4.11 Structure of service imports
See Table 4.11 hereAbout the data
Definitions
Data sources
Balance of payments statistics, the main source of information for international trade in services, have many weaknesses. Until recently some large economies—such as the former Soviet Union—did not report data on trade in services. The level of disaggregation of important components may be limited and varies significantly across countries. There are inconsistencies in the methods used to report items, and the recording of major flows as net items is common practice (for example, insurance transactions are often recorded net as premiums less claims). These factors contribute to a downward bias in the value of the services trade reported in the balance of payments.
Efforts are being made to improve the coverage, quality, and consistency of the data. The Organization for Economic Cooperation and Development and Eurostat, for example, are working together to improve the collection of statistics on trade in services in member countries. And the International Monetary Fund is implementing the new classification of trade in services introduced in the fifth edition of its Balance of Payments Manual (1993).
But because of the difficulties in capturing all the dimensions of international trade in services, the record is likely to remain incomplete. Cross-border intrafirm service transactions, which are usually not captured in the balance of payments, are increasing rapidly as foreign direct investment expands and electronic networks become pervasive. One example of such transactions is transnational corporations’ use of mainframe computers around the clock for data processing, exploiting time zone differences between their home country and the host countries of their affiliates. Another important dimension of services trade not captured by conventional balance of payments statistics is establishment trade—sales in the host country by foreign affiliates. By contrast, cross-border intrafirm transactions in merchandise may be reported as exports or imports in the balance of payments.
• Services refer to economic output of intangible commodities that may be produced, transferred, and consumed at the same time. International transactions in services are defined by the IMF’s Balance of Payments Manual (1993), but definitions may nevertheless vary among reporting economies.
• Transport covers all transport services (sea, air, land, internal waterway, space, and pipeline) performed by residents of one economy for those of another and involving the carriage of passengers, the movement of goods (freight), rental of carriers with crew, and related support and auxiliary services. Excluded are freight insurance, which is included in insurance services; goods procured in ports by nonresident carriers and repairs of transport equipment, which are included in goods; repairs of railway facilities, harbors, and airfield facilities, which are included in construction services; and rental of carriers without crew, which is included in other services.
• Travel covers goods and services acquired from an economy by travelers for their own use during visits of less than one year in that economy for either business or personal purposes.
• Communications, computer, information, and other services cover international telecommunications and postal and courier services; computer data; news-related service transactions between residents and nonresidents; construction services; royalties and license fees; miscellaneous business, professional, and technical services; personal, cultural, and recreational services; and government services not included elsewhere.
• Insurance and financial services cover various types of insurance provided to nonresidents by resident insurance enterprises and vice versa, and financial intermediary and auxiliary services (except those of insurance enterprises and pension funds) exchanged between residents and nonresidents.
Data on exports and imports of services come from the balance of payments data files of the International Monetary Fund (IMF). The IMF publishes balance of payments data in the International Financial Statistics and in the Balance of Payments Statistics Yearbook.