A Comprehensive Introduction to Regional Issues
Edited by Masahisa Fujita, Ikuo Kuroiwa and Satoru Kumagai
Chapter 8: Services Trade and Investment Liberalization
Christopher Findlay 8.1 INTRODUCTION The argument has been made that, in the case of one ASEAN member, the service sector is the oil in the engine of the economy that determines more than most people realize the course of Indonesia’s growth and its economic efficiency and international competitiveness.1 This notion of services as the ‘oil in the engine of the economy’ is pursued in this chapter. The scope of the chapter is to examine the factors that help or hinder services playing that role. The chapter has a particular focus on the extent of international integration of the service sector in the East Asian economies and on how an open service sector performs better itself and how it contributes to better performance in other parts of the economy, which in turn may lead to greater integration of other sectors of the economy as well. That is, tackling factors which affect integration in services has not only direct effects in that sector but also important indirect effects in the rest of the economy. The first part of the following section considers the scope of the service sector. The significance of the sector in the economy is then reviewed, and the phenomenon of a rising services share of output is discussed. A discussion follows of the nature of trade and investment in services and of barriers to trade in services. The significance of those barriers is examined and progress on liberalization in East Asia is reviewed, followed by a look at routes...
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