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The Services Sector: How Best to Measure It?
Although calculating the exports of goods is a relatively routine job, measuring trade in services is not so simple. A recent conference organized by the International Trade Administration attempted to identify better ways of measuring this vital sector of the U.S. economy.
by John Ward
Knowing how many goods are traded across borders has been a settled science for some time. Data have been collected at various points of shipment; sorted by industry and country of destination; and made available monthly, quarterly, and annually by the federal government for many years. Not so for the services sector. Largely dependent on a variety of surveys, data on the services sector can often be subject to significant time lags and gaps in industry coverage.
For More Information
More information about the conference, including remarks and presentations, are available on the Web.
In an attempt to identify ways to improve situation, more than 140 policy makers and business leaders gathered in Washington, D.C., on September 14, 2010, to participate in an all-day conference, “Measuring and Enhancing Services Trade Data.” Organized by the Manufacturing and Services unit of the International Trade Administration (ITA), the conference attracted speakers and presenters from several federal data collection agencies, including the U.S. Census Bureau, the Bureau of Economic Analysis (BEA), and the Bureau of Labor Statistics, as well as private-sector innovators in the services information arena.
Domestic and International Importance
The services sector is an important part of the U.S. economy. According to BEA, in 2009 services accounted for 79.6 percent of U.S. private-sector gross domestic product (GDP), or $9.81 trillion. Services jobs accounted for more than 80 percent of U.S. private-sector employment, or 89.7 million jobs.
The United States enjoys a surplus in services trade. In 2009, exports of services totaled $502 billion, with a surplus of $132 billion over services imports. This surplus is larger than that of any other country. Currently, the services sector accounts for 32 percent of total U.S. exports.
Statistics Lag Change
Francisco Sánchez, under secretary for international trade, outlined the challenge facing data collection entities and their business users to conference attendees, “The U.S. trade data system is excellent. But it does not provide detailed, disaggregated information on some vital subjects. For example, it cannot tell us what the United States imports from and exports to Colombia in services. Nor do we know our current trade balance in health care services.”
This sentiment was echoed by Rebecca Blank, under secretary for economic affairs at the Department of Commerce, who noted that “over the past decades, the American economy has shifted from a manufacturing-based economy to a services-based one. Yet our statistics have lagged behind this change.”
Challenges and Next Steps
Today, detailed data on exported services are available exclusively from survey-based reports compiled by the Census Bureau. Those reports include the economic census that is conducted every five years and the Services Annual Survey. In addition, data on exports of services by type of service are available from BEA, which compiles its statistics both from surveys that it conducts and from data provided by other government agencies and private sources.
Catherine Mann of Brandeis University detailed some of the challenges posed by survey-based data collection. She suggested that U.S. statistics collecting agencies increase their partnerships with trade association and private aggregators, but she cautioned that there are challenges with this approach. They include difficulty in establishing classifications that meet users’ needs, confidentiality rules, the need for official approval if the published data involve private entities, and private parties’ fear of what the data will reveal.
Among the next steps discussed at the conference for improving services trade data were supporting the work of industry-specific groups, developing recommendations for public-private partnerships, identifying short-term opportunities for data sharing, and developing ideas for improving sample frames and response rates.
Recovery and Growth
The data collection improvements discussed at the conference have the potential to bring advancements to the nation’s overall economic performance. Sánchez noted, “Accurately measuring trade in services is crucial to assessing our economic competitiveness and to President Obama’s National Export Initiative, which relies on growing exports to lead our economic recovery and growth.”
John Ward is a writer in the International Trade Administration’s Office of Public Affairs. Barbara Rawdon of the International Trade Administration’s Manufacturing and Services unit assisted with this report.
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