The contribution of services to trade and development in Southern Africa

Services are the fastest growing portion of world trade and now account for nearly a quarter of global exports. This presents opportunities for emerging economies to adapt and enter new markets. Many countries in southern Africa have struggled to diversify from a heavy reliance on primary commodities towards manufacturing industries. Tradable services could contribute to economic growth and development by bolstering industrial capabilities, facilitating productivity growth, and contributing directly to exports. The authors examine evidence on international services trade for the Southern African Development Community between 1995 and 2012, and supplement this with a review of Foreign Direct Investment from South Africa. Tradable services appear to have made a limited contribution to total trade for most countries, and there is little evidence of significant regional integration or specialization in higher value-added activities. The role of tradable services is an important policy and research agenda that warrants much more attention all round.