Services: going Global?

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Services going Global?

• Dr. Truong Thi Kim Chuyen

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• Defining and the theorizing services
• National and global stimuti to the growth of
  services
• Rising per capita incomes
• Growing demand for healthcare and educational
  services
• Increasingly complex division of labor
• Growing size and role of the public sector
• Increasing international trade in services
• Rapid growth in outsourcing service functions

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• Service outsourcing benefits and drawbacks for
  all?
• Limits to service export growth in the
  semi-periphery and periphery
• Technology and infrastructure
• Education and training
• Government regulation and policies
• Corperate strategies

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• Geography of services
• Patterns and trajectories
• International trade in services
• Transnational investment patterns
• Export processing zones (EPZS)
• Agglomeration and new bussiness service
  concentrations
• Variety in the internationalization of services
• Internationalization of retailing
• International tourism
• Internationalization of finance
• Internationalization of bussiness services

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Defining and the theorizing services

• Services can be categorized into a number of
  major components, including finance, insurance
  and real estate business services
  transportation and communications wholesale and
  retail trade entertainment, hotels and motels
  public services and non-profit services.
• The distinction between services and
  manufacturing has come to be seen increasingly as
  redundant. The notion of service encapsulation of
  goods and materials is useful for understanding
  how services are increasingly incorporated into
  manufactured products.

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• Major forces that are driving the growth of
  services include rising per capita incomes
  growing demand for healthcare and educational
  services an increasingly complex division of
  labor the growing size and role of the public
  sector increasing international trade in
  services and the rapid growth in outsourcing
  service funtions.

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• Service outsourcing involves not only potential
  drawbacks but also potential benefits for the
  developed countries and the less developed
  countries.
• There are significant constraints related to
  technology and infrastructure education and
  training government regulations and policies
  and corporate strategies that can limit the
  growth the services and prevent certain LDCs from
  capturing some of service and outsourcing market,
  especially for IT-enables services.

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• The percentage of workers employed in services is
  uneven among different parts of the world.
• There is significant variation in the percentage
  of workers employed in services among the LDCs.

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• The structure of foreign direct investment has
  shifted toward services. The developed countries
  for the largest shares of FDI in services.
• Export processing zones (EPZs) are increasingly
  used to attract investment in export-oriented
  services by the LDCs.
• High value-added services, using skilled labor
  and tacit forms of knowledge, are highly
  agglomerated in world cities. In contrast,
  relatively low value-added increasingly dispersed
  to low wage peripheral countries.

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• As the world largest retailers like Wal-Mart have
  been expanding into foreign markets, they have
  been internationalizing their supply networks.
  E-shopping has added an additional dimension to
  retailing that does not involve traditional
  shopping venues.
• Eco-tourism can offer a more sustainable
  strategy for economic development in some
  peripheral regions.

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• The internationalization of finance has created
  opportunities and challenges for the LDCs in
  terms of the operation of transnational banks and
  FDI in financial services, the continued
  dominance of London, New York and Tokyo over
  foreign exchange transactions despite the
  increasing use of electric money, and the
  concentration of offshore banking centres in the
  LDCs.

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• The internationalization of business in term of
  BPO (Business process outsourcing) was begun by
  US TNCs. The kinds of service activity involved
  now include not only call centers, computer
  network support, legal services, accounting and
  procurement, but also software development,
  research and development and engineering
  services. The main outsourcing destinations for
  BPO in the LDCs are India, Israel, the
  Philippines and South Africa.

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National and global stimuli to the growth of
services

• Rising per capita incomes
• Growing demand for healthcare and educational
  services
• Increasingly complex division of labor
• Growing size and role of the public sector
• Increasing international trade in services
• Rapid growth in outsourcing service functions

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PATTERNS AND TRAJECTORIES

• Nowadays, there is an increase in service
  employment
• But the percentage in services is different
  between parts of the world (both DCs and LDCs)

Patterns and Trajectories
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PATTERNS AND TRAJECTORIES
Most people in DCs are employed in tertiary
sector
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PATTERNS AND TRAJECTORIES

• Workforce in service
• -DCs ¾
• -Latin and Caribbean 2/3
• -Central, eastern Europe and Russian ½
• -East Asia, Sub-Saharan, South Asia, SEA and
  Pacific 1/3?1/4

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EXPORT PROCESSING ZONES (EPZs)

• Definition
• Type of free trade zone (FTZ)
• By government, to promote export.
• Also called development economic zone or special
  economic zone.
• Offer incentives to attract foreign investment.

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EPZs (cont.)
Number of countries with EPZs for services
World 91
Asia and the Pacific 26
Latin America and the Carribean 26
Africa 20
Central and Eastern Europe 13
European Union and other developed countries 6
? Most EPZs locate in LDCs.
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EPZs in Vietnam

• Quang Trung Software City
• Location District 12, HCM.C.
• Constructed in 2000, operated in 2001.
• 104 enterprises (55 is foreign enterprises).
• Includes consultant service, telecom service,
  advertising service, offices for lease

Export processing zones
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EPZs in Vietnam (Cont.)

• Sai Gon High Tech Park
• Location District 9, HCM.C.
• Operated in 2002
• A lot of foreign investor Intel (USD 1
  billion), Nidec (USD 1 billion)
• Includes microelectronic, information
  technologies, telecom, biotechnology, precision
  mechanics - automation - robonics, advanced
  materials - nanotech - new energy.

Export processing zones
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AGGLOMERATION AND NEW BUSINESS CONCENTRATIONS

• Two kinds of knowledge
• Standardized knowledge include form of
  information that are easily transmitted from one
  person to another such as quantitative data,
  publicly know rules.
• Tacit knowledge includes information which is not
  standardizes, change rapidly and is often not put
  in writing.

Agglomeration
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• Actor-network theory
• Actor-network theory, sometimes abbreviated to
  ANT, is a sociological theory which contains not
  merely people, but objects and organizations.
• Actor-Network Theory focus on question of power,
  politic, social relation and highlight that fact
  that the global service economy is contingent
  outcome of actors situates in network

Agglomeration
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AGGLOMERATION
Agglomeration
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AGGLOMERATION
Agglomeration
10 Most Populated Urban Agglomerations In The
World
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• AGGLOMERATION
• High value-added services, skilled labor and
  tacit forms of knowledge are highly agglomerated
  in the worlds global services.
• Low value-added service functions back offices,
  call centers and offshore banks is increasing
  dispersed to the worlds low wage periphery
• Factors affected industrial agglomeration in VN
  Business Environment , Supporting Industry ,
  Business Development service. (Institute for
  Industrial Policy and Strategy, Vietnam )

Agglomeration
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• NEW BUSINESS CONCENTRATION

• Expert thinking involving solving problem for
  which there are no rule base solution
• Complex communication involving interacting with
  other worker in other to acquired information, to
  explain it or to persuade others of its
  implications for action

Agglomeration

• Routine cognitive tasks requiring mental skills
  that are well describe by logical rule