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-