2006 Impact of International Sourcing Trends OECD

2006 Impact of International Sourcing Trends OECD

Services now account for around two-thirds of output and foreign direct investment in most developed countries, and for up to 20-25% of total international trade. The importance of services in international trade remains comparatively modest because many services have only recently become tradable, and many others remain non-tradable. Rapid advances in information and communication technologies (ICTs) and the ongoing global liberalisation of trade and investment in services have increased the tradability of many service activities and created new kinds of tradable services. Many service sector activities are thus becoming increasingly internationalised, especially since ICTs enable the production of services to be increasingly location independent. This has led to the globalisation of services activities and facilitated the ICT-enabled offshoring of services, with associated changes in trade and cross-border investment in service activities and employment patterns.

This paper uses trade and employment data to examine the relationship between the share of employment potentially affected by offshoring and economic and structural factors, including trade in business services and foreign direct investment, using simple descriptive regressions for a panel of OECD economies between 1996 and 2003.

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