This document discusses three transformational trends in global trade and foreign direct investment: trade in tasks, the internationalization of services, and the rise of the global South. It notes that trade and FDI have become more interactive and extended into new economic sectors like services. It also highlights the growing role of emerging markets in global trade and investment. The document argues that these trends present both new opportunities and challenges for developing countries regarding trade, growth, and competitiveness. It emphasizes that services trade will be increasingly important and that regulations need to facilitate both services exports and imports to boost productivity.

1. Reaping the Benefits from Trade and
FDI 2.0
Erik von Uexkull
Country Economist, AFTP3
Conference on ‘Trade and Regulation of Services in Africa’
Addis Ababa, 5/6/2013

2. Purpose
• Paper commissioned by FPD Investment Climate unit
for trade logistics, investment policy and business
taxation (CICTI)
Review trade, FDI, growth (TFG) linkages
Highlight transformational trends in the global economy
and their impact on TFG relationship
Implications for trade logistics / investment policy / tax in
developing countries?
Implications for trade and regulation of services in Africa

3. Why trade and FDI 2.0?
More interactive
Extends into new parts of life
New players

4. Why trade and FDI 2.0?
Three transformational trends in global trade
and FDI:
More interactive: Trade in Tasks
New parts of life: The Internationalization of Services
More players: The Rise of the South

5. Trade in Tasks

6. Trade in Tasks

7. Trade in Tasks
• Insiders and Outsiders: Firms engaging in trade
in tasks (TNT = both importing and exporting)

8. The Internationalization of Services
• Services account for over two thirds of GDP, but
only 20% of world trade, but that is changing
ServicesExports/GDP

9. The Internationalization of Services
“Services can be an engine of export growth for some
countries (…) but more important is that they are a key
determinant of the competitiveness of all firms in open
economies.”
Francois and Hoekman (2009)

10. The Internationalization of Services
• Services trade can make key inputs cheaper and
thus boost competitiveness of domestic firms

11. The Rise of the South

12. The Rise of the South
• The ‘great doubling’
• A commodity boom
• South-North investment
• Looking ahead
– South-South offshoring?
– Another great doubling?

13. The Great DoublingShareinLMICManufacturingExports
• Competition is getting tougher

14. A Commodity Boom
• While demand for commodities is rising

15. What does all this mean for trade, FDI and
growth?
• New gains from trade, but also new
challenges
• A wider view on openness
Behind the border issues
Services Regulation
Stronger trade – FDI complementarity
A two way street
• Trade costs matter more
• Intra firm trade and global value chains
• New markets and new role models

16. Implications for trade and regulation
of services in Africa
• Trade in Services needs to be seen in the context
of other fundamental trends in the global
economy
• Services play a key role for reaping the benefits
from trade and FDI 2.0
• New opportunities in services exports, but
imports might be even more important
 Productivity / competitiveness
 ‘reverse offshoring’
 ‘integration services’
 Learning / innovation

17. Implications for trade and regulation
of services in Africa
• But openness to services trade is complex…
 Regulation
 Competition
 Link with FDI
 Role of the public sector
• … and so is analytical work on services
trade
 Data
 Data
 Data

18. Thank you!
jvonuexkull@worldbank.org