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Patrick Low

Significant strides have been made in recent years towards a fuller understanding of the role of services in global value chains and the economy more generally. Improvements in data collection and statistical methodology have played a major part in helping to identify services value and the multiple roles services play in production and trade. The chapter reports on a set of case studies of global value chains (GVCs) located in Asia (part of a wider collaborative project between a Hong Kong think tank and the Asia-Pacific Economic Cooperation (APEC) Policy Studies Unit. The case studies illustrate how as a result of bundling, all producer services are potentially tradable and therefore constitute a much greater prospective and actual source of value – contrary to earlier thinking on this matter. They also show that outsourcing is a frequent practice of lead firms, suggesting potential for greater participation among local firms and opportunities for upgrading. When policy interventions are treated as another source of (potential) value, it becomes clear that governments can contribute to productivity growth just as firms can through services. Considering the rapid development of new technologies such as artificial intelligence, robotics, additive manufacturing, the cloud and quantum computing, studies of this nature inevitably aim at a moving target. A final observation concerns the dysfunctionality of maintaining separate international regimes for goods, services and investment in a world where these are intimately connected in production, trade and consumption.