Globalisation of services: trade, foreign direct investment and regional development

Konstanze Hoechtberger (CISC - 3 The Potential for regionalising internationally traded services)

This paper examines the ways by which the process of globalisation coupled with advances in information and communication technologies (ICTs) affects technology-intensive business services sectors. By elaborating on the nature of trade, foreign direct investment (FDI) and international production strategies in technology-intensive business services, it attempts to provide a cautious assessment of the development prospects for regions incorporated into the sector`s emerging international division of labour. Services firms and also manufacturing firms, which locate their internal services functions in offshore locations use a variety of international services delivery modes and apply them in complementary ways. Services trade and FDI statistics are of limited value to grasp this complexity. Thus, the paper draws on selected country case studies to consider centralisation and decentralisation tendencies in the services sector and regional development implications of a globalising service economy. Although global cities dominate in the sector`s geography, the paper finds that services globalisation by the means of ICTs offers development prospects for less advanced regions in the world economy.

Related Priority Research Area: Internationally Traded Services

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