Trade in services (also known as invisible trade) refers to the export and import of intangible services between a country and the rest of the world.
Key characteristics:
- Involves non-physical, intangible activities provided across borders
- Cannot be seen or touched like goods
- Often called invisible trade because the services are not physically observable
Types of services traded:
- Transportation: shipping, airline, and logistics services
- Tourism and travel: spending by foreign visitors and domestic tourists abroad
- Financial services: banking, insurance, and investment services
- Consulting and professional services: legal, accounting, and management advisory
- Education services: tuition fees from international students
- Communication services: telecommunications and postal services
- Calculated as: Exports of services − Imports of services
- A country with higher service exports than imports runs a services surplus
- A country with higher service imports than exports runs a services deficit
- Many developed economies run a surplus in services but a deficit in goods