Servicification of Firms and Trade Policy Implications

Abstract

In the OECD countries, the decline of manufacturing and the employment implications have long been matters of concern. Recently, policymakers in several countries have set out to try and achieve reindustrialization. The servicification of firms is related to these concerns and aspirations. However, servicification, and particularly its role in trade policy, has received limited attention. I review micro-level evidence and discuss its implications. I find that imported, domestic and exported services are all important to contemporary firm competitiveness and participation in international value chains. Therefore, historic policymaking divisions between trade in manufactures and trade in services services, between export and import interests, and among modes of supply are becoming less relevant. I conclude by suggesting potential steps forward.