comparison between major developed countries (Japan, the United States, Germany and the

United Kingdom) in terms of the average growth rate of exports shows that the growth rate is high for

the United States (6.8%), Germany (6.4%) and the United Kingdom (6.1%), while Japan’s growth rate,

at 4.2% is low.

If professional services are broken down further, research and development services recorded the

highest growth. In the United States, the United Kingdom and Germany, the value of exports of

professional and business consulting services127 was large and made the largest contribution to the

growth rate of overall professional services between 2010 and 2014. Professional and business

consulting services is thus the main driver of exports of professional services. Although the value of

exports of technical, trade-related services, and business services128 is at a certain level, the growth rate

of such services is not high compared with the growth rates of other items (Figures I-3-1-43 to 46).

127 It should be kept in mind that the growth rate of exports of professional and business consulting

services from Japan (2.5%) represents the sum of the growth rates of exports of those services and

technical, trade-related services and business services. 128 This category includes “architectural, engineering and other technical services,” “operating leasing

services,” and” trade-related services.” In developed countries, sectors requiring advanced skills are

presumed to correspond to “architectural, engineering, and other technical services.” In the United States

and the United Kingdom, this item is contributing to growth and has a large share in exports of other

business services (10% in the United States, 15% in the United Kingdom and 17% in Germany). In the

case of Japan, it is impossible to grasp the trend due to the absence of tabulated data concerning this

classification.

3.13.0

2.3

2.0

1.5 1.5 1.4

0.9 0.9 0.8 0.8 0.7 0.7 0.7 0.6 0.5

0.0 0.0

1.4

0

1

2

3

4

UK

Fran

ce

Ind

ia

Germ

any

Can

ada

RO

K

Italy

Brazil

Russia

Arg

entin

a

Japan

US

Indon

esia

Ch

ina

South

Africa

Au

stralia

Tu

rkey

Sau

di A

rabia

Glo

bal av

erage

(%)

269

Figure I-3-1-43 Growth rate of exports of professional services in major countries and

contribution to the growth rate by item (2010-2014)

Note: Average growth rates from 2010 to 2014. Due to statistical restrictions, the figure of “others” for

Japan is the total of the contribution of “professional and business consulting services” and that of

“technical and trade-related services.”

Source: OECD. Stat, Office for National Statistics of the United Kingdom and Bank of England

Figure I-3-1-44 Value of exports of research and development services (2014) and its growth

rate (2010-2014) sin major countries

Note: Average annual growth rate from 2010 to 2014


1.1 1.4

2.9

3.5

2.9

1.9

2.5 1.1

2.6

2.3

6.8

6.1 6.4

4.2

-1

0

1

2

3

4

5

6

7

8

US UK Germany Japan

Research and development services

Professional and business consulting services

Technical and trade-related services (architectural, engineering and other technical services)

Technical and trade-related services (operating leasing services)

Technical and trade-related services (trade-related services)

Technical and trade-related services (others)

Total of all professional services

(%)

10.3 10.6 11.1

13.6

0

2

4

6

8

10

12

14

16

0

5

10

15

20

25

30

35

US UK Germany Japan

Export value (2014) Average annual growth rate (2010-2014) (right axis)

(Billion dollars) (%)

270

Figure I-3-1-45 Value of exports of professional and business consulting services (2014) and its

growth rate (2010-2014) in major countries

Note: Average annual growth rates from 2010 to 2014. Due to statistical restrictions, the figure for Japan

shows the growth rate of the total of “professional and business consulting services” and “technical and

trade-related services.”


Figure I-3-1-46 Value of exports of technical, trade-related services, and business services

(2014) and its growth rate (2010-2014) in major countries

6.2

9.3 7.8

2.5

0

1

2

3

4

5

6

7

8

9

10

0

10

20

30

40

50

60

70

US UK Germany Japan



5.0

2.9

2.3 2.5

0

1

2

3

4

5

6

0

5

10

15

20

25

30

35

40

45

50

US UK Germany Japan



271

Note: Average annual growth rates from 2010 to 2014. Due to statistical restrictions, the figure for Japan

shows the growth rate of the total of “professional and business consulting services” and “technical and

trade-related services.”


As for the trade balance concerning professional services in major developed countries, the surplus

in the United States and the United Kingdom has been expanding due to an increase in exports of

professional and business consulting services, while the deficit in Germany has been shrinking. On the

other hand, the deficit in Japan has been expanding (Figures I-3-1-47 to 50).

Figure I-3-1-47 Trade balance concerning professional services (United States)

Note: Figures in boxes are the trade balance for the total of all professional services.

Source: OECD. Stat

5 6 6 5 4

5 7 9 8 7

19 17 20 21 21

0

(1) -1 -2

0 30 29

33 31

34

-5

0

5

10

15

20

25

30

35

40

2010 2011 2012 2013 2014








(Billion dollars)

(Year)

272

Figure I-3-1-48 Trade balance concerning professional services (United Kingdom)



7

9 9 12 11

13

18 20

23 27

1 1 1 2

4

29

25

23 31

35

-20

-10

0

10

20

30

40

50

2010 2011 2012 2013 2014








(Billion dollars)

(Year)

273

Figure I-3-1-49 Trade balance concerning professional services (Germany)


Source: OECD. Stat

-4 -5 -4

-5 -4

3

-7

-8 (9)

(7)

-4

4 5

5 5 5

-5

-9

(12) -8

(4)

-20

-15

-10

-5

0

5

10

2010 2011 2012 2013 2014








(Billion dollars)

(Year)

274

Figure I-3-1-50 Trade balance concerning professional services (Japan)

Note: Figures in boxes are the trade balance for the total of all professional services. Due to statistical

restrictions until 2013, figures for “others” are the trade balance for the total of services other than

research and development services.

Source: OECD. Stat

On the other hand, the share of major developed countries of the overall value of exports of

professional services has been declining slightly while China's share has been increasing considerably

(Figure I-3-1-51).

-1 -1

-13 -12

(7)

(4)

-6 -6

-7 -8 -11

-6 -8

-20 -20

-22 -25

-20

-15

-10

-5

0

2010 2011 2012 2013 2014

Research and development servicesProfessional and business consulting servicestechnical, trade-related services, and business servicesOthersTotal of all professional services

(Billion dollars)

(Year)

275

Figure I-3-1-51 Changes in the share of the value of exports of professional services by country


Importing countries of business-related services are not necessarily limited to developed countries,

with outsourcing from China and other emerging countries accounting for a large portion of overall

imports. Between 2005 and 2014, the value of imports of professional services increased by 8.8%

annually on average, and the United States (1.2%), China (0.8%) and Germany (0.7%) made large

contributions to the growth. This suggests that business services are being outsourced globally, with

developed and emerging countries taking advantage of each other’s strengths (Figure I-3-1-52).

Figure I-3-1-52 Contribution to the growth rate of the global market of professional services

(growth rate of the value of imports) (8.8%) by country (2005-2014) (top 20 countries)



0

2

4

6

8

10

12

14

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

China Taiwan Germany JapanROK UK US

(%)

(Year)

276

Table I-3-1-53 Definition of professional services

Professional services

This item covers various services for businesses other than product-related, financial,

insurance and information services. It is further broken down into "research and development

services," "professional and management consulting services," and "technical, trade-related,

and other business services."

(1) Research and development services

Services associated with research and development (such as basic research, applied

research, and the development of new products); outright sales of the industrial property

rights obtained as a result of research and development (such as represented in patents,

utility model rights, and design rights)

(2) Professional and management consulting services

Legal services; accounting and management consulting services; public relations

services; advertising and market research services

(3) Technical, trade-related, and other business services

Architectural, engineering, and other technical services; agricultural and mining

services; operating leasing services; trade-related services; other professional business

services


(C) Exports of product-related services (maintenance and repair services) growing faster than

product exports

Regarding product-related services (Table I-3-1-59), which cover services derived from goods, the

ratio of exports of such services to GDP is high for France (0.6%), Germany (0.3%) and the ROK (0.2%)

(Figure I-3-1-54).

277

Figure I-3-1-54 Ratio of the value of exports of product-related services to nominal GDP (2014)

Note: Due to statistical restrictions, the breakdowns of exports of Argentina, Mexico and Saudi Arabia

are unknown.


Maintenance and repair services, which are among product-related services, cover repair of goods and

after-sales services provided across national borders, such as maintenance of aircraft and other

equipment and after-sales services undertaken by sellers based on goods transaction contracts. Exports

of such services may include cases in which value added shifts from sales of goods to provision of

services derived from goods based on the analysis of big data obtained through IoT and other advanced

technologies (Figure I-3-1-55).

Figure I-3-1-55 Value of exports of maintenance and repair services and its growth rate (2005-

2014)

0.6

0.30.2

0.2 0.2

0.2 0.2

0.10.1

0.1 0.10.0 0.0 0.0 0.0 0.0

0.2

0

0.2

0.4

0.6

Fran

ce

Germ

any

RO

K

Italy

Ch

ina

Russia

UK

US

Can

ada

Indon

esia

Japan

South

Africa

Turk

ey

India

Brazil

Australia

Glo

bal to

tal

(%)

11.7

12.3

12.1

6.0

10.3

25.1

32.8

0

5

10

15

20

25

30

35

0

2

4

6

8

10

12

14

16

18

20

US

Sin

gap

ore

Fran

ce

Germ

any

Sw

itzerland

Japan

UK

Export value (2014)

Average annual growth rate (2005-2014) (right axis)


278

Note: Due to data restrictions, the figure for France shows the growth rate from 2008 to 2014. The above

figure covers the top five major developed countries with the highest export values as of 2014.


Regarding countries’ share in the value of exports of maintenance and repair services, the United

States has maintained a share of more than 30% of the total and has also stayed in surplus in the balance

of trade in such services (Figure I-3-1-56).

Figure I-3-1-56 Changes in the share of value of exports of maintenance and repair services by

country

Note: Due to data restrictions, a calculated value was used for the global total. The above figure covers

the top five major developed countries with the highest export values as of 2014.


An example of maintenance and repair service is the Maintenance Repair Overhaul (MRO:

outsourcing of aircraft maintenance) business in the aircraft industry. This business serves an after-sales

market where demand continuously arises after the sale of aircraft, and this market has continued to

expand. Of MRO services, labor-intensive ones, such as aircraft maintenance, have been increasing

mainly in emerging countries as a trend. Meanwhile, concerning aircraft engines, major global engine

manufacturers are providing a variety of services to airlines. The provision of total care service, which

charges fees related to the use of engines, such as fees for supply of engine parts and maintenance based

on flying hours, is known as an example of the engine manufacturing business’ shift to the services

industry.

In addition, in recent years, engine manufacturers have been engaging in solution businesses, such

as developing maintenance schedules from the perspective of preventive maintenance through the

monitoring of the status of engine operation and the status of flight control through big data analysis and

0

5

10

15

20

25

30

35

40

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

US Singapore France Germany

Switzerland Japan UK

(%)

(Year)

279

other techniques and improving operational efficiency through data analysis. Businesses integrating

manufacturing technology with information and communications technology are thus expanding as a

trend.

The trade trend by industry cannot be identified by looking at the international balance of payments

concerning maintenance and repair services. However, the United States, where major manufacturers of

industrial engines are concentrated, has continuously maintained a large share, while exports from the

United Kingdom have been recently increasing. Moreover, in major product exporting countries

excluding China and Taiwan, the growth rate of the value of maintenance services exports is higher than

the growth rate of the value of product exports, indicating that the importance of providing new services

is growing in the manufacturing industry as well (Figures I-3-1-57 and I-3-1-58).

Figure I-3-1-57 Changes in the growth of value of exports of maintenance and repair services

Note: Due to data restrictions, the figures for France were calculated assuming its value as of 2008 as

100. The above figure covers the top five major developed countries with the highest export values as

of 2014.


0

200

400

600

800

1000

1200

1400

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

US Singapore FranceGermany Switzerland Japan

(2005=100)

(Year)

280

Figure I-3-1-58 Comparison of the value of exports of maintenance and repair services and

that of products

Note: Top 10 countries with the highest value of exports of products in 2014.

The size of the bubbles represents the value of exports of maintenance and repair services in 2014.


Table I-3-1-59 Definition of product-related services

Product-related services

Total of “manufacturing services on physical inputs owned by others” (hereinafter referred to

as “contract manufacturing services”) and “maintenance and repair services”

(1) Contract manufacturing services

Fees charged by a processor when the owner of the goods commissions the processor to

process or assemble the goods. (Examples) Oil refining, liquefaction of natural gas, and

assembly of clothing and electronics

(2) Maintenance and repair services

Maintenance and repair work by residents on goods that are owned by nonresidents (and

vice versa). (Examples) Repairs and maintenance of movable property such as vessels

and aircraft, after-sales services incurred by the seller under a sales contract, such as

repairs and maintenance during the warranty period


281

In Japan, too, it is becoming increasingly important to develop new business models that

strategically link the strengths of the manufacturing industry, which has until now maintained a high

level of competitiveness in the world, with data obtained through goods. Initiatives being considered in

Japan in response to this trend will be discussed in Part II, Chapter 2, Section 1.

(D) Japan and the United States leading in terms of royalties and license fees

While royalties and license fees (Table I-3-1-67) are a major item that makes significant positive

contributions to Japan’s services trade balance,129 the United States has the largest global share and is

highly competitive in this field. Japan has the second largest share after the United States, and the growth

rate of the value of receipts of royalties and license fees has recently been rising albeit moderately

(Figure I-3-1-60).

Figure I-3-1-60 Ratio of the value of receipts of royalties and license fees to nominal GDP

(2014)

Note: Due to statistical restrictions, the breakdowns of Turkey and Saudi Arabia are unknown.


As for the growth rate of the value of receipts of royalties and license fees from abroad, namely

exports of intellectual property, in the past 10 years, Singapore, China and Taiwan recorded particularly

129 As was analyzed in the White Paper on International Economy and Trade 2015, the main method of repatriation of profits by overseas affiliates of Japanese companies is the payment of dividends and

royalties. Dividends are included in the primary income balance of the international balance of payments,

while royalties are included in the “royalties for intellectual property rights, etc.” of the services account

balance.

0.80.8

0.50.4

0.4 0.4

0.20.2

0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

0.4

0

0.2

0.4

0.6

0.8

1

Japan

US

UK

Fran

ce

RO

K

Germ

any

Can

ada

Italy

Australia

Russia

Sou

th A

frica

Ind

ia

Arg

entin

a

Brazil

Mex

ico

Ind

on

esia

Ch

ina

Glo

bal av

erage

(%)

282

high growth rates, and these countries’ imports of intellectual property have also been increasing

significantly (Figures I-3-1-61 to 64).

Figure I-3-1-61 Contribution to the growth rate of the value of receipts of royalties and license

fees (6.8%) by country (2005-2014) (top 20 countries)



Figure I-3-1-62 Contribution to the growth rate of payments of royalties and license fees

(6.8%) by country (2005-2014) (top 20 countries)

283



Figure I-3-1-63 Changes in the growth rate of value of receipts of royalties and license fees

Note: Due to data restrictions, figures for France were calculated assuming the figure of 2008 as 100.


Figure I-3-1-64 Changes in the share of value of receipts of royalties and license fees

Note: Due to data restrictions, figures for France are only shown from 2008 onward.


0

100

200

300

400

500

600

700

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

China Taiwan Germany Japan

ROK UK US France

India Singapore Switzerland

(2005=100)

(Year)

0

5

10

15

20

25

30

35

40

45

50

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

China Taiwan Germany JapanROK UK US FranceIndia Singapore Switzerland

(%)

(Year)

284

A close look at the case of the United States, which is the largest exporter of intellectual property in

the world, shows that the largest portion of exports are fees for the use of industrial rights received as

royalty income from factories and subsidiaries established by manufacturers expanding into foreign

countries. In terms of the balance of payments, fees for computer software and trademarks, the areas of

strength for U.S. companies, are boosting the surplus (Figure I-3-1-65).

Figure I-3-1-65 Changes in the breakdown of royalties and license fees in the United States

Note: The value of receipts of fees for trademarks in 2014 includes the value of receipts of franchise

fees.

Source: Unites States Department of Commerce and CEIC Database

In the case of Japan, most of the surplus concerning royalties and license fees is attributable to fees

related transportation machinery, indicating that the overseas expansion of the automobile industry,

which has been one of Japan’s major industries, is increasing royalty income. On the other hand, Japan

285

is recording a deficit concerning fees for the use of copyrights, etc., including the use of software130

(Figure I-3-1-66).

Figure I-3-1-66 Changes in the breakdown of royalties and license fees in Japan

Source: “Balance of Payments” (Ministry of Finance)

Table I-3-1-67 Definition of royalties and license fees

Royalties and license fees

This item covers charges for the use of proprietary rights arising from research and

development as well as from marketing, charges for licenses to reproduce or distribute

copyrighted works, and charges for screening and broadcasting rights.

130 Looking at technology trade based on the science and technology statistics of the Ministry of Internal

Affairs and Communications in order to examine trends by sector, the manufacturing industry is recording

a surplus, driven mainly by the automobile sector, while the non-manufacturing industry is recording a

deficit. In particular, the deficit recorded by the information and communications sector is large, offsetting

the surplus recorded by academic and research institutions.

286

(1) Charges for the use of industrial property

Charges for the use of industrial property rights such as patents, utility model rights,

design rights, and trademarks; charges for the use of know-how or technical information;

various expenses related to franchising; payments/receipts for grants of distribution rights;

technical assistance or management fees related to such rights.

(2) Charges for the use of copyrights

Charges for licenses to reproduce or distribute computer software, music, video

recordings, etc.; charges for the use of copyrighted works such as literature, art, music,

video, and characters; charges for screening and broadcasting rights; charges for film

distribution rights; charges for the right to release films on video


(E) Other services

The ratio of export of financial services and insurance and pension services to GDP are high in the

United Kingdom, indicating that the provision of services to foreign countries by financial institutions

and other companies is an important business for the country (Figures I-3-1-68 and I-3-1-69).

Figure I-3-1-68 Ratio of the value of exports of financial services to nominal GDP (2014)



2.5

0.5 0.5 0.5 0.40.3 0.3 0.2 0.2 0.2 0.1 0.1 0.1 0.1 0.0 0.0 0.0 0.0

0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

UK

Germ

any

Fran

ce

US

Can

ada

India

Italy

South

Africa

Au

stralia

Japan

Tu

rkey

RO

K

Russia

Brazil

Ch

ina

Sau

di A

rabia

Ind

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Arg

entin

a

Glo

bal av

erage

(%)

287

Figure I-3-1-69 Ratio of the value of exports of insurance and pension services to nominal GDP

(2014)


The ratio of exports of transport services to GDP is high in the ROK (2.5%), and the ratio of exports

of construction services, including those related to infrastructure projects, is also high in the ROK (1.2%).

The ratio of exports of public services contracts to GDP is high in the United Kingdom (0.14%) (Figures

I-3-1-70 to 72).

Figure I-3-1-70 Ratio of the value of exports of transport services to nominal GDP (2014)


1.1

0.3 0.3 0.20.1 0.1 0.1 0.1 0.1 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

0.2

0.0

0.2

0.4

0.6

0.8

1.0

1.2

UK

Mex

ico

Germ

any

Fran

ce

Turk

ey

Ind

ia

Italy

US

Can

ada

South

Africa

RO

K

Ch

ina

Japan

Australia

Brazil

Russia

Arg

entin

a

Sau

di A

rabia

Ind

on

esia

Glo

bal to

tal

(%)

2.5

1.8 1.8

1.51.3

1.10.9 0.9 0.9

0.7 0.70.5 0.5 0.4 0.4 0.4 0.4

0.20.1

1.2

0.0

0.5

1.0

1.5

2.0

2.5

3.0

RO

K

Fran

ce

Tu

rkey

Germ

any

UK

Russia

India

South

Africa

Japan

Can

ada

Italy

US

Arg

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a

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Ch

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di A

rabia

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Mex

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Glo

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erage

(%)

288

Figure I-3-1-71 Ratio of the value of exports of construction services to nominal GDP (2014)

Note: Due to statistical restrictions, the breakdowns of exports of Mexico and Saudi Arabia are unknown.


Figure I-3-1-72 Ratio of the value of exports of public services to nominal GDP (2014)



(4) Export industries’ shift of priority to services

Until now, an overview of cross-border provision of services has been provided. Regarding goods

exports as well, the share of value added by the services industry during the processes leading to export

has been rising, particularly in developed countries. The share of value added by the services industry

1.2

0.3 0.30.2 0.1 0.1 0.1 0.1 0.1 0.1

0.0 0.0 0.0 0.0 0.0 0.0 0.0

0.1

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

RO

K

Russia

Japan

Turk

ey

Ch

ina

UK

Fran

ce

Ind

on

esia

India

Germ

any

Italy

Can

ada

US

Brazil

Au

stralia

South

Africa

Arg

entin

a

Glo

bal to

tal

(%)

0.14 0.14

0.13

0.11 0.10

0.10

0.08 0.08 0.07 0.07

0.06 0.05 0.05 0.05

0.04 0.04 0.03

0.01

0.10

0.00

0.02

0.04

0.06

0.08

0.10

0.12

0.14

0.16

UK

Germ

any

US

Sou

th A

frica

Tu

rkey

Japan

RO

K

Can

ada

Sau

di A

rabia

Ind

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Australia

Italy

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tal

(%)

289

in exports related to the overall manufacturing industry in the OECD member countries, which was

32.8% in 1995, rose to 35.9% by 2009. However, the share has recently declined slightly, and in the

non-OECD countries, the share has been on a downtrend compared with the share in the 1990s (Figure

I-3-1-73).

Figure I-3-1-73 Share of value added by the services industry in manufacturing industry

exports

Source: “Trade in Value Added” (OECD)

However, the share of value added by the services industry has grown rapidly in some sectors and

countries, and in some cases, the increase in the share may be leading to the development of industries

and the expansion of exports through a rise in productivity. A typical example of such phenomenon is

the Netherlands’ agricultural exports. The share of business services131 in agricultural exports in the

Netherlands was below the average for the whole of the OECD in 1995, but the share later rose rapidly,

reaching 35.2% in 2011 (Figure I-3-1-74). Despite the small size of its territorial land, the Netherlands

is the second-largest food exporting country in the world, and the strength of its service sector, as

exemplified by the well-developed distribution function, is cited as the driving force of the Netherlands’

food exports.

131 The total of wholesaling, transport, information and communications, and research and development.

The classification is in accordance with the OECD Trade in Value Added.

32.8 34.335.0 35.8 35.9 34.4 34.5

31.7 30.829.8 29.5

31.0 30.6 30.5

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

1995 2000 2005 2008 2009 2010 2011

OECD countries Non-OECD countries

(%)

290

Figure I-3-1-74 Share of value added by business services in agricultural exports


This trend becomes all the more prominent when compared with the case of Japan. It is not an

exaggeration to say that the Netherlands’ agricultural exports are services exports, rather than exports of

agricultural products132 (Figure I-3-1-75).

Figure I-3-1-75 Sources of value added concerning exports in the agricultural sector

Note: Figures are based on the industrial structure as of 2011.

132 Regarding specific trends in agricultural exports from the Netherlands, refer to the detailed analysis in

Part II, Chapter 3.

26.5 28.5

25.6

35.2

25

27

29

31

33

35

37

1995 2000 2005 2008 2009 2010 2011

Whole of the OECD Netherlands

(%)

(Year)

41.855.0

35.2

25.6

23.0 19.4

0

20

40

60

80

100

Netherlands Japan

Value added by the agricultural sectorValue added by business servicesOthers

(%)

291


3. Summary

The shift of priority in industry to services associated with the growth of the world economy is

making significant progress in both developed countries and emerging countries, and this trend is

prominent in China in particular partly due to the Chinese government’s policy. As a result, even while

goods trade is slowing down worldwide, services trade continues to expand steadily while capturing

demand in emerging countries. Although the scale of services trade is still smaller than that of goods

trade, there is a strong tendency of an increase in services exports from developed countries in particular,

suggesting that such countries have a competitive advantage.

In addition to travel and transport, which have until now been the major trade items, new growth

sectors are emerging in services trade.

chapter 3 emergence of new sources for growth · 2018. 11. 21. · chapter 3 emergence of new...

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