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Services: going Global?

Services: going Global?. Dr. Truong Thi Kim Chuyen. Defining and the theorizing services National and global stimuti to the growth of services Rising per capita incomes Growing demand for healthcare and educational services Increasingly complex division of labor

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Services: going Global?

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  1. Services: going Global? Dr. Truong Thi Kim Chuyen

  2. Defining and the theorizing services • National and global stimuti to the growth of services • Rising per capita incomes • Growing demand for healthcare and educational services • Increasingly complex division of labor • Growing size and role of the public sector • Increasing international trade in services • Rapid growth in outsourcing service functions

  3. Service outsourcing: benefits and drawbacks for all? • Limits to service export growth in the semi-periphery and periphery • Technology and infrastructure • Education and training • Government regulation and policies • Corperate strategies

  4. Geography of services • Patterns and trajectories • International trade in services • Transnational investment patterns • Export processing zones (EPZS) • Agglomeration and new bussiness service concentrations • Variety in the internationalization of services • Internationalization of retailing • International tourism • Internationalization of finance • Internationalization of bussiness services

  5. Defining and the theorizing services • Services can be categorized into a number of major components, including finance, insurance and real estate; business services; transportation and communications; wholesale and retail trade; entertainment, hotels and motels; public services; and non-profit services. • The distinction between services and manufacturing has come to be seen increasingly as redundant. The notion of service encapsulation of goods and materials is useful for understanding how services are increasingly incorporated into manufactured products.

  6. Major forces that are driving the growth of services include rising per capita incomes; growing demand for healthcare and educational services; an increasingly complex division of labor; the growing size and role of the public sector; increasing international trade in services; and the rapid growth in outsourcing service funtions.

  7. Service outsourcing involves not only potential drawbacks but also potential benefits for the developed countries and the less developed countries. • There are significant constraints – related to technology and infrastructure; education and training; government regulations and policies; and corporate strategies – that can limit the growth the services and prevent certain LDCs from capturing some of service and outsourcing market, especially for IT-enables services.

  8. The percentage of workers employed in services is uneven among different parts of the world. • There is significant variation in the percentage of workers employed in services among the LDCs.

  9. The structure of foreign direct investment has shifted toward services. The developed countries for the largest shares of FDI in services. • Export processing zones (EPZs) are increasingly used to attract investment in export-oriented services by the LDCs. • High value-added services, using skilled labor and tacit forms of knowledge, are highly agglomerated in world cities. In contrast, relatively low value-added increasingly dispersed to low wage peripheral countries.

  10. As the world largest retailers like Wal-Mart have been expanding into foreign markets, they have been internationalizing their supply networks. E-shopping has added an additional dimension to retailing that does not involve traditional shopping venues. • Eco-tourism” can offer a more sustainable strategy for economic development in some peripheral regions.

  11. The internationalization of finance has created opportunities and challenges for the LDCs in terms of the operation of transnational banks and FDI in financial services, the continued dominance of London, New York and Tokyo over foreign exchange transactions despite the increasing use of electric money, and the concentration of offshore banking centres in the LDCs.

  12. The internationalization of business in term of BPO (Business process outsourcing) was begun by US TNCs. The kinds of service activity involved now include not only call centers, computer network support, legal services, accounting and procurement, but also software development, research and development and engineering services. The main outsourcing destinations for BPO in the LDCs are India, Israel, the Philippines and South Africa.

  13. National and global stimuli to the growth of services • Rising per capita incomes • Growing demand for healthcare and educational services • Increasingly complex division of labor • Growing size and role of the public sector • Increasing international trade in services • Rapid growth in outsourcing service functions

  14. PATTERNS AND TRAJECTORIES • Nowadays, there is an increase in service employment • But the percentage in services is different between parts of the world (both DCs and LDCs) Patterns and Trajectories

  15. PATTERNS AND TRAJECTORIES Most people in DCs are employed in tertiary sector

  16. PATTERNS AND TRAJECTORIES Workforce in service: -DCs: ¾ -Latin and Caribbean: 2/3 -Central, eastern Europe and Russian: ½ -East Asia, Sub-Saharan, South Asia, SEA and Pacific: 1/31/4

  17. EXPORT PROCESSING ZONES (EPZs) • Definition: • Type of free trade zone (FTZ) • By government, to promote export. • Also called development economic zone or special economic zone. • Offer incentives to attract foreign investment.

  18. EPZs (cont.)  Most EPZs locate in LDCs.

  19. EPZs in Vietnam QuangTrung Software City: • Location: District 12, HCM.C. • Constructed in 2000, operated in 2001. • 104 enterprises (55% is foreign enterprises). • Includes: consultant service, telecom service, advertising service, offices for lease… Export processing zones

  20. EPZs in Vietnam (Cont.) SaiGon High Tech Park • Location: District 9, HCM.C. • Operated in 2002 • A lot of foreign investor: Intel (USD $1 billion), Nidec (USD $1 billion) … • Includes: microelectronic, information technologies, telecom, biotechnology, precision mechanics - automation - robonics, advanced materials - nanotech - new energy. Export processing zones

  21. AGGLOMERATION AND NEW BUSINESS CONCENTRATIONS Two kinds of knowledge: • Standardized knowledge include form of information that are easily transmitted from one person to another such as quantitative data, publicly know rules. • Tacit knowledge includes information which is not standardizes, change rapidly and is often not put in writing. Agglomeration

  22. Actor-network theory • Actor-network theory, sometimes abbreviated to ANT, is a sociological theory which contains not merely people, but objects and organizations. • Actor-Network Theory focus on question of power, politic, social relation and highlight that fact that the global service economy is contingent outcome of actors situates in network Agglomeration

  23. AGGLOMERATION Agglomeration

  24. AGGLOMERATION Agglomeration 10 Most Populated Urban Agglomerations In The World

  25. AGGLOMERATION • High value-added services, skilled labor and tacit forms of knowledge are highly agglomerated in the world’s global services. • Low value-added service functions: back offices, call centers and offshore banks is increasing dispersed to the world’s low wage periphery • Factors affected industrial agglomeration in VN: Business Environment , Supporting Industry , Business Development service. (Institute for Industrial Policy and Strategy, Vietnam ) Agglomeration

  26. Expert thinking involving solving problem for which there are no rule base solution • Complex communication involving interacting with other worker in other to acquired information, to explain it or to persuade others of its implications for action NEW BUSINESS CONCENTRATION: Agglomeration • Routine cognitive tasks requiring mental skills that are well describe by logical rule

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