International trade in services statistics by broad economic categories
Data extracted in May 2023
Planned article update: July 2024
Highlights
In 2022, intermediate services (services that serve as inputs to other economic activities) accounted for 76% of total EU exports and 84% of EU imports.
EU intermediate and final services exports, partner Extra EU, 2013-2022
This article presents data on trade in services, broken down by broad economic categories (BEC). This overview is the result of the ongoing work related to the conversion of the international trade in services statistics (ITSS) from the EBOPS 2010 classification into the classification by Broad Economic Categories (BEC Rev.5). The main analytical use of the BEC classification is to understand the predominant use of goods and services, e.g. final use (consumption), or as inputs to other economic activities (intermediate use).
Intermediate goods and services are particularly relevant for the analysis of global value chains (GVCs). GVCs comprise the full range of activities that are required to bring a product from its conception, through its design, its sourced raw materials and intermediate inputs, its marketing, its distribution and its support to the final consumer. Cars are a typical example: producers source materials from different widespread geographical locations to assemble them in a central location, a process made possible by low transport and labour costs and improved means of communication.
Full article
General overview
The international trade in services statistics (ITSS) are usually reported using the EBOPS 2010 classification (see also the Eurostat online database: [1]). The EBOPS 2010 classification is mainly a product-based classification, built upon the type of service traded, without a distinction as regards the intended use of the service.
This article presents the ITS data broken down by broad economic categories, e.g. giving information about the end use of the service. The main analytical use of the BEC classification is to understand the predominant use of goods and services: final use (consumption), or as inputs to other economic activities (intermediate use). Intermediate services (as well as intermediate goods) are of particular relevance for Global Value Chains (GVCs) analysis, as they serve as inputs to other economic activities.
The changes to the way in which services are produced, due to the globalisation, falling trade costs and technological progress, has resulted in manufacturing processes being split into different stages so that intermediate inputs may be sourced from the most efficient producers, even if they are spread across disparate locations.
The analysis in this article covers the EU aggregates for 2013-2022 and individual EU Member States for 2022. The 2022 data come from annualised quarterly data, and are considered to be preliminary annual data for that year. For the preliminary 2022 data, only the 12 main EBOPS items are available; Eurostat estimated the more detailed sub-items, based on the trends shown in the data for the previous years.
Due to the limited scope of the study, the conclusions are descriptive and cannot be generalised.
Main conclusions
- Extra-EU imports of final services suffered the most from the COVID-19 pandemic in 2020; despite significant growth in 2022 they still had not reached pre-pandemic levels, standing at about 8 % lower than the 2019 figure.
- Similarly to the imports, extra-EU exports of final services also dropped the most in 2020 (35 % down compared with 2019 levels). In 2022 they almost reached the pre-COVID-19 crisis levels.
- Imports of intermediate services declined slightly in 2020, bouncing back to pre-COVID-19 pandemic levels in 2021; in 2022 intermediate services imports marked a 16 % increase.
- In 2022, intermediate services accounted for 76 % of the EU's total services exports and 84 % of the EU services imports.
- In 2022, intermediate services were most prevalent in the category 'ICT, media, computers, business and financial services' both for extra-EU exports (49 % of the exports) and imports (55 %).
EU international trade in service flows
In 2022, intermediate services accounted for 76 % of total EU exports and 84 % of imports.
Since 2013 EU international trade in service flows continued increasing substantially up to 2019, followed by a sharp decrease in 2020 as a result of the COVID-19 pandemic crisis (see Figure 1) and reached its highest levels in 2022 – for exports worth €1 300 billion and imports of €1 126 billion. The sharp drop in 2020 brought the EU exports to levels close to those of 2017, i.e. €919 billion. This dramatic fall was due to the impact of the COVID-19 pandemic and the associated protective measures imposed in most countries of the world (lockdown, restrictions on movement and travelling, etc.). A recovery was observed already in 2021 and continued in 2022, leading to an increase of 21 % for exports and 10 % for imports compared with 2019 levels.
Source: Eurostat (bop_its6_det)
Figure 1 presents EU exports and imports of services. However, it does not indicate the end use of these services.
Figure 2 provides further insight by presenting services trade broken down by intermediate and final consumption. As shown, during the same period (2013-2022) much more intermediate services were traded across EU borders each year compared with final services. Until 2019, both intermediate and final services (imports and exports) were increasing steadily each year; with intermediate services increasing at a faster pace. In 2022 the exported intermediate services were three times higher than the final ones, while the imported intermediate services were more than five times higher compared with the imported final services.
Source: Eurostat (bop_its6_det) and own calculations
For the observed period 2013-2022, trade in intermediate services between the EU and extra-EU countries more than doubled both for exports and imports. During the same period, final consumption services also increased but at a slower pace: exports of final services increased by 51 % and imports only by 20 % (Figure 2).
In 2021, both intermediate and final services exports regained higher values compared with the year before and continued growing in 2022. In 2022, both intermediate and final services reached their highest value. The exports of intermediate services reached €959 billion (76 % of the total EU exports), while imports of intermediate services accounted for €934 billion or about 84 % of the total EU imports.
In 2020 the volume of the final services dropped significantly, reaching the lowest ever levels for the period (€195 billion exports and €118 billion imports). This dramatic drop was due to the effects of COVID-19 in early to mid-2020. The final services were mostly driven by the travel item (expenditure of foreign tourists and travelers) and since there was practically very limited travel or none for the most part of 2020, the result is visible in the values of the final services for 2020. On the other hand, the drop in intermediate services in 2020 was much less than 2019 levels (about 3 % both for exports and imports).
The analysis of services by end-use provides further insight into the effects of globalisation processes - for a more detailed discussion see the Context section.
EU international trade in services by end use
EU as a trader of intermediate services.
During the period 2013-2022, the EU was predominantly importing and exporting intermediate services from/to extra-EU countries (see Figures 3.a and 3.b). This significant share is related to globalisation effects in the EU economies and the participation of the EU enterprises to global value chains (GVCs).
The relative share of intermediate services in exports remained almost stable during the observed period 2013-2022, equal to around 70 %, peaking up to 78 % in 2020 and 2021, and going down to 76 % in 2022. As regards imports, the share of intermediate services has been constantly increasing, albeit at a slow pace, reaching its maximum of 87 % of imports in 2020, and like in export – declining to 84 % in 2022.
Source: Eurostat (bop_its6_det) and own calculations
Source: Eurostat (bop_its6_det) and own calculations
EU trade in intermediate and final services by broad economic categories
Figure 4 presents an analysis of EU intermediate and final services trade broken down by broad economic categories, for the year 2022.
In 2022 the most imported and exported intermediate services to/from the EU were ICT, media, computers, business and financial services (49 % of the exports and 55 % of the imports) (see Figure 4).
Other dominant economic categories were also Transport equipment and services, travel, postal services - 31 % of the exports and 25 % of the imports, and Health, pharmaceuticals, education, cultural, sport services - 7 % of the exports and 11 % of the imports.
As regards final services, 49 % of exports and 42 % of imports were ICT, media, computers, business and financial services, followed by Transport equipment and services, travel, postal services (22 % for exports and 24 % for imports), Health, pharmaceuticals, education, cultural, sport services came in third place (20 % for exports and 23 % for imports).
Source: Eurostat (bop_its6_det) and own calculations
Source: Eurostat (bop_its6_det) and own calculations
Source: Eurostat (bop_its6_det) and own calculations
Source: Eurostat (bop_its6_det) and own calculations
Focus on EU Member States
Figures 5 and 6 show the relative shares of intermediate services in the exports and imports of each EU Member State in 2022, with partner World (partner extra-EU for the EU exports and imports). These results should be viewed with some caution, as Eurostat estimated the split of some EBOPS items to their constituents, for some Member States.
As regards exports, the shares for intermediates in exports of services were highest in Denmark (88 %) and Lithuania (87 %) and below 50 % in Portugal (46 %), Malta (38 %) and Croatia (28 %), see Figure 5.
_10-07-2023.png)
Source: Eurostat (bop_its6_det) and own calculations
Figure 6 shows that the EU Member States predominantly import intermediate services. For Ireland, Denmark, Malta, Lithuania, Finland and the Netherlands more than 83 % of imported services are intermediate services. The least shares of intermediate services imports are exhibited by Romania (60 %) and Croatia (64 %).
_10-07-2023.png)
Source: Eurostat (bop_its6_det) and own calculations
Data sources
Eurostat disseminates statistics on international trade in services under the system of balance of payments statistics (BoP). Balance of payments statistics cover an economy's transactions with the rest of the world. The methodological standard for the compilation of BoP statistics is the IMF's sixth edition of the Balance of Payments and International Investment Position Manual (BPM6). The implementation of this in Eurostat statistics is explained in the Manual on Statistics of International Trade in Services. The source data for international trade in services statistics used in this article, is bop_its6_det enhanced with Eurostat's own calculations. The conversion from EBOPS 2010 items to BEC Rev.5 codes was made using the fine-tuned correlation table published on Eurostat website which contains modelled allocation shares.
Source data for tables and graphs
Context
Measuring intermediate and final services; and the use of BEC Rev.5
The classification by Broad Economic Categories (BEC Rev.5) is an international product classification, mainly designed to provide a set of broad product categories for analysing trade statistics.
The main analytical use of the BEC classification is to understand the predominant use of goods and services: either final use (final consumption), or as inputs to other economic activities (intermediate consumption).
| Goods | Services |
| i. intermediate consumption | i. intermediate consumption |
| ii. fixed capital formation | ii. final consumption |
| iii. final consumption | |
| Source: UNSD, BEC Rev. 5 | |
Figure 7 shows the service flows (e.g. intermediate or final consumption) in the context of the broad economic categories discussion.
BEC is a high-level aggregation of existing detailed product classifications, such as the Standard International Trade Classification (SITC), the Harmonised Commodity and Coding System (HS) and the Central Product Classification (CPC).
For the first time, BEC Rev.5 includes the services dimension and provides a more complete picture of end-use categories for analytical purposes.
Figure 8 gives an overview of the structure of BEC Rev.5.
A correlation table between EBOPS 2010, CPC and BEC Rev.5 was also developed to accompany the BEC Rev.5 documentation. Based on this correlation table, Eurostat calculated the distribution of the EBOPS items to the relevant BEC Rev.5 categories, where an EBOPS item corresponds to two or more BEC categories (and in particular for cases when a single EBOPS item corresponds to categories of intermediate as well as final use).
Using this fine-tuned correlation table, Eurostat mapped the EU services by EBOPS to BEC categories, and calculated the final and intermediate consumption services trade.
Globalisation and services Globalisation has created new opportunities and competitive challenges forcing producers to seek more efficient ways to create their products. It has become increasingly common to divide the traditional vertically integrated production model into stages or tasks (fragmentation) allowing outsourcing part of the production process to another country / economy.
Lower trade barriers, organisational innovations, and progress in information and communication technologies have made slicing up the production process cheaper and easier. Coordination costs have fallen, and different stages of production are now often located in two or more countries. High labour costs and heavy regulations in more developed countries have also helped to accelerate the shift through a wave of outsourcing and offshoring to developing countries[1].
Therefore, instead of intermediate and final production taking place all within one exporting country, exports are more likely to embody intermediate goods and services sourced from any number of countries. Thus, the value and characteristics of exports do not reflect only the production and technological capabilities of the exporter (as the product is not made in a single country but in several countries).
The resultant global value chains (GVCs) comprise the full range of cross-border activities required to bring a product or service from conception through the different production and delivery phases to final consumers. The rise of GVCs has made the analytical distinction between trade in intermediate goods/services and trade in final goods/services more important. In this respect, it is important to note that all trade in intermediate services is (by its own nature) GVC trade: both trading enterprises (i.e. the exporter/supplier and the importer/customer) are part of a GVC.
Methodology
1. Input The conversion from EBOPS 2010 items to BEC Rev.5 categories was made using the fine-tuned correlation table, published on Eurostat web site with the modelled allocation shares. This table is based on a correspondence table between the Classification by Broad Economic Categories revision 5 (BEC Rev. 5), the Central Product Classification, version 2.1 (CPC 2.1) and the Extended Balance of Payments Services Classification, version 2010 (EBOPS 2010), published by the UNSD. The fine-tuned table builds upon the EBOPS-CPC-BEC conversion table and provides modelled allocation shares of the EBOPS items to the relevant BEC Rev.5 categories (the estimations are evidence based and applicable for the EU).
More specifically, in the cases where a single EBOPS item corresponds to more than one BEC codes, Eurostat used additional information and modelling techniques to split the EBOPS code among the respective BEC categories.
Eurostat estimated a mapping of such items, based on available data from Services trade by enterprise characteristics (STEC) statistics, SBS, National Accounts and modelling using the count-seed RAS methodology[2].
In some cases, an allocation could not be derived, as the available data only contain information at a more aggregated level. These cases were:
- Operating leasing services SJ33,
- trade related services SJ34,
- other direct insurance services SF13, and
- explicitly charged financial services SG1.
For these items, we used a proportional allocation; however, in most cases this does not affect the intermediate vs. final consumption allocation (as all the associated BEC categories have the same use).
2. Estimations Some of the detailed EBOPS items required in the EBOPS to BEC conversion table are confidential / non-publishable (especially for individual countries) or simply non-available (e.g. voluntary items). Eurostat estimated all missing voluntary items in the country data sets by calculating imputation-shares based on the reported values. The reported voluntary items from a few countries were used to define the shares for the countries not reporting these voluntary items.
For the Travel item (SD), the split by type of product was estimated for all countries using the shares provided in the correlation table, except for those countries that already report these sub-items to Eurostat (Czechia, Ireland, Croatia, Slovenia and Sweden). The EBOPS to BEC conversion requires that the goods value contained in Travel is removed from BEC services (in fact, it should be correlated to BEC categories for goods). For this article, it was assumed that the goods amount present in Travel is about 25 % of the Travel item (estimate based on modelling and data reported by some countries). For this reason, the BEC services total is always lower than the reported total services by EBOPS 2010.
The split of the item charges for the use of intellectual property (SH) into its sub-items was estimated (entirely or partly) for all countries except Bulgaria, Cyprus, Czechia, Finland, Croatia, Ireland, Lithuania, Poland, Portugal and Romania (both for exports and imports).
The estimations of all missing items for 2022 were calculated on the bases of the shares from 2021 data.
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Notes
- ↑ Source: UNECE Guide to measuring global production - see: https://www.unece.org/fileadmin/DAM/stats/documents/ece/ces/bur/2014/Guide_to_Measuring_Global_Production_-_CES.pdf
- ↑ Mattia Cai & José Manuel Rueda-Cantuche (2019) Bridging macroeconomic data between statistical classifications: the count-seed RAS approach, Economic Systems Research, 31:3, 382-403, DOI: 10.1080/09535314.2018.1540404. Accessed here: JRC Publications Repository: Browsing JRC Publications Repository (europa.eu)