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Sunday Observer - - FEATURES -

Ser­vices such as fi­nance, dis­tri­bu­tion and telecom­mu­ni­ca­tions are used in­tensely in the pro­duc­tion and trade of all goods in an econ­omy.

Typ­i­cally, ser­vices make up 10-20 per cent of pro­duc­tion and trad­ing costs – com­mu­ni­ca­tions, trans­port, trade fi­nance and in­sur­ance, and dis­tri­bu­tion ser­vices.

The price and qual­ity of ser­vices are there­fore cru­cial in de­ter­min­ing the cost of all other prod­ucts in the econ­omy.

In turn, glob­al­i­sa­tion has made ser- vices an even more im­por­tant fac­tor in de­ter­min­ing the com­pet­i­tive­ness of goods pro­duc­ers.

This is be­cause of two facts. First, in­fra­struc­ture based ser­vices have a sig­nif­i­cant im­pact on trade per­for­mance of an econ­omy. For ex­am­ple, there is a proven trend that the re­duc­tion of trans­port costs causes an in­crease in trade. Sec­ond, en­try into global pro­duc­tion networks re­quires ef­fi­cient and timely de­liv­ery. There­fore, low-qual­ity ser­vices that de­lay pro­duc­tion or trans­port ef­fec­tively ex­clude pro­duc­ers from such networks.

The ef­fects ex­tend be­yond any one­time gains and may have an im­pact on the growth rates of coun­tries. Poor qual­ity, high-priced ser­vices not only af­fect the cur­rent op­er­a­tions of man-

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