Internationalization of Services: A Technological Perspective

Abstract

Despite the rapid pace of developments in the policy front, a major weakness of the theoretical and policy treatments of the service sector and the “trade in services” debate is their neglect of the impact of technological change on the changing nature of the service sector, the increasing internationalization of services, and the particular and dominant role played by transnational corporations in this process. This paper outlines a taxonomy of services based on their technological linkages with manufacturing and other service sectors. This taxonomy identifies a number of technology-intensive service sectors closely related to the use of information that are essential to growth. The effect of recent technological changes on the transformations in business organisation, industry structure, internationalization, and the role of transnational corporations in these technology-intensive service sectors is explored. The paper concludes with policy implications for less developed countries.