Exports of services - how important are they?

Asked to list our big earners most will include dairy, meat, forestry, wine, and other assorted products.  Apart from tourism though, and perhaps film, most lists are usually concentrated on the exports of goods.

But, of our annual revenue of nearly $58bn for the year to March 2011, did you know that more than $12bn is from service exports?  Using official Statistics New Zealand numbers, tourism accounts for about $6bn of that figure.  Education is another large category, adding just over $2bn to the annual total.  Another element, about $1bn worth, while not explicitly stated can be related to freight services associated with trade in goods.  But that still leaves a sizable $3bn.

As Figure 1 shows, export revenue from the services has declined in recent times, primarily as a result of the struggling tourism sector.  Education receipts have recently stabilized, but both are undoubtedly likely to experience further post-quake difficulties.

This suggests that the ‘other’ category is worthy of further inspection.  After all, this $3bn category contributes in total more than forestry!  So, any guesses as to what makes up the bulk of this total?

A trawl through the bowels of the data is only partially enlightening.  I note that computer and information service export receipts have been constantly growing since 1995 (to total about $360m for the year to March 2011); as have royalties and licence fees (about $265m).  The contribution from personal, cultural and recreational services has been somewhat erratic, while communication service receipts have declined.

But the largest item within the category ‘other’ is a series helpfully labeled as ‘other business services’ – totaling about $1.4bn for the year to March 2011.  Even more relevant is that this category has recorded impressive growth in revenue over the past decade, as illustrated in Figure 2.

So, again, the microscope should go on this category.  This becomes even murkier as some data for some sub-categories are further suppressed.  But two sub-categories show up as of noticeable size and interest. 

One is labeled ‘legal, accounting, management consulting and public relations services’, which totaled nearly $280m export revenue.  However, this category has stalled over the past decade after having reached over $330m in 2001.  Similarly, a category labeled ‘research and development’ contributed just over $100m in the latest March year, but remains relatively unchanged from the $100m recorded in 2001.