foreign country),<sup>4</sup> and "other services." The last category includes items such as brokerage, insurance, conmmunications, leasing and rental of equipment, technical and professional services, income generated by the temporary movement of labor, as well as property income (royalties).

# Box 1: Services Data Needs and Weaknesses

The main source of data on trade in services are the balance of payments (BOP). They have many weaknesses: Consistency and Coverage - A user of BOP statistics cannot be certain that what is reported, for example, for exports of port services by country A consists of the same items as reported exports of port services by country B. Moreover, at virtually any level of aggregation, some nations may not report information on a certain item. Examples include maritime shipment exports and air transport services, as well as many types of business and professional services. This results in biased figures when data are added across countries to arrive at regional totals, and discrepancies when comparing world imports and exports for a category.

Trade by Origin and Destination - This information is not available on a comparable and detailed basis. Some countries report information on the direction of trade by geographic region or by major trading partner, but most countries do not do this.

Disaggregation - The amount of detail or disaggregation for data on trade in services is very limited. Trade data on a volume basis - BOP data on services trade is only available on a value basis. The lack of volume and quality adjusted data makes it very difficult to determine what proportion of growth in a category in a given year is due to inflation as opposed to improvements in quality.

Comrarability across time - When comparing developments in trade in services over time at both the country and the global level, another problem is that methodologies and definitions employed by countries may vary between different years. Often, countries may have improved the sectoral coverage of their data collection efforts at some point in time, making it difficult to determine to what extent an increase in recorded trade in services for a specific time period is 'real,' as opposed to being due to improvements in data collection.

Concordances -It is quite difficult--if not impossible-to relate service trade statistics to domestic production and employment data. To some extent this is because different countries include different items in various components of the current account. More important is that trade data are simply too aggregated, so that concordances have little meaning. Even if disaggregated trade data existed that were consistent across countries, trade statistics include items that do not appear in the national accounts. An example is expenditure by travellers.

Data on sales by foreign affiliates - BOP conventions imply that if factors of production move to another country for a period longer than one year, a change in residency status is considered to have occurred. The output generated by such factors that is sold in the host market will no longer be registered as trade in the BOP. Data on the magnitude of sales by affiliates and natural persons that have established in a foreign host country are rarely collected. The U.S. is a notable exception.

For more detailed discussions of the shortcomings of services data, see Hoekman and Stem (1991).

4 Note that part of tourist expenditures will be on goods (e.g., souvenirs or artifacts).

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