Presentation on theme: "Is Thailand taking advantage of globalization of services? Service Exports: A Toolkit for Assessing Export Performance & Growth International Trade Department."— Presentation transcript:
Is Thailand taking advantage of globalization of services? Service Exports: A Toolkit for Assessing Export Performance & Growth International Trade Department PREM, The World Bank November, 2011
SAMPLE WDI, World Bank and BOP, IMF Primarily focused on comparing Thailand's performance in service exports with Cambodia, Malaysia, China and India Questions: - To what degree also bring goods analysis as a focal comparator? ……
CONTENTS How important are services to growth in Thailand? Service Export performance: - Export Growth - Tradability - Productivity - Modernity - Specialization Service Export Sophistication Service Export Sophistication and Economic Growth
SERVICES AND GROWTH starting the discussion
Thailand has a relatively low share of services given its stage of development
Contribution to Growth of service has declined
Declined by around 7 percent
Countries with higher service output growth grew faster
SERVICE EXPORT PERFORMANCE Service exports growth tradability productivity modernity specialization
Growth in Goods and service Exports
Growth in Service Exports
Comparative Advantage, Thailand
Share of services in total exports declined
TRADABILITY – service exports/service value added (%)
Service Productivity, in constant 2000 US$ (NOTE: Labor force)
EVOLUTION OF SERVICE EXPORTS Changing nature From Traditional to Modern
Share of Traditional vs. Modern in 1990 and 2009
SERVICE EXPORT SOPHISTICATION
Measure of Services Export Sophistication Inspired by Hausmann, Hwang and Rodrik (2007), What you export matter : Goods EXPY a proxy for the sophistication of goods or the production frontier in a country. A country with a high level of self- discover y latch on to higher productivity goods, not simply the goods that are determined by their endowments. We wanted a measure capturing countries discovery process in terms of services as well as the changing nature of services: Service EXPY Not only have countries become more sophisticated in the type of services they export, but some services themselves have become more sophisticated.
Service PRODY PRODY is a proxy for the expected income/productivity level associated with a particular service category. Construct PRODYs for each service category, for each year of analysis (PRODYs are the same for all countries). The sum of the GDP of countries exporting this service, weighted by their revealed comparative advantage.
Service EXPY EXPY is a proxy for the income/productivity level to be expected from a particular service export basket. Construct EXPYs for each country, for each year of analysis. The sum of a countrys PRODYs, weighted by their share in the countrys service export basket.
Difference Service EXPY and Goods EXPY Goods EXPY uses static PRODYs, i.e. PRODYs from one period of time. A change in Goods EXPY is hence a change in the countrys export basket. Service EXPY uses dynamic PRODYs. A change in Service EXPY is either due to changes in the export basket of the country or a change in the expected income/productivity level of a particular service. Two reasons: The two aspects we want to capture The high aggregation of service exports in the data
Reasons for being cautious when using service export data The high level of aggregation A less straightforward recording system than for goods: Within services Between goods and services AREAS OF FUTURE EXPLORATION
Global PRODYs by category
PRODY growth rates
Service Export Sophistication
Service EXPY as expected given GDP per capita in 1993
General shift upwards and relative decline for thailand, 2007
Data and specification 3 year panel Fixed Effect & Generalized Method of Moment Number of countries Specification
Dynamic service EXPY and growth: 3 year panel, fixed effect and System GMM, (dependent variable – GDP per capita growth) Note: All equations include period dummies. Fixed effects include dummies for countries. GMM is the Blundell-Bond System-GMM estimator using lagged growth rates and levels as instruments. The GMM estimation also uses log population as additional instruments. * Significant at 10% level ** Significant at 5% level *** Significant at 1% level. Robust t-statistics are in parentheses.
Dynamic service EXPY and growth: 3 year panel data regressions, (Controlling for Size of Service sector and Goods export sophistication) (dependent variable – GDP per capita growth) Note: All equations include period dummies. Fixed effects include dummies for countries. GMM is the Blundell-Bond System-GMM estimator using lagged growth rates and levels as instruments. The GMM estimation also uses log population as additional instruments. * Significant at 10% level ** Significant at 5% level *** Significant at 1% level. Robust t-statistics are in parentheses.
Dynamic service EXPY and growth: 3 year panel data regressions, (Controlling for Size of Service sector and Goods export sophistication) (dependent variable – GDP per capita growth)
DYNAMIC SERVICE EXPY AND GROWTH: 3 YEAR PANEL DATA REGRESSIONS (SAMPLE: COUNTRIES WITH PER CAPITA INCOME BELOW US$ 10,000) (DEPENDENT VARIABLE – GDP PER CAPITA GROWTH)
FUTURE OF SERVICES TRADE Looking beyond….
1. NASSCOM/McKinsey type data within country, example
2. Mapping for Results
3. Benchmarking performance Service Exports Sophistication with determinants – Matrix method
4. Internet Focus Value of consumer and producer surplus in Thailand What are the start ups emerging in What is the VC and start up environment