A Seminar report on

CLASSIFICATION OF SERVICES
Submitted in partial fulfillment of the requirement for the award of degree
of Bachelor of Technology in Computer Science
SUBMITTED TO: SUBMITTED BY:
www.studymafia.com www.studymafia.com

Preface
I have made this report file on the topic CLASSIFICATION OF SERVICES
, I have tried my best to elucidate all the relevant detail to the topic to be included in the
report. While in the beginning I have tried to give a general view about this topic.
y efforts and wholehearted co!corporation of each and everyone has ended on a
successful note. I e"press my sincere gratitude to ####..who assisting me
throughout the prepration of this topic. I than$ him for providing me the reinforcement,
confidence and most importantly the trac$ for the topic whenever I needed it.
content
%verview
Importance of Services
Services definition
Statistical framewor$s
Bibliography
%verview
This overview provides an insight into the importance of services in
selected CSME economies, a defnition of services and an outline of the
paper. From the onset it is important to note that the paper is mainly
an extraction of various paragraphs from the following pulications.
!. "S"C #ev.$ pulication, Series M, %o $, #ev. $
&. 'raft chapters of the revised Manual on Statistics of "nternational
Trade in Services ('raft
MS"TS).
The paper supports the view that services must e frst produced and
measured and included in the %ational *ccounts aggregate +',. -f
this production, a proportion is exported and is recorded in the .alance
of ,ayments and accounted for in Trade in Services. The paper provides
a rief overview of three statistical framewor/s, i.e. The System of
%ational *ccounts &001 (S%* &001), Sixth edition of the .alance of
,ayments and the "nternational "nvestment Manual (.,M2), and the
"nternational #ecommendations for Tourism Statistics &001 and
Tourism Satellite *ccounts3 #ecommended Methodological Framewor/
&001 ("#TS &001). The classifcation adopted to measure the
production of services is "S"C #ev. $ and C,C #ev.&, while the
classifcation adopted to measure trade in services is .,M2, E.-,S and
to satisfy +*TS,
+%S454!&0. "S"C #ev.$ covers all economic activities within the
production oundary of S%*, These economic activities are su6divided
into a hierarchical order of &! Sections (*lpha coded), 11 two6digit
'ivisions, &71 three6digit +roups and at the greatest level of detail $!8
four6digit Classes. The services industries consist of !1 Sections, 92
'ivisions, !$! +roups and &09 Classes. "deally, production of services
should e measured at the greatest level of detail, i.e. at the four digit
class. :owever, depending on the sophistication of the statistical
system and its data collection process production could e recorded at
di;erent levels. The C,C on the other hand, provides the output of
each economic activity y product. The product classifcation at the
C,C serves as a useful
guide for the classifcation of Trade in Services (T"S). T"S can also e
classifed according to .,M2, E.-,S, and +%S454!&0. The Tourism
Satellite *ccount (TS*) descries the relationship etween the travel
component of E.-,S and the concept of tourism as included in the
TS*. "t also discusses rea/downs of tourism expenditure and their
potential relevance to trade agreements. The TS* also provides an
alternative
potential source of data that might e used to estimate a more
detailed rea/down of travel services.
Importance of Services
Tales ! < 7 illustrate the importance of services in selected CSME
countries. %ational *ccounts constitute the statistical framewor/ out of
which main macroeconomic aggregates are calculated (production,
+',, +ross %ational "ncome, consumption=). >alue added ro/en
down y industry permits the measurement of the contriution of the
services industries and its su6industries to GDP. "n an energy ase
economy li/e Trinidad and Toago the services industries contriute on
average 90? to +', over the period &007 to &001. The situation is
@uite di;erent in the ECCA countries, .arados and Bamaica where
services average contriution to +', over the same period are 80?,
18? and C1? respectively.
Tale !3 Services Contriution to +', of Selected Countries in CSME 6
,ercentage
Country &007 &00$ &009 &002 &00C &001 Average
Trinidad D
Toago
97.0 $1.& $$.C $C.9 $C.7 92.2 $8.2
ECCA 18.0 80.0 80.2 80.1 8!.0 8!.0 80.$
Bamaica C1.! C1.0 C1.& C1.8 C1.7
.arados 11.0 11.C 18.0 11.9 11.2
Source3 %ational Statistical -Eces and Central .an/ wesites
Tale &3 Export of Services as a proportion of Total Services of Selected
Countries in CSME 6 ,ercentage
Country &007 &00$ &009 &002 &00C &001 Average
Trinidad
D Toago
!0.C !&.0 !!.2 8.7 1.8 !0.0 !0.$
ECCA $1.! $9.$ $!.9 $0.0 71.7 $&.C
Bamaica 77.0 77.7 70.1 7&.$ 7$.0 7&.C
.arados $$.2 $7.9 $1.0 $1.2 $2.!
Source3 %ational Statistical -Eces and Central .an/ wesites
Tale 73 Shares of Services Employment in Total Employment of
Selected Countries in CSME 6 ,ercentage
Country &007 &00$ &009 &002 &00C &001 Average
Trinidad
D Toago
10.8 1!.1 1&.1 17.0 17.$ 17.C 1&.2
ECCA
Bamaica C2.7 C2.0
.arados
Source3 %ational Statistical -Eces and Central .an/ wesites
9
"n Tale & exports of services, as measured in the .alance -f
,ayments, demonstrate a similar situation. "n Trinidad and Toago only
!0? of the produced services are exported, while in the ECCA, Bamaica
and .arados the proportion exported are $7?, 77? and $2?
respectively. Employment statistics provide the total numer of people
employed y economic activity. This classifcation allows the numer of
people employed in the services industries and their distriution
among di;erent su6industries. "t should e noted that such statistics
also form part of the central framewor/ of %ational *ccounts.
The Employment data in Tale 7 nevertheless confrm the importance
of the services industries which are accounting for more than seventy
fve percentage of the employment in most countries under review (up
to
17? in Trinidad and Toago).
Services definition
The term FservicesG covers a heterogeneous range of intangile
products and activities that are diEcult to encapsulate within a simple
defnition. Services are also often diEcult to separate from goods with
which they may e associated in varying degrees.
The &001 S%* use of the term services, which is defned in para 2.!C as
follows3 FService are t!e
re"#t of a pro$"ction activit% t!at c!ange t!e con$ition of t!e con"ming "nit& or
faci#itate t!e e'c!ange of pro$"ct or financia# aet. These types of service
may e descried as transformation services and margin services
respectively. Transformation services are outputs produced to order
and typically consist of changes in the conditions of the consuming
units realiHed y the activities of producers at the demand of the
consumers. Transformation services are not separate entities over
which ownership rights can e estalished. They cannot e traded
separately from their production. .y the time their production is
completed, they must have een provided to the consumers.G The
&001 S%* then @ualifes this in para 2.!1 and 2.!8 as follows3 FThe
changes that consumers of services engage the producers to ring
aout can ta/e a variety of di;erent forms as follows3
a. Changes in the condition of the consumerIs goods3 the producer
wor/s directly on goods owned y the consumer y transporting,
cleaning, repairing or otherwise transforming themJ
(. Changes in the physical condition of persons3 the producer
transports the persons, provides them with accommodation, provides
them with medical or surgical treatments, improves their appearance,
etc.J
c. Changes in the mental condition of persons3 the producer provides
education, information, advice, entertainment or similar services in a
face to face manner.G
FThe changes may e temporary or permanent. For example, medical
or education services may result in permanent changes in the
condition of the consumers from which enefts may e derived over
many years. -n the other hand, attending a footall match is a short6
lived experience. "n general, the changes may e presumed to e
improvements, as services are produced at the demand of the
consumers. The improvements usually ecome emodied in the
persons of the consumers or the goods they own and are not separate
entities that elong to the producer. Such improvements cannot e
held in inventories y the producer or traded separately from their
production.G
Internationa# tra$e in ervice )
.efore the pulication of the Manual on Statistics of "nternational Trade
in Services (MS"TS) the conventional statistical meaning of international
trade in services was that descried in .,M2, which defnes international
trade in services as eing etween residents and non6residents of an
economy. This also corresponds very closely to the concept of trade in
services in the Frest of the worldG account of the &001 S%*. This
concept of international trade in services comines with the concept of
international trade in goods, to form international trade in the .,M2
+oods and Services *ccount.
:owever, it is not always possile to separate trade in goods from
trade in services.
Services di;er from goods in a numer of ways, most commonly in the
immediacy of the relationship etween supplier and consumer. Many
services are non6transportale, i.e., they re@uire the physical proximity
of supplier and customer<<for example, the provision of a hotel service
re@uires that the hotel is where the customer wishes to stay, a cleaning
service for a usiness must e provided at the site of the usiness, and
a haircut re@uires that oth hairstylist and client e present. For
international trade in such non6transportale services to ta/e place,
either the consumer must go to the supplier or the supplier must go to
the consumer. Suppliers may also prefer providing their services y
eing present in the country of the consumer rather than cross6order.
"nternational trade
agreements concerning services, in particular those emodied in +*TS
ma/e provision for agreement on suppliers having a presence in the
country of the consumer.
Therefore, MS"TS extends the scope of international trade in services to
include the supply of services through foreign aEliates estalished
aroad. Such supply of services and its related statistics, descried
here as Foreign Affiliates Statistics (F*TS), are explained later. MS"TS also
covers international trade in services as services supplied y the
presence of foreign individuals, either as foreign service suppliers
themselves or employed y a foreign service supplier, which is either
the mother company or the foreign aEliate of the mother company.
:owever, non6resident persons employed y host country companies
that are not owned y a foreign parent are outside the scope of
international trade in services. * large part of services supplied
through the presence of
natural persons is covered y the .,M2 and F*TS framewor/s.
Note: *lthough MS"TS extends the general scope of the term
Finternational trade in servicesG to accommodate the +*TS provisions,
MS"TS does not suggest that provision4ac@uisition of services y
foreign aEliates estalished aroad e referred to as exports4imports
of services. These terms are reserved to reKect trade in services
etween residents and non6residents of di;erent economies.
1
(document MT%.+%S454!&0, Services Sectoral Classifcation list,
hereinafter 54!&0) ased on consultations with memers. The list
identifes relevant sectors and susectors so as to enale memers to
underta/e specifc commitments. 54!&0 should thus e viewed as an <
optional < classifcation system for trade negotiating purposes, rather
than as a statistical classifcation.
8
The !& maLor categories in the 54!&0 list are3
!. .usiness services.
&. Communication services.
7. Construction and related engineering services.
$. 'istriution services.
9. Educational services.
2. Environmental services.
C. Financial services.
1. :ealth6related and social services.
8. Tourism and travel6related services.
!0. #ecreational, cultural, and sporting services.
!!. Transport services.
!&. -ther services not included elsewhere.
Statistical framewor$s
(a) S%tem of *ationa# Acco"nt& )++, 5
The System of National Accounts, 2008 is an integrated system of accounts
related to the economic activities and sectors of the economy of a
country. &001 S%* provides a defnition of services and distinguishes
transformation services from margin services (see S%* chapter 2).&.&9.
To capture the transactions etween an economy and all others, the
&001 S%* provides an account called the Frest of the worldG, which it
also refers to as the Fexternal transactions accountG. 5ithin this
account is an Fexternal account of goods and servicesG, in which trade
in goods and services are separately recorded.
-( ) Si't! e$ition of t!e IM. Ba#ance of Pa%ment an$ Internationa# Invetment
Poition
Man"a# -BPM/0 /
.,M2 descries the conceptual framewor/ that underlies the
international investment position, the alance of payments and the
other changes in assets and liailities account. The alance of
payments is a statistical statement that summariHes transactions of
residents of an economy with non6residents during a period. *
transaction is an interaction etween two institutional units that occurs
y mutual agreement or through the operation of the law and involves
an exchange of value or a transfer. Transactions etween residents and
non6residents consist of those involving goods or services,
ac@uisition of assets, compensation of employeesJ dividendsJ etc. and
those (such as taxes, det forgiveness, grants, personal transfers, etc.)
that are classifed as transfers.
The &001 S%* and .,M2 have a common conceptual framewor/. The
defnitions of residence, valuation, and time of recording and the
principles of accrual accounting recommended in the present MS"TS
are the same as those in oth .,M2 and the &001 S%*.
!0
The international transactions in trade in services that ta/e place
etween residents and non6residents of an economy that are descried
in the present MS"TS are ased on the .,M2 classifcation and
defnition of services, ut the detail recommended in Chapter """ of the
present MS"TS is greater than that of .,M2. The scope of international
trade in services etween residents and non6residents in the present
MS"TS is the same as that in .,M2.
-c0 Internationa# 1ecommen$ation for To"rim Statitic )++, an$ To"rim
Sate##ite
Acco"nt: 1ecommen$e$ Met!o$o#ogica# .rame2or3 )++, 4
The International Recommendations for Tourism Statistics 2008 ("#TS &001) were
developed y the 5orld Tourism -rganiHation (A%5T-) and the Anited
%ations. "#TS &001 provides the comprehensive methodological
framewor/ for collection and compilation of tourism statistics and
should e viewed as an important foundation of the System of Tourism
Statistics. The development of this system is closely lin/ed to the
second set of international recommendations related to tourism
statistics which are the Tourism Satellite Accounts: Recommended Metodological
Frame!or" 2008,
(TS*6#MF &001) developed y Eurostat, A%5T-, -EC' and the Anited
%ations. TS*6#MF &001 sets out a framewor/ to measure the economic
contriution of tourism in an internationally comparale way. "#TS &001
and the TS*6#MF &001 respect the defnitions and norms of the &001
S%*, where relevant. The coverage of the expenditure of individuals
traveling in a country other than that of their residence as descried in
the present MSITS and the international tourism expenditure as
descried in the "#TS &001 and TS*6#MF &001 di;er to some extent.
The alance of payments data on travel are one source of data on
inound and outound tourism expenditure as defned in tourism
statistics recommendations. These recommendations, consistently with
.,M2, also allow for a rea/down of non6resident visitorsI expenditure
according to a rea/down of products, with special emphasis on
tourism characteristic products that may e useful for +*TS.
-$0 T!e E'ten$e$ Ba#ance of Pa%ment Service ,
"n !882, the -EC' and Eurostat, in consultation with the "MF,
developed a more detailed classifcation than that of the Fifth Edition of
the .alance of ,ayments ManualMthe version of the .alance of
,ayments Manual in use at that timeMto record international trade in
services etween residents and non6residents. The Extended .alance
of ,ayments Services (E.-,S) Classifcation of transactions etween
residents and non6residents, as it is called, is therefore a rea/down of
a numer of the alance of payments services components. The
revised version of this classifcation presented
in E.-,S &0!0, updates that recommended in the previous MS"TS. "t
provides for further rea/downs of the .,M2 classifcation to meet a
numer of user re@uirements, including the provision of information
re@uired in connection with +*TS. * numer of supplementary items
are included in E.-,S &0!0. These supplementary items are not
always confned to services transactionsJ they are included to provide
additional information on the transactions that are to e recorded.
Some, such as the travel
items, are alternative rea/downs. "n many countries, the information
to e included in these supplementary items (e.g., for insurance) may
e otained as part of the process of data collection. These
supplementary items provide useful additional information for trade
negotiations and other analytical purposes, including data @uality
assessment. -ften the data necessary for compiling the !!
supplementary items are availale as part of the data6collection
process for the related E.-,S &0!0 components. "n such cases, the
supplementary items should e compiled at the same time as the
related E.-,S &0!0 components. :owever, if the data are not
availale ut are deemed important for
the compiling economy, the compiler may choose to set up further
data6collection systems to otain appropriate data for the
supplementary items. The further detail recommended in E.-,S &0!0
recogniHes the detail necessary for trade negotiations, primarily those
conducted under +*TS, as well as the importance of services in studies
of gloaliHation. "n the present #$%&S 20'0, it is recogniHed that not all
countries have the same needs for data, and that compilers will ma/e
decisions on the data to e compiled ased on individual country
needs. E.-,S &0!0 is consistent with the .,M2 classifcation of
services. The classifcations of services (.,M2 and E.-,S &0!0) are
primarily product6ased classifcations, and may e partially descried
in terms of the international classifcation of products, C,C. .,M2
descries the various services components in terms of C,C >er.&. *
similar, ut more detailed, approach has een used in the revised
Manual. :owever, as in .,M2, there are a numer of E.-,S
components for which a correspondence with the C,C cannot e
estalished. "n these areas, travel,
construction and government goods and services, n(i(e(, a wide range of goods
and services may e traded or consumed. These three areas of E.-,S
&0!0, which are discussed further elow, emphasiHe the transactor and
the mode of consumption of goods and services rather than the type of
product consumed. Further, it should e noted that it is not possile to
estalish a one6to6one correspondence etween E.-,S &0!0 and C,C,
>er.& ecause in places C,C, >er.& calls for more detail than is shown in
E.-,S &0!0, while in a few areas the reverse is true.
!&
&0 years and facilitating international comparison through increased
comparaility with existing regional classifcations.
The scope of "S"C in general covers productive activities, i.e., economic
activities within the production oundary of the System of %ational
*ccounts (S%*). * few exceptions have een made to allow for the
classifcation of activities eyond the production oundary ut which
are of importance for various other types of statistics. These economic
activities are sudivided in a hierarchical, four6level structure of
mutually exclusive categories, facilitating data collection, presentation
and analysis at detailed levels of the economy in an internationally
comparale, standardiHed way. The categories at the highest level are
called sections, which are alphaetically coded categories intended to
facilitate economic analysis. The sections sudivide the entire
spectrum of productive activities into road groupings, such as
F*griculture, forestry and fshingG (section *), FManufacturingG (section
C ).
Division Group Class Description
Bi(#iograp!%
!. Anited %ations, 'epartment of Economic and Social *;airs
Statistical 'ivision, Statistical ,apers, Series M %o.12, Manual on
Statistics of "nternational Trade in Statistics, &00&.
&. Anited %ations, 'epartment of Economic and Social *;airs
Statistical 'ivision, Statistical ,apers, Series M %o.CC, >er.!. Central
,roduct Classifcation, >ersion !.0,!881
7. Anited %ations, 'epartment of Economic and Social *;airs
Statistical 'ivision, Statistical ,apers, Series M %o.$, #ev.$
"nternational Standard "ndustrial Classifcation of *ll Economic
*ctivities, #evision $, &001.
$. Anited %ations, Statistics 'ivision, Classifcation #egistry3
http344unstats.un.org4unsd4cr4registry4default.asp
9. "nteragency Tas/ Force on Statistics of "nternational Trade in
Statistics, Apdating of the MS"TS, 'raft chapters and annexes3
http344unstats.un.org4unsd4tradeserv4TFS"TS4msits.htm