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Trading firms in the services sectors: comparable evidence from four EU countries

Abstract

We establish a set of stylised facts for trade and trading firms in five market services sectors using comparable firm- and activity-level data from four EU countries. Our analysis shows that exports account for much lower shares of overall sales in the services sectors than in manufacturing. This is because fewer firms are engaged in trade in the services sectors and also because within particular sectors firms trade a lower share of their sales on average. Services producers trade mostly goods, but in terms of value, trade in services is much more important to them than to manufacturers. Larger and more productive firms are more likely to be two-way traders and to engage in both goods and services trade. Trade by services firms is somewhat less dominated by firms that both export and import than trade by manufacturing firms. Few firms export many services or to many countries. The value of services exports is increasing in the number of markets served but not necessarily in the number of services traded.

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Notes

  1. According to data provided by UNCTAD (UNCTADstat 2013), the value of total services exports by the EU countries grew by 104 % in 2000–2006, while the total exports of goods grew by 85 %. Exports of services continued to grow faster than exports of goods also after 2006. Meanwhile, in just over a decade the ratio of world services exports to world GDP has increased from 4.1 % in 1995 to 6.2 % in 2008. This is a small fraction compared to world merchandise exports (25 % of world GDP) but still an impressive development. At a global level, exports of goods and services have been growing at the same speed since 1990. The EU countries have therefore clearly been specialising in services which underlines the importance of services for the future development of the EU.

  2. The manufacture of radio, television and communication equipment and apparatus (NACE 32) was removed for confidentiality reasons.

  3. See http://www.stat.fi/til/pul/2004/pul_2004_2006-04-21_men_001_en.html for a methodological description of the Statistics on International Trade in Services in Finland.

  4. Mode 1: cross-border supply covers services flows from one country to another country (e.g. banking or architectural services transmitted via telecommunications or mail). Mode 2: consumption abroad refers to situations where a service consumer (e.g. tourist or patient) travels to another country to obtain a service. Mode 3: commercial presence implies that a service supplier of one country establishes a territorial presence, including through ownership or lease of premises, in another country's territory to provide a service. Mode 4: presence of natural persons refers to persons of one country entering the territory of another country to supply a service (e.g. accountants, doctors or teachers).

  5. Response rates are typically 70 % or higher. The use of CSO data in this work does not imply the endorsement of the CSO in relation to the interpretation or analysis of the data. This work uses a research dataset which may not exactly reproduce statistical aggregates published by the CSO. The possibility for controlled access to the confidential micro dataset on the premises of the CSO is provided for in the Statistics Act 1993.

  6. We are grateful to Stephen McDonagh of the CSO for extracting this information.

  7. Shares of aggregate exports in aggregate sales vary from year to year. Thus, if the annual average growth rate of aggregate exports exceeds that of aggregate sales over the period this is not inconsistent with a decrease in the share of aggregate exports in aggregate sales between the first and the last year.

  8. Compared to earlier evidence for manufacturing, the export intensities for the manufacturing sector reported here span the range of values observed in other countries. ISGEP (2008) reports export intensities for all exporters (no distinction between one- and two-way traders) in manufacturing ranging from 18 % in Columbia to 53–54 % in Ireland and Slovenia for firms with 20 or more employees.

  9. Note the maximum number of markets served for Finnish services exports does not exceed 60 in any year between 2004 and 2007. This is not an artefact of excluding the observations that pertain to one or two firms to preserve confidentiality.

  10. The European Union Services Directive was adopted by the European Parliament and the Council on 12.12.2006. Member states were required to harmonise national legislation accordingly by 28.12.2009 (see http://ec.europa.eu/internal_market/services/services-dir/index_en.htm).

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Acknowledgments

This project is funded by the European Commission, Research Directorate General as part of the 7th Framework Programme, Theme 8: Socio-Economic Sciences and Humanities, Grant Agreement No. 244552 (SERVICEGAP). This publication reflects the views of the authors and not those of the institutions they are affiliated with. The European Commission is not liable for any use that may be made of the information contained therein.

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Correspondence to Stefanie A. Haller.

Appendix

Appendix

Types of services included in Figs. 6, 7 and Table 9.

France

Communication services Telecommunication and post
Construction services Foreign merchandise designated for major works
  Major works
Insurance services Insurance on merchandises bonus and service charge
  bonuses; bonuses; other insurance: bonus and service charges
  Reinsurance
Financial services Service charge and banking or financial charges from banking sector
  Service charge and banking or financial charges from nonbanking and private sector
Computer and information services Computer services
Royalties and licences, patents Royalties on patents, trade in know-how
  Sales of licences, property rights, author’s rights
Other business services  
Leasing Leasing of mobile and immobile goods (other than ships)
Direct business services Studies, research and technical assistance
  Overheads
  Other labour remuneration
  Subscriptions, advertising
Personal services, cultural services  
Audiovisual services Audiovisual

Finland

Transport services freight charges
Postal and courier services
Telecommunications services
Construction abroad
Construction in Finland
Financial intermediation services
Computer services
Information services
Royalty and license fees
Merchanting services and other trade-related services
Operational leasing
Legal services, accounting, auditing, bookkeeping, business and management consultancy and public relations services
Advertising, market research and public opinion polling
Research and development services
Architectural, engineering and other technical services
Agricultural services, mining services and on-site processing services
Other business services
Services between related enterprises not included elsewhere
Audiovisual and related services
Other personal, cultural and recreational services
Other unspecified services

Ireland

Communications (postal, courier, telecommunications)
Computer services
 (a) Licences
 (b) Other
Information services
Professional and consultancy services (legal, accounting, auditing, tax advice, etc.)
Architectural, engineering and other technical services
Advertising, market research, public relations
Financial services
Operating lease rentals
Insurance services
Research and development
Agricultural and mining and exploration services
Repairs
Processing
Agents’ fees, commissions etc.
Merchanting/drop shipping
Management fees between related companies
Miscellaneous services
Royalties, licences (excluding computer), copyrights, etc.

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Haller, S.A., Damijan, J., Kaitila, V. et al. Trading firms in the services sectors: comparable evidence from four EU countries. Rev World Econ 150, 471–505 (2014). https://doi.org/10.1007/s10290-014-0190-9

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  • DOI: https://doi.org/10.1007/s10290-014-0190-9

Keywords

  • Exports
  • Imports
  • Services
  • International comparison

JEL Classification

  • F14
  • D22
  • L80