Major companies behind growing foreign trade in services
News, Staff memo Swedish exports and imports of services have steadily increased as a share of GDP in recent decades. Moreover, the growth rate has accelerated and risen sharply since 2019. A small number of multinational companies are behind the development.
In the staff memo “Major companies behind growing foreign trade in services”, the authors describe the development of Swedish foreign trade in services over the past 20 years. They also look at the factors that have driven the rise in trade.
The analysis shows that a handful of multinational companies are responsible for much of the development. They usually have high value-added functions and assets located in Sweden. These are head office, research and development and intangible assets, which give rise to trade in services with foreign companies within the same group.
Some of these companies are also important players in the digital economy. Some sell their services to households around the world and others produce goods that also include services, such as software. For these goods producers, services account for an increasing share of their exports.
There are indications that the large multinationals will continue to drive the increase in foreign trade in services. Signs of continued growth in the global trade in services include the continued growth of the digital economy and the increasing availability of skilled labour from emerging economies.
But the future is uncertain. Risks such as geopolitical tensions and potential trade barriers could instead slow the growth of trade in services. Swedish foreign trade in services is largely dependent on the activities and corporate structure of a few companies. How well they perform and where they choose to invest intangible assets will therefore continue to play a crucial role in Swedish foreign trade in services.
Authors: José Camacho and Liv Hakimi Fard, who work at the Monetary Policy Department
Staff memo
A Staff Memo provides Riksbank staff members with the opportunity to publish advanced analyses of relevant issues. It is a staff publication, free of policy conclusions and individual standpoints on current policy issues. Publication is approved by the head of department concerned. The opinions expressed in Staff Memos are those of the authors and should not be regarded as the Riksbank’s standpoint.