direction of flow of these skills. It calculates the share of non-OECD countries in FDI exports to OECD countries, and as such is a measure of uphill flows at the global level. This share has been steadily rising from about 9 percent in 2003 to close to 15 percent in 2007, suggesting that uphill FDI flows have in fact been rising.

# _Exports of goods_

We find a similar pattern for exports of sophisticated goods. The average income level of world exports of sophisticated products declined by a similar percent (about 10%) but over a slightly longer period (Chart 4A). Unlike in the case of FDI, China is a big contributor to this decline in the income of the source country for world exports of sophisticated products. Excluding China reduces the decline by nearly 5 percent (Chart 4B).

In Chart 4C, we calculate the uphill flows of sophisticated products from non-OECD countries. For each country, uphill flows are exports of sophisticated goods to countries richer than itself. These are added for all non-OECD countries and expressed as a share of total sophisticated exports to OECD countries. This share was about 1% in 1980 (0.2 percent for highly sophisticated products (HSPs))<sup>3</sup> and increased to 10 percent in 2006 (3 percent for HSPs).<sup>4</sup> The individual country charts show that uphill flows were very pronounced for China, Malaysia, and Mexico but much less so for India and Brazil (Chart 4D).

# _Services_

In services, we focus on exports of services other than transport and travel, i.e. the category “other commercial” (in the US “other private”) services, which cover most skillintensive business services. Again we find a decline, albeit slow, in the average income level of services exporters (Chart 5A). This trend suggests that developing countries are becoming increasingly important exporters of skilled services.

Unfortunately, bilateral data on services trade is available only for the OECD countries, so it is not possible to construct measures of uphill flows analogous to those for goods and FDI.<sup>5</sup> However, bilateral data available for the United States shows that for some developing countries (e.g. India and Malaysia) services exports as a share of GDP are flowing uphill (Chart 5B).

3 There are two definitions of sophisticated products. The first covers exports that lie above the median value of PRODY (defined in the text) calculated for 1990. The second covers exports that lie in the top 25<sup>th</sup> percentile of PRODY values. For each definition, we compute the weighted average of per capita GDP of the exporting countries, with the weights being the share of each country in the total exports of sophisticated products.

4 Of course, this development could simply reflect the fact that richer countries, which are more likely to demand sophisticated goods, have grown faster than poorer countries. But, during this period, the nonOECD countries in our sample grew substantially faster than the OECD countries.

5 It is, in principle, possible to combine OECD data and IMF balance of payments statistics to obtain an estimate of the share of skilled services exports of developing countries directed to OECD countries. However, significant inconsistencies in the data between these two sources prevent meaningful comparisons.

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