Chapter 8, continued

• Financial Services

• Producer Services Case Studies

• Producer Services Locations

• Trade in Services

• Technological Change in Services

• Electronic Funds Transfer

• Offshore Banking & Back-Office Locations

• Consumer Services

Financial ServicesConcentrationOf BankingEmployment

FinancialRegulationAndDeregulation

Producer Services Case Studies

• Accounting: The collapse of Arthur Anderson & the replacement: Accenture

• Design Services – niche markets –– They are the norm across the producer

services

• Legal Services – a wide variety of firm sizes and types of practice– Co-counseling – the reality the within

producer services of professional regulation in many industry lines

KPMG –An Example of a Globalized Service Firm

Hierarchy & Concentration in Law Firms

The Location of Producer Services –

Trade in (Producer) Services

• Differences in export orientation by industry

• Differences in export orientation by size of establishment

• The 35% figure for exports – it is likely rising over time

International Service Transactions• The pathways discussed here are equally

valid from an interregional perspective• Four pathways to trade:

– Cross border supply – no movement of either buyer or supplier across border

– Consumption abroad - purchaser goes across border to get service

– Commercial presence – supply services through cross-border affiliates

– Flow of naturalize persons – labor moves to region of the consumer to provide the service

International (Interregional) Trade in Services

• Difficult to measure, in large measure due to advances in IT

• The issue of whether services are supplied due to the theory of comparative advantage (factor conditions) or competitive advantage (Porter – see Ch. 11)

• International Production Systems – governance, global value chains, location

Technological Change & Electronic Funds Transfer

The eastward flow of funds over fiber optic networks – over $1.5 trillion daily

Offshore Banking

Back Office LocationsShift from movement of paper to just digital activity

Consumer Services Revisited

• Previously discussed – central places

• Rethinking role of consumer services retail, entertainment, sports, arts, the rise of tourist spaces

Many relativelySmall countries

U.S.CanadaMexicoCaribbeanSouth America

Tourism:Businessvs. Personalvs.Mixed trippurposes

Changing Patterns of Consumption

0

0.05

0.1

0.15

0.2

0.25

0.3

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005

Sh

are

of

PC

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Food and tobacco

Clothing, accessories,jewelry & personal care

Housing & householdoperation

Medical care

Transportation

Recreation

Education, research,personal business, religiousand welfare activities

Shifts in the Composition of the Recreation Account

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

19

60

19

65

19

70

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75

19

80

19

85

19

90

19

95

20

00

20

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Sh

are

of

Re

cre

ati

on

Ac

co

un

tAdmissions to SpectatorAmusement

Radio & TV Repair

Clubs, Fraternal,Recreation Programs

Commerical ParticipantAmusement

Pari-mutual returns,Lotteries

Pets, veterinarians

Cable television & ISP

Film Development,Photofinishing,Videocassette Rental

Other CommericalAmusement

Flat

Flat

Up, then down

Up then down