unctad.org | Paraguay eyes services sector for growth
Paraguay eyes services sector for growth
03 December 2018
Flag of Paraguay
A burgeoning global services sector has Paraguay interested in expanding its own to create jobs and growth.


UNCTAD has completed intensive reviews of Paraguay’s services policy twice in the past four years – a process that led the South American country to create its own National Plan for Trade in Services.

The draft plan and a summary of UNCTAD’s second services policy review recommendations were presented to a strategic gathering of government officials, the private sector and national associations in Asuncion, Paraguay on 9 November.

The hope is the review and plan will help Paraguay unlock and expand its trade in services, said Pedro Mancuello, vice minister of trade from the Ministry of Industry and Trade of Paraguay.

In Paraguay the service sector accounts for 59% of employment and 50% of GDP.

While direct service exports amount to around 6% of total exports, services as a value-added component within exports of other sectors is far higher at 28%.

“The review process was designed to assist Paraguay in developing its services sector to support its industrial productivity,” said UNCTAD transport economist Vincent Valentine, highlighting the potentials in transport services identified in the review report.

Architectural and engineering services
Architectural and engineering services are being outsourced to Paraguay
 
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“We found there is value in reducing transport costs and time, making exports more competitive.”

“Similarly, the organisation of the construction services sector to offer professional services remotely is a real option to develop the services industry.”

A focus on key sectors like transport and construction means that Paraguay can tap some of the gains in global services growth, which in 2017 represented more than 70% of global GDP and 51% of global jobs.

“Services are important part of the industrialization process and of structural upgrading,” UNCTAD economics affairs officer, Bruno Antunes added.

Review rewards

These findings and others were outlined at the workshop, an outcome of a longstanding collaboration between UNCTAD and Paraguayan Ministry of Industry and Trade.

UNCTAD has used its toolbox on services to support Paraguay since 2014.

Recently it leveraged its Services Policy Review (SPR) publication series – flush with a detailed prescriptive methodology to help countries identify key priorities – to upgrade Paraguay’s approach to services.  

The first SPR was completed in 2014 and took an overview approach.

The second, a 2018 version, is being finalized, but both informed the new National Plan for Trade in Services.

This plan itself defines the objective, strategies and lines of action for the promotion and sustained development of trade in services in Paraguay.

It also includes a directive to continue liaising with UNCTAD for the development of public policies on services.  

The most recent SPR focuses on two cross-cutting issues in the transport and professional services sectors.

Highlighting fluvial transport, attention was given to the importance of transport costs and time with a view to improving these and making exports more competitive.

Efficiencies in the professional services linked to the construction sector were also explored, especially the possibility of offering remote architectural and engineering services.

The workshop aimed to provide the government with feasible policy options for these sectors.

“The idea is to offer a tool for policymakers and regulators to ensure policy coherence, build institutional capacities, enhance productive and trade capacity in services, and competitiveness to meet the 2030 Agenda for Sustainable Development and the Sustainable Development Goals (SDGs),” said Mr. Antunes.  

Workshop discussion items also included the importance of developing and understanding supply-chain logistics, reduced barriers and costs, participation in global value chains, and increased productive productivity.

UNCTAD also underlined that trade in services are more inclusive for small exporters, and more resiliently to external shocks.

The Paraguay project includes collaboration in UNCTAD’s Global Services Forum, UNCTAD’s Multi-year Expert Meeting on Trade, Services and Development and on the SPRs.

Southern Deals

Currently Paraguay and Brazil are considering the ratification of the Global System of Trade Preferences among Developing Countries (GSTP), a platform of South-South cooperation to promote regional trade in goods.

These goods comprise mainly medium and high technology exports, closely linked to services value-added.

The São Paulo Round of the GSTP is one country short of ratification to allow its entry into force.

If Paraguay were to accept the system, it would facilitate Mercosur’s regional ratification and help to promote greater South-South trade in goods in general, and eventually South-South trade in services worldwide.

The 43 GSTP developing country members combined have an economy of $14 trillion and are home to an estimated 3.6 billion people – a massive market place, Mr. Valentine said.

UNCTAD estimates the potential gains from reducing tariffs, in monetary terms, could be around $2.5 billion.

“Yet the indirect benefits of increased trade and opportunities could be much more and have a wider impact that may ultimately help bring about the SDGs.”


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