August 27, 2007 --  Services are accounting for a larger and larger share of the economy, employment, trade and foreign investment all over the world. Since 1990, cross-border trade in services has tripled and the stock of foreign direct investment in services quadrupled. Growth in services has been consistently higher than that of goods, and, in recent years.

The rapid pace of technological change (information and communication technologies, biotechnology nanotechnology, etc.) is ushering in a scenario where digitalization and growing connectivity extend daily the frontier between tradable and non-tradable goods. Modern services are at the heart of the debate on competitiveness and technological innovation.

Modern services provide inputs that are increasingly vital to economic growth and higher productivity by improving financial intermediation, infrastructure, logistics, use of information and communication technologies (ICTs), education and the quality of public policies.

In its report  Latin America and the Caribbean in the World Economy 2006. Trends, 2007, the Economic Commission for Latin America and the Caribbean (ECLAC) analyzes regional performance in international trade in services, especially as compared with Asian countries, and highlights the  potential of Latin America and the Caribbean to transform itself into a major exporter of services.

Over the past two decades, the region's share of world trade in services has decreased. Between 1985 and 2005, these expanded by a factor of 4.5 in Latin America and the Caribbean, 6.2 in the world, 8 in the ASEAN countries and Hong Kong, 14 in India and 24 in China.

In this report,  ECLAC focuses on "other services." including communications, construction, financial, insurance, royalties, licenses, as well as "other business services" such as accounting, legal and consultancy services, advertising and market research, research and development, and technical services related to architecture, engineering, agriculture and mining, among others.  Trade in "other services" has grown more quickly than transport and travel (tourism), the other major category of services in international trade. These services, which allow companies to concentrate their resources on their core business and subcontract ancillary services to third-parties, acquire a strategic character that allows other sectors (industrial, primary and tertiary alike) to develop fully.

Although Latin America and the Caribbean have been less successful than India and China at capturing segments of the growing international demand for high-quality services, the region has great potential to reverse that trend. Its advantages include an ever-larger body of skilled labour with fairly competitive pay levels, a good-quality technological infrastructure and cultural similarities with the Western countries.

For the region to make better use of the opportunities offered by the trade in services, there needs to be a major push by the public and private sectors to produce better-quality, competitively priced services.

To accomplish this, it is necessary to achieve greater convergence among the regulatory frameworks of countries in the region and the gradual removal of barriers to trade in services, at least in sectors important to the overall competitiveness of the economy.

Improving human capital is probably the most important task for Latin America and the Caribbean. Modern services generally require highly-skilled personnel, which depends on the creation of ICT university courses and training programmes, especially for small and medium-sized enterprises. It is also vital to encourage the learning of English, the dominant language in international trade, along with better teaching of mathematics and information technology in secondary schools. Public policy plays a key role here, both in working with the private sector and in fostering the expansion of a critical mass of skilled personnel resources in sectors with the greatest competitive potential.

An important step in easing access to modern technologies such as telecommunications is to improve regulatory and competition policy with a view to stimulating investment and ensuring that high-quality services are provided at the lowest possible cost. Greater broadband Internet penetration makes it easier to sell more complex electronic services internationally, and gives a major boost to companies' competitiveness and productivity.

Another measure to encourage service exporting is quality certification, for example of the ISO 9000 type. Such certification enhances international credibility and facilitates access to international business opportunities, including possibilities to integrate into international value chains.