Trade is about better services
Trade
is not just about ‘things’ (goods), it’s also about ‘services’. Services range
from insurance and banking to telecoms and tourism – “anything you can’t drop on
your foot”, as someone put it. Often services are invisible such as when a UK
company sells insurance online to an Indian company.
And just as trade in goods can boost developing country economies, so can opening up services. For example, reliable banking facilities help attract incoming investment, ensure that local savings are turned into local investment and enable small businesses to get credit and cut overheads.
Opening up services like telecoms to competition can revolutionise the prosperity of people and their countries. In Botswana, it led to a doubling of landline coverage, while the numbers using mobile phones leapt from none in 1998 to 250,000 in 2001 – around 16% of the population.
When one out of every ten people gets access to a mobile phone in a developing country, it’s estimated that national earnings rise by 0.6%. Opening up services can provide real benefits to developing countries, as long as the process is managed well and regulated properly.
And as long as developing countries are able to choose which services they want to open up and how. Trade can help reduce poverty, but only if the conditions are right.
Global trade must take place on a level playing field, and the trouble at the moment is that developing countries are being asked to play uphill and into a fierce wind.
This case study is part of Trade Matters
Other links to stories about opening up services
- UK to give £100 million a year to help poor countries trade their way out of poverty (Nov, 2005)
- Developments Magazine:
Only Connect - how mobile technology is changing the face of development
- Sending money home - DFID-supported site making it easier and cheaper to send money back to developing countries
