Recognising the role of tradable service exports in the South African economy: an untapped resource

Abstract

The contribution of services embedded in manufactured products in world trade has greatly increased since the 1980s. So too has services as a direct export. South Africa is an interesting case of an emerging economy that has struggled to diversify its export basket beyond basic commodities, despite having a robust domestic service sector. The article assesses the contribution of service exports to international trade in South Africa. Balance of payments data confirm that services trade is modest compared to merchandise trade. Exports in higher-value services show strong growth, although off a low base. Yet certain kinds of international linkages are not counted in official trade statistics. These service firms are also more productive, report higher output and usually pay better wages than those focused on the domestic market as mirrored in studies of manufacturing exports. We advocate for further research and greater recognition of tradable service exports in trade policy.