International services are defined as transactions by private individuals and/or corporations that cross national boundaries. Thus, government services such as diplomatic, cultural, and scientific transactions among governments are not part of international services as defined here.
It must be pointed out at the outset that the exchange of services is closely linked to the exchange of goods, and vice versa. For example, shipping, one of the most important international services, is obviously the result of the exchange of goods, as are banking, insurance, communications, and aviation. Similarly, the exportation of machinery for a new factory in Brazil may be the result of the endeavors of a U.S. consulting, engineering, and construction firm.
Traditionally, services were restricted to the five main categories mentioned above: aviation, banking, communication, insurance, and shipping. The eighties have ushered in a new type of service, which is destined to be far more important for the United States than all other conventional services. This new service is the exchange of information and information technology. Because of its importance for contemporary and future international business, information technology is treated separately in CONSORTIA AND STRATEGIC ALLCES.
A country's ability to export services will depend on, among other things, the level of the country's development. It is well established that a country evolves from an agrarian society, where the main source of its citizens' income is the production of primary products, such as agricultural produce and minerals, to an industrial society, where the production of secondary goods, such as machines and instruments, becomes the primary source of income for its citizens, to a post-industrial society, where tertiary activities, such as services, are the hallmark of the country's business activities.
The contribution of services to the United States' international transactions has been increasing steadily. For example, whereas in 1960 services amounted to a small percentage of the U.S. foreign exchange earned from exports, in 1984 services reached the $142.4 billion mark, an increase of 8% over the previous year. For 1988, services were expected to earn in the neighborhood of $150 billion. The United States has the largest share, about 20%, of services trade worldwide.
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