Financial services The financial services sector may arguably be the most significant of all business-related services, insofar as it affe...
Financial services The financial services sector may arguably be the most significant of all business-related services, insofar as it affects virtually all other sectors — both goods and services. Financial services are critical to the financing of new investments and individual transactions, and access to credit is a critical determinant of whether new ventures are profitable or even feasible. There are some developing countries that are leaders in this sector, such as Panama and Lebanon, but most others rely at least partly on the presence of foreign providers in this sector. Regulation in the financial services sector is therefore a matter not merely of sectoral but of horizontal importance for developing countries, and one that merits close attention in a TPF. The report on Angola, for example, recommended with respect to financial services that the country adopt reforms to enhance the use of banking by the national population. The recommendation urged improvements in regulatory and institutional support for the national Law on Financial Institutions, and called on the Government to build a hub for credit risk information, increase the quantity and quality of human resources specialized in banking and develop a law on money laundering. 2. Transportation and tourism Like financial services, the transportation and tourism sectors have widespread effects on the economy as a whole. Efficient and affordable transportation is a critical element in determining the international competitiveness of a country’s goods, just as tourism is linked with a wide cluster of goods- and servicesproducing sectors. Panama offers a good example of a country that has benefited from the efficiency of its service providers in these sectors, and hopes to move from strength to strength. Services account for about 90 per cent of the total Panamanian exports, and are concentrated around canal-cluster activities, tourism, banking, telecommunications and other related activities. The persistent services trade surplus partly offsets that country’s equally persistent deficit in merchandise trade. Panama had decided to double down on its commitment to trade in services, with the National Logistics Plan (PNLog) identifying the interoceanic area as an area of vital importance to logistics development. Nor are these aspirations unique to relatively high-income countries such as Panama. Namibia is positioning itself as a services hub in the SADC region, especially in transport services. Liberalization of these transport and tourism sectors, according to that country’s TPF,
enables Namibia to forge ahead with its trade and industrialization plans with minimal policy let or hindrance in the region. Countries may nonetheless encounter difficulties in exploiting their potential for tourism. Officials can sometimes fall into the trap of believing that with respect to this sector “if you build it, they will come”. The TPF for Algeria took a more realistic view, stressing that the development of touristic infrastructure is necessary but not sufficient. Similar logic may explain why this is one of the few services sectors in which most developing countries have made GATS commitments. “If you commit it”, the hope may have been, “they will invest”. An open trade and investment regime may be a necessary element for the attraction of foreign investment in tourism facilities, but it is not sufficient. The other elements include such diverse elements as the presence of attractions that range from museums and sports stadiums to beaches and ecotourist sites, efficient airports and cruise ship ports, frequent and affordable connections with major population centres and a reputation for preserving the physical safety of visitors from crime, political unrest, tropical diseases and gastrointestinal disorders. These are all factors that should be given just as much consideration as trade agreements and promotional campaigns when assessing how a country might tap more effectively into this potentially lucrative source of foreign exchange.
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