SINGAPORE'S TRADE IN SERVICES : CHALLENGES AND PROSPECTS

Abstract

The past decade has seen a growing interest among economists in services generally and in international trade in services in particular. There are several reasons for this phenomenon. The first reason is the growing importance of services in most economies, as measured by their share in the value of national output. The second reason is the range of new possibilities for the development of services generated by technological changes in the service sector, which may amount to a service revolution. Thirdly, and perhaps of more immediate significance to international trade in services, is the inclusion of services for the first time in the current round of GATT negotiations. This A.E. looks into Singapore's trade in services, which is of special interest to us due to its importance and impact on our economy. Since the 1960s, Singapore has always had a large service sector contributing two-thirds to our GDP. And it is also due to our growing surplus in trade in services that helps to offset our merchandise trade deficits since 1986. Special reference will be made to three service sub-sectors, namely: Tourism, Financial Services and Information Technology (IT). Tourism is chosen due to its relatively large share of service exports while Financial Services is chosen in the light of Singapore's development into a regional financial centre. As for IT, our government is trying to create a niche and its growing importance cannot be ignored, as we enter into the technology age. As we study the structural changes within the service sector, we hope to identify the different niches in services that Singapore has developed in the past three decades. With this, we then seek to examine the challenges and prospects facing these three sectors. Since services are generally believed to be labour intensive, attempts are also made to explain how, Singapore, as an increasingly labour-scarce has been enjoying a comparative advantage in services for the three decades.