ABSTRACT
International transactions in services are integral to the process of globalization. Services are intangible, perishable and/or cannot be held as inventory and have traditionally been regarded as difficult if not impossible to trade. This has all changed. Indeed, the consumption of certain services (such as transportation and communications) is key to the process of trade itself as the cheaper these services are offered, the greater is the incentive for firms to engage in trade. Furthermore, the efficiency of delivery of services is directly related to the competitiveness of firms within international markets. Indeed the costs of transportation, financial services, communications, legal services,
education, computer services, accountancy services, etc. have rapidly grown in their importance to business performance. These are services that businesses need to consume as part of their everyday operations and that have become increasingly prominent determinants of their competitiveness. This is reflected not merely in terms of cost but also in terms of the quality of the service offered. This chapter explores the process of service globalization and the framework provided by the GATS and links trends in the internationalization of services to the process of economic development and the shift towards service trade over the Internet.
