SEVICES: GOING GLOBAL? pot

Lecturer: Dr. Truong Thi Kim Chuyen
CONTENT
I. Defining and the theorizing services
II. National and global stimuli to the growth of
services
III. Service outsourcing: benefits and drawbacks
for all?
IV. Limits to service export growth in the semi-
periphery and periphery
V. Geography of services
VI. Variety in the internationalization of
services
Group members

Thái Thụy Tường Vy

Đỗ Bảo Khánh

Phạm Bình Dương

Đoàn Anh Việt

Nguyễn Thị Anh Thư
11.1/ Defining and the theorizing
services
I. Defining and the theorizing services
Following Fisher – Clark thesis, services have been
defined:

Comprising what remains after agriculture, mining and manufacturing
are excluded. (1

st
defined way)

Production and consumption of intangible inputs and outputs. (2
nd

defined way)
1
st
defined way
Differences between manufacturing and
services play important implications

For LDCs and the DCs

For measuring and studying services
Services are categorized into 7 major components

Finance, insurance and real estate

Business services

Transportation and communications

Wholesale and retail trade

Entertainment, hotels and motels

Public services at all government levels


Non-profit services
2
nd
defined way
•
The distinction between tangible manufactured goods and
intangible services is not clear cut
•
Many manufactured products have come to be offered not in
their own right to consumers, but in terms of their wider
service attributes. This has occurred in 2 ways
−
The manufactured products can be offered along with closely aligned
service products in a single package
−
Instead of buying a manufactured product in a single one-time purchase,
a consumer can buy the service which the manufactured product
provides as part of a continuing process involving long-term customer
contact through service delivery
Service encapsulation
11.2/ National and global stimuli
to the growth of services
II. National and global stimuli to the
growth of services

Rising per capita incomes

Growing demand for healthcare and educational services

Increasingly complex division of labor


Growing size and role of the public sector

Increasing international trade in services

Rapid growth in outsourcing service functions
11.3/ SERVICE OUTSOURCING:
BENEFITS AND DRAWBACKS FOR
ALL?

Deciphering outsourcing terminology
Outsourcing/offshoring
Where How
Domestically Abroad Affiliated company
( Internal )
Unaffiliated company
( External )
Outsourcing √ √ √
Offshoring √ √ √
Captive
outsourcing
√ √
Offshore
outsourcing
√ √

Outsourcing can be done domestically or abroad, involves work done
externally

Offshoring is always done abroad, the work can be done either

internally

External outsourcing – where the work is done by unaffiliated
companies ( including independent foreign subcontractors, as in
offshore outsourcings )

Internai outsourcing – where the work is done by affiliated companies
as in captive outsourcing

While the outsourcing of services is still at a relatively early age, it is
seen as representing the leading edge of changes in global production

UNCTAD : Reflect a shift to a new internal division of labour in the
production of services

OECD : The total number of jobs could be affected by international and
domestic outsourcing

Service and manufacturing activities, important differences are
expected to fuel an acceleration in service outsourcing

First, There is significant room for growth

Second, The rate of increase in the amount of services that has become
tradable

Third, Manufacturing companies have primarily carried out the
outsourcing of goods production

Fourth, Skill levels are typically higher


Fifth, Services may be more mobile than outsourced manufacturing
activities

The benefits of service outsourcing for LDCs include the criterion of
higher skill jobs involving better pay, training and transferable skills
and associated infrastructure investment that can contribute to
further local job growth

The drawback for some LDCs include the possible relocation of
outsourced service activities to other more competitive LDC locations
unless worker skills and local infrastructure are continuously
upgraded
11.4/ LIMITS TO SERVICE
11.4/ LIMITS TO SERVICE
EXPORT GROWTH IN THE
EXPORT GROWTH IN THE
SEMI-PERIPHERY AND
SEMI-PERIPHERY AND
PERIPHERY
PERIPHERY
Semi-periphery and periphery
Semi-periphery and periphery

The semi-periphery countries are the industrializing,
mostly capitalist countries which are positioned between
the periphery and core countries

The periphery countries (sometimes referred to as just
the periphery) are those that are less developed than the

semi-periphery and core countries.
TECHNOLOGICAL LIMITATIONS:
DIGITAL FORM
USE BY COMPUTER
MADE TO
OUTSORCING
TECHNOLOGY AND
TECHNOLOGY AND
INFRASTRUCTURE
INFRASTRUCTURE
TECHNOLOGICAL LIMITATIONS:

Ex: Africa has less than 1 internet host per 1000
inhabitants
LIMITED INFRASTRUCTURE:
LIMITED INFRASTRUCTURE:
EX: LDCs cannot link into telecommunications network in
submarine cables
=> They are limited in their ability to develop competitive
base for services exports
Lack of education and training is a limiting
factor in knowledge-intense services.
EDUCATION AND TRAINING
EDUCATION AND TRAINING