Affecting Factors of International Trade in Services

Affecting Factors of International Trade in Services

With the deepening of the degree of economic service, the status of international trade is more and more prominent.

(I)The macro variables that affect the supply of international services

The ability of a country or region to provide services to the international market is directly affected by the level of development of the domestic service industry. A distinctive feature of the service is that the producer has a large degree of interaction with the consumer, in other words, the service production process largely affects the consumer’s evaluation of the final outcome of the service. Therefore, the domestic service industry has a high level of development of the country or region and has accumulated a wealth of experience in service production, which can efficiently provide customer satisfaction services.

According to Porter’s “National Diamonds” theory, the ability of a country or region to provide services to international markets is also affected by domestic demand for services. The higher demand for domestic services, the more able to promote the development of domestic services, so as to provide the ability to provide services to the international market. However, the demand for domestic services may also lead to another result, that is, the main target in the domestic, export incentives are suppressed, especially the large scale of the domestic economy is more likely to dominate domestic demand.

The ability of a country or region to provide services to the international market is also affected by its own trade in goods. On the one hand, many trade in services are accompanied by trade in goods, such as international freight services, insurance services, import and export credit services and maintenance services; on the other hand, according to Porter’s theory, cross-border business activities is the international competitiveness of the industry as the important factors in the export market in the leading countries or regions, which finally contribute to the smooth conduct of international trade in services.

(II)The macro variables that affect the demand for international trade in services

The demand for a country or region for foreign services is directly affected by the demand for domestic services. Service demand mainly comes from two aspects, one from the production needs, that is, producer demand; the second is from the consumer demand, that is, consumer demand. The demand for producer services is affected by the scale of the domestic economy. The greater the size of the domestic economy, the greater the demand for the services of the producers. The higher the income is, the higher the demand for services.

The demand for a country or region for foreign services is also affected by the level of development of the domestic service industry. If domestic service production is sufficient to meet domestic demand, the demand for foreign services is low. Similarly, the demand for a country or region for foreign services is also affected by its demand for foreign goods, because many imports of goods will lead to the corresponding import services.

The key to the successful integration of developing countries into the international service trade system is the increased participation in international trade in services. Open market is an irreversible trend, only actively participate in international competition, China’s service trade can flourish, China’s service industry can also get real development. The international market opportunities and challenges coexist, as long as China’s service enterprises can correctly grasp the pulse of the market, and the government to provide strong policy support, then China’s service trade development space is very large.

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