6 minute read

By Andrés Fiallos (Andres.FIALLOS@oecd.org) and Antonella Liberatore (Antonella.LIBERATORE@oecd.org), Statistics and Data Directorate (OECD)

Analysing patterns in international trade in services can be a challenging task. Not all countries publish information on trade relations with their partners, and often what a country reports does not match what its trading partners say. The OECD-WTO Balanced Trade in Services (BaTIS) dataset addresses both these problems and provides users with a complete and coherent trade in services dataset. The results confirm the importance of OECD member countries in international trade, as well as the steady and broad-based growth of digitally deliverable services since 2005.

Why are statistics on bilateral trade in services so scarce?

Recording cross-border trade in services remains a challenge for many economies around the world, and bilateral information (i.e., statistics broken down by partner country) is not widely available. One of the difficulties statisticians face in compiling trade in service statistics relates to the intangible nature of services. Since they are not physical objects, it is more difficult to track when a service is provided across borders, especially in the case of digitally deliverable services.

The limited availability of bilateral data is illustrated in Figure 1. Europe is the geographic region that reports the largest number of trading partners, with most European countries reporting close to 200 trade partners for their total services trade. In contrast, Africa has the lowest coverage of reported bilateral data for services trade, with only one country having publicly available bilateral information for some of its services trade flows. In the Americas only a handful of countries compile and publish statistics on their trade in services relationships. The situation is similar in Asia, where only a few economies report data on this topic. The coverage is even lower when total services is broken down into its subcategories. As of 2022, only 65 economies had published some statistical information on trade in services with their partners for some years between 2005 and 2021.

Source: OECD (2023). Balanced Trade in Services dataset (BaTIS).

One goal of BaTIS is to provide the best possible estimate for all trade in services flows that are not reported by national sources. This is achieved by leveraging all official statistics available at the national level and supplementing them with estimates derived through different statistical and econometrical techniques, including various specifications of gravity models. The final output of the dataset contains annual bilateral trade flows among more than 200 countries and for 12 main service categories, filling a substantial gap in trade in services statistics and serving as a reference tool to identify trends, carry empirical analyses and inform policymaking.

When reported, bilateral trade in services data often show large asymmetries

The complexity and opacity of trade in services flows mean that trading partners often report different values for the same transaction. This may be due to differing data sources and compilation methods and is exacerbated by the complexity of contemporary global production arrangements. Asymmetries make it difficult to understand global trade patterns and can undermine users’ confidence in official statistics. In BaTIS, these differences are corrected by applying a balancing procedure. The observed asymmetries are reconciled by calculating an average of the two flows, weighted by the symmetry index between the reported flow and the flow published by the trade partner, which statisticians call ‘mirror flows’. The symmetry index is a measure of the similarity between the reported trade values and the figures reported by their peers; the closer the index is to 1, the more a country’s trade is aligned with what is reported by its partners.

OECD member countries exhibit less asymmetries compared to non-OECD economies. The average annual symmetry index for OECD members is 0.7 for exports and 0.8 for imports and is relatively stable over the period studied. In contrast, non-OECD economies show an average annual symmetry index dropping to 0.6 for both exports and imports.

Balanced trade values can be considered the best quantification of the ‘true’ bilateral flows. On one hand, they can help policymakers identify market opportunities and design policies with an informed perspective. On the other hand, they can assist compilers in identifying data gaps and improving the quality of official statistics. Balanced values are often relatively close to the reported values, but in some cases, the differences can be stark. To illustrate this point, Figure 2 shows the ratio between reported and balanced values for OECD members that provided bilateral trade in services data for 2021, aggregated by all partner countries. A ratio of 1 means that there is no difference between reported and balanced values. When the ratio is above 1, the balanced values are higher than the reported values; and when it is below 1, the reported values are higher than the balanced ones.

The difference between reported and balanced values varies widely among OECD member countries. In 2021, Australia and Switzerland appear to have significantly underreported their services exports and imports, meaning that the ‘true’ service trade flows were larger than originally reported. For leading services traders such as Germany, Italy or Japan the gap between balanced and reported values is small.

OECD countries account for an important share of global services trade

After correcting for asymmetries, the OECD represented 69% of world exports and 72% of world imports in 2021, while non-OECD members accounted for the remaining part. More than 3 trillion USD worth of services were traded between OECD countries, indicating that 53% of world services commerce in 2021 was traded among the OECD’s 38 members (Figure 3). For services that can be delivered digitally, such as financial, business, insurance or intellectual property services, the share of OECD economies is even higher, reaching 77% in 2021.

SInsurance and pension services, Financial

Source: OECD (2023). Balanced Trade in Services dataset (BaTIS). Notes: Exporters are shown in the left side and importers on the right side of the diagrams.  Digitally deliverable services refer to the aggregation of the following service categories (as expressed in EBOPS 2010 classification): Insurance and pension services, Financial services, Charges for the use of intellectual property n.i.e., Telecommunications, computer, and information services, Other business services, and, Personal, cultural, and recreational services.

Digitally deliverable services are taking the lead

Digitalisation has had a considerable impact on trade in services, as technological advances allow the remote delivery of many types of services. In the period 2005-2021, at the world level, digitally deliverable services grew at an average annual rate of 7.7%, higher than the 3.9% recorded for non-digitally deliverable services. In 2020, non-digitally deliverable services, such as construction, travel and transport, experienced a 37% decline in traded value compared to 2019 (Figure 4). In contrast, digitally deliverable services grew by 0.9% in 2020 compared to 2019. In 2021, non-digitally deliverable services showed a considerable recovery compared to the first year of the pandemic, but still insufficient to reach pre-pandemic levels.

About BaTIS

Since 2017, OECD and WTO have developed a global dataset of complete and consistent bilateral trade in services statistics by main service categories. The latest edition of the OECD-WTO Balanced Trade in Services dataset (BaTIS) covers over 200 reporters and partners and the 12 main EBOPS 2010 service categories for the period 2005-2021. Access the latest edition of the OECD-WTO BaTIS dataset and the accompanying methodological paper (PDF).

This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.