Services linkages and the value added content of trade

Services trade constitute roughly one-third of trade on a value added basis, and much of this is concentrated in margin services (transport, logistics) linked to trade in goods. However, producer services are also part of the value added contained in traded goods. This is especially true in high income countries, where services account for roughly 70 percent of value added. Working with data (a set of global social accounting matrices spanning intermittent years from 1992 to 2007) this paper examines the services embodied in trade on a value added basis. This includes not only the direct and indirect contribution of services to value added contained in a given country’s exports, but also the extent to which third-country value added in services, through intermediate linkages of imported goods and services, are also embodied in production and trade. This exercise serves to highlight not only the importance of non-tradables in trade, but also by extension the importance that productivity, foreign affiliates sales, and trade and investment in services may hold for interdependence and cross-border linkages.