access services, medical records transcription, call centers, and some educational services. These differ significantly from traditional, more personal, services, which require face‐to‐face interaction.<sup>5</sup> Given its level of development, Russia shows a relatively high share for transport services. This is a feature often observed in emerging countries (Sáez et al. 2014), but in 2013, among the BRICS (Brazil, Russia, China, India, and South Africa), Russia had the highest share in this category, which means that it still relies heavily on more traditional services. In South Africa and Brazil, services’ value added makes an equal contribution to their economies. In travel services, Russia’s export share is not only modest but also declining, though, Brazil actually shows a lower trade share.

The more modern category of other business services has been growing fast in recent years and building up its revealed comparative advantage (RCA). **Error! Reference source not found.** looks at the most disaggregated subsectors of other commercial services (OCS).<sup>6</sup> Other business services (which include professional services) is a category that has been growing fast in Russia, together with construction. Although exports of telecommunications and information and communications technology (ICT)‐related services accounted for only 3.6 percent of OCS in 2005, its share hit 5.7 percent in 2011–13. Although China still has a higher share of OCS exports than Russia, the shares of other BRICS countries have been low in recent years.

The growth rates of telecoms, finance, and other business services exports have also been extremely dynamic. In particular, the RCA of other business services has risen in recent years ( **Error! Reference source not found.** ).<sup>7</sup> These sectors had growth of more than 15 percent between 2005 and 2013, and the share of other business services in total exports went up from 20 to 27 percent. **Error! Reference source not found.** also shows that traditional services sectors are still important for Russia’s economy, with total shares in 2013 of 30 percent for transportation and 17 percent for travel services.

The untapped potential is further illustrated by the relatively low share of services exports relative to Russia’s level of development. **Error! Reference source not found.** plots on the horizontal axis GDP per capita in purchasing power parity (PPP) (level of development), for both 2002–04 (panel A) and 2011–13 (panel B). Russia is below the predicted value line, which means that it is doing less well than some other countries at a similar level of development. Interestingly, Russia’s contribution of services exports to GDP has been much lower than expected in recent years compared to South Africa, but China and Brazil are doing worse. The relationship between Russia’s services trade and income level tracks that of its services value added.

Russia has scope for expanding exports of both traditional and modern services. **Error! Reference source not found.** shows the relationship between exports of both types of services and level of development for 2011–13. In Figure 6, modern services are proxied using the OCS category, which covers communications, construction, insurance, financial, Other business services (OBS), computer and

> 5 The classification into traditional or modern is largely arbitrary because technology is increasingly affecting the tradability of services and reducing the need for proximity. The purpose of using this classification is simply to illustrate international trends.

> 6 IMF _Balance of Payments Statistics_ identifies three broad categories: Transport, Travel, and Other Commercial Services. The last category W includes financial, communication, construction, ICT‐related, and other business services, royalties and license fees, and personal, cultural, and recreational services. This classification differs from the one used below in the section on trade in value added. It is important to highlight also that Balance of Payments (BoP) statistics does not cover all modes of supply. In particular, it does not cover mode 3 transactions (i.e. commercial presence in WTO/GATS jargon).

> 7 This is a common Balassa index that measures the share of a sector’s exports of a country in the country’s total exports with the share of exports of all countries in that sector in the world’s total exports for all sectors.

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