Chapter 17: The changing landscape of global trade in business services and value chains: Are emerging economies taking over?
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This chapter looks into the growing involvement of emerging economies in the trade of business services and value chains since 1995. With the initial rise of India in the provision of business services, other developing countries such as Brazil, China, Mexico, Poland, Russia and the Philippines have also entered the sector. The sector is growing and an increasing number of developing countries from Africa, Asia, Eastern Europe and Latin America are participating in value chains in business services. The chapter begins with an analysis of the growing participation of emerging markets in global value chains (GVCs) in business services using data on exports in terms of gross values and value added. Using several indicators from the GVC literature, we illustrate the rising participation of emerging countries in the trade in business services and their embodiment in final goods and services. The chapter then goes on to describe how emerging countries from around the world have penetrated and upgraded in the three prominent segments of business services value chains: information technology outsourcing (ITO), business processes outsourcing (BPO) and knowledge processes outsourcing (KPO). Some contributing factors that have facilitated developing countries’ involvement in the trade of business services and their inclusion in value chains are also addressed.

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