UN trade and development (UNCTAD) says the current trade growth in the services sector notwithstanding, it cannot generate enough quality jobs in developing countries.
UNCTAD therefore calls for an ambitious policy mix towards green transition and promoting labour-absorbing activities, especially in the non-tradable services sectors.
“Some examples can be construction, retail, various types of care work as well as the personal and public sectors that provide services consumed locally in the country or region where they are produced,” said UNCTAD.
UNCTAD in its 2024 review, noted: ” Service exports, now representing 25% of world trade, offer a bright spot amid a subdued global economic outlook.”
UNCTAD said that in 2023, trade in services expanded by 5% in real terms, contrasting a 1.2% contraction in merchandise trade, according to the Trade and Development Report 2024.
As a development strategy, services are gaining more traction than manufacturing, a longstanding growth engine for middle-income countries.
This is largely because the comparative advantage of cheaper, less-skilled labour no longer aligns with the reliance of modern manufacturing on skill- and capital-intensive production,” the report notes.
“Additionally, industrialization is increasingly scrutinized for its large ecological footprint and contributions to climate change.”