Services in Global Value Chains – An Insight into the Current Situation in the EU Member States

Abstract

Global value chains (GVCs) consist of many production processes and phases/tasks that take place in different countries. The studies of the global value chains are mainly focused on manufactured products, often neglecting the role of services. In this paper, the emphasis is on the service sector, trade in services and the measurement of their participation in GVCs in the EU member states. There are four different ways, "modes of supply", to deliver services from a producer to the final customer. Official statistics include some of these modes, whereas some are hidden within the manufacturing process. According to the descriptive statistics analysis and presented data employed, it is clear that services trade is undervalued; services represent the majority of value added in the EU's GDP, but less than half of foreign trade; domestic value added in the service sector is higher than in manufacturing, which indicates the importance of domestic resources in the creation and export of services. EU industries are highly serviced and, interestingly, services contribute to more than 30 per cent of manufacturing production, with a higher share of foreign services.