          
                         SERVICE EXPORTS
          
          
          Service industries span a wide variety of enterprises from
          hamburgers to high technology. The service sector accounts
          for about 70 percent of the U.S. GNP and 75 percent of
          employment. In 1988, the service sector also accounted for
          slightly more than two-thirds of all self-employed persons.
          
          Internationally, a similar change has taken place. World
          trade in services grew in the past decade at an average
          rate of 5 percent a year to constitute approximately 20
          percent of overall world trade today. In some countries,
          the share is much higher. Spain reports a 39 percent share;
          Austria, 36 percent. The leading exporter of services, the
          United States, shows services accounting for 18 percent of
          all merchandise and services trade and, unlike the
          situation with trade in goods, has had a surplus in
          services trade for decades.
          
          The income generated and the jobs created through the sale
          of services abroad are just as important to the U.S.
          economy as income and jobs resulting from the production
          and export of goods. In view of the shift toward services
          both domestically and internationally and the substantial
          competitive advantage of the United States in the services
          field, those who have services to offer can become major
          participants in world trade.
          
          TYPICAL SERVICE EXPORTS
          
          The service sector accounts for a great share of the U.S.
          economy, although some services are not easily exported. It
          would be very difficult to export most personal services,
          such as the service performed by waiters in restaurants;
          but most business services can be exported _ especially
          those highly innovative, specialized, or technologically
          advanced services that are efficiently performed in the
          United States. The following sectors have particularly high
          export potential:
          
          *    Construction, design, and engineering. The vast
               experience and technological leadership of the U.S.
               construction industry, as well as special skills in
               operations, maintenance, and management, frequently
               give U.S. firms a competitive edge in international
               projects. Some U.S. firms with expertise in
               specialized fields, such as electric power utilities,
               also export related construction, design, and
               engineering services, such as power plant design
               services.
          
          *    Banking and financial services. U.S. financial
               institutions are very competitive internationally,
               particularly when offering account management, credit
               card operations, collection management, and other
               services they have pioneered.
          
          *    Insurance services. U.S. insurers offer valuable
               services ranging from underwriting and risk evaluation
               to insurance operations and management contracts in
               the international marketplace.
          
          *    Legal and accounting services. Firms in this field
               typically aid other U.S. firms operating abroad
               through their international legal and accounting
               activities. They also use their experience to serve
               foreign firms in their business operations.
          
          *    Computer and data services. The U.S. computer services
               and data industries lead the world in marketing new
               technologies and enjoy a competitive advantage in
               computer operations, data manipulation, and data
               transmission.
          
          *    Teaching services. The vast U.S. education sector
               offers substantial new services for foreign
               purchasers, particularly in areas such as management,
               motivation, and the teaching of operational,
               managerial, and theoretical issues.
          
          *    Management consulting services. Organizations and
               business enterprises all over the world look to the
               United States in the field of management. U.S.
               management consulting firms as well as other U.S.
               firms that are willing to sell their particular
               management skills find great potential overseas for
               export of their services.
          
          EXPORT SERVICES VERSUS PRODUCTS
          
          There are many obvious differences between services and
          products.  Consequently, important features differentiate
          exporting services from exporting products:
          
          *    Services are less tangible than products, providing
               little in terms of samples that can be seen by the
               potential foreign buyer.  Consequently, communicating
               a service offer is much more difficult than
               communicating a product offer. For example, brochures
               or catalogs explaining services often must show a
               proxy for the service. A construction company, for
               instance, can show a picture of a construction site,
               but a picture of the finished building communicates
               the actual performance of the service more
               effectively. Much more attention must be paid to
               translating the intangibility of a service into a
               tangible and saleable offer.
          
          *    The intangibility of services also makes financing
               more difficult.  Frequently, even financial
               institutions with international experience are less
               willing to provide financial support for service
               exports than for product exports, because the value of
               services is more difficult to monitor. Customer
               complaints and difficulties in receiving payments can
               also appear more troublesome to assess.
          
          *    Services are often more time dependent than products.
               Quite frequently, a service can be offered only at a
               specific time, and as time passes, the service
               perishes if it is not used. For example, to offer data
               transmission through special telephone lines may
               require providing an open telephone line. If this line
               is not heavily used, the cost of maintaining it may
               not be covered.
          
          *    Selling services is also more personal than selling
               products, because it quite often requires direct
               involvement with the customer. This involvement
               demands greater cultural sensitivity when services are
               being provided, since a buffer of indirect
               communication and interaction does not exist.
          
          *    Services are much more difficult to standardize than
               products.  Service activities must frequently be
               tailored to the specific needs of the buyer. This need
               for adaptation often necessitates the service client's
               direct participation and cooperation in the service
               delivery.
          
          Demand for certain services can derive from product
          exports. Many of our merchandise exports would not take
          place if they were not supported by service activities such
          as banking, insurance, and transportation.  Services can be
          crucial in stimulating product export and are a critical
          factor in maintaining such exports. However, in such cases,
          services follow products rather than taking the lead over
          them.
          
          MARKETING SERVICES ABROAD
          
          Since service exports are often delivered in the support of
          product exports, a sensible approach for some beginning
          exporters is to follow the path of relevant product
          exports. For years, many large accounting and banking firms
          have exported by following their major multinational
          clients abroad and continuing to assist them in their
          international activities. Smaller service exporters who
          cooperate closely with manufacturing firms can also
          determine where these manufacturing firms are operating
          internationally and aim to provide service support for
          these manufacturers abroad.
          
          For service providers whose activities are independent from
          products, a different strategy is needed. These individuals
          and firms should search for market situations abroad that
          are similar to the domestic market.
          
          Many opportunities derive from understanding the process
          and stage of development of relevant trade activities
          abroad. Just as U.S. society has undergone change, foreign
          societies are subject to changing economic trends. If, for
          example, new transportation services are opened up in a
          country, an expert in the area of containerization may
          offer services to improve the efficiency of the new system.
          
          Leads for service activities can also be gathered by
          staying informed about international projects sponsored by
          organizations such as the World Bank, the Caribbean
          Development Bank, the Inter-American Development Bank, the
          UN, and the World Health Organization. Very frequently,
          such projects are in need of service support.
          
          The Eximbank has introduced a new program to assist U.S.
          design, engineering, and architectural firms with foreign
          contracts. For information on this program, contact the
          Eximbank's Engineering Division (202-566-8802).
          
