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Services and Sustainable Development:
A Conceptual Approach
Development and LDCs
September 2016 |
ICTSD
Framework Paper
l
Development and LDCs
Services and Sustainable Development:
A Conceptual Approach
Framework Paper
September 2016
ICTSD
ii
Published by
International Centre for Trade and Sustainable Development (ICTSD)
International Environment House 2
7 Chemin de Balexert, 1219 Geneva, Switzerland
Tel: +41 22 917 8492 Fax: +41 22 917 8093
ictsd@ictsd.ch www.ictsd.org
Publisher and Chief Executive: Ricardo Meléndez-Ortiz
Managing Director: Deborah Vorhies
Programme Ofcers: Nicholas Frank, Kiranne Guddoy, and Simon Pelletier
Acknowledgements
This paper was produced under ICTSD’s Programme on Development and Least Developed Countries
(LDCs) as part of a project focused on leveraging services to drive sustainable and inclusive
economic growth.
ICTSD gratefully acknowledges the essential and innovative contributions of Professor Bernard
Hoekman and Dr Matteo Fiorini of the European University Institute who developed the conceptual
elements of this paper. ICTSD would also like to thank Marta Soprana for her original work on
criteria and indicators and Niki Cattaneo, Rhodes University, for her valuable comments and
feedback.
ICTSD is grateful for the generous support from its core and thematic donors including the
UK Department for International Development (DFID); the Swedish International Development
Cooperation Agency (SIDA); the Ministry of Foreign Affairs of Denmark (Danida); the Netherlands
Directorate-General of Development Cooperation (DGIS); the Ministry for Foreign Affairs of
Finland; the Ministry of Foreign Affairs of Norway; and the Australian Department of Foreign
Affairs and Trade.
ICTSD welcomes feedback on this publication. These can be sent to Fabrice Lehmann, ICTSD
Executive Editor (ehmann@ictsd.ch).
Citation: ICTSD. 2016. Services and Sustainable Development: A Conceptual Approach. Geneva:
International Centre for Trade and Sustainable Development (ICTSD).
Copyright © ICTSD, 2016. Readers are encouraged to quote this material for educational and
non-profit purposes, provided the source is acknowledged. This work is licensed under the
Creative Commons Attribution-NonCommercial 4.0 International License. To view a copy of this
license, visit: https://creativecommons.org/licenses/by-nc/4.0/ or send a letter to: Creative
Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA.
The views expressed in this publication are those of the authors and do not necessarily reflect
the views of ICTSD or the funding institutions.
ISSN 1995-6932
iii
Development and LDCs
TABLE OF CONTENTS
LIST OF TABLES AND FIGURES iv
LIST OF ABBREVIATIONS v
FOREWORD vi
EXECUTIVE SUMMARY vii
1. INTRODUCTION 1
2. SERVICES AND SUSTAINABLE DEVELOPMENT 2
2.1. Why Services Matter 2
2.2. Dening Sustainable Development 3
2.3. Sustainable Development: From the MDGs to the SDGs 3
3. SERVICES AND THE SDGS: COMPLEX LINKAGES AND
MULTIDIMENSIONAL IMPACTS 5
3.1. Developing a Conceptual Framework 5
3.2. Services and Sustainable Development: The Growth Eect 6
3.3. Services and Sustainable Development: Non-Growth Dimensions 7
4. PRIORITISING SERVICES SECTORS: A CALL FOR CRITERIA 8
4.1. Why Criteria Are Needed 8
4.2. Criterion A: Explicit Reference 9
4.3. Criterion B: Backbone Services 12
4.4. Criterion C: Nature of Contribution 15
5. THE ROLE OF INDICATORS: MEASURING IMPACT AND ASSESSING
THE CONTRIBUTION OF SERVICES 23
5.1. Issues With Indicators 23
5.2. Strength of Contribution 24
5.3. Types of Indicators 27
6. CONCLUSION 29
REFERENCES 30
ADDITIONAL BIBLIOGRAPHY 32
iv
LIST OF TABLES AND FIGURES
Table 1 Criterion A – Explicit Reference to Services in the SDGs
Table 2 Criterion B – Backbone Services and the SDGs
Table 3 Criterion C – Nature of Direct / Indirect Contribution of Services to the SDGs
Table 4 Strength of Contribution of Services Sectors to Attainment of SDGs – A Potential
Approach
Table 5 Impact of Services Sectors on SDGs – Indicators by Scope
Table 6 Impact of Services Sectors on SDGs – Sample Indicators by Purpose or Focus of
Assessment
Figure 1 Conceptual Framework for Impact of Services on Sustainable Development
v
Development and LDCs
LIST OF ABBREVIATIONS
GATS General Agreement on Trade in Services
GDP gross domestic product
ICT information and communications technology
IT information technology
LDC least developed country
LIC low income country
MDG Millennium Development Goal
OECD Organisation for Economic Co-operation and Development
Rio+20 United National Conference on Sustainable Development (Brazil 2012)
SDG Sustainable Development Goal
SME small and medium-sized enterprise
TiVA Trade in Value Added
UN United Nations
UNCTAD United Nations Conference on Trade and Development
WTO World Trade Organization
vi
FOREWORD
The adoption of the 2030 Agenda for Sustainable Development by the United Nations in September
2015 established an extensive and ambitious international framework for the achievement
of sustainable development objectives. The 2030 Agenda, which includes the 17 Sustainable
Development Goals (SDGs) and is buttressed by the Addis Ababa Agenda for Action on Financing for
Development, makes explicit and frequent reference to the importance of trade and trade policy in
driving sustainable development outcomes.
Advances in information and communication technologies have fundamentally changed the structure
of global trade and production patterns. Services have emerged as the most dynamic sector in the
global economy and now account for two-thirds of world employment and approximately half of
world trade when measured on a value-added basis. At the same time, the production of both goods
and services, as well as investment ows, has increasingly taken place within global value chains.
This trend towards fragmentation has been facilitated by access to efcient and low cost producer
services. By the same token, integration into value chains, whether regional or global, is dependent
upon access to vital intermediation services.
While least developed countries (LDCs) have expanded their trade in services over the last
decade—albeit from a low base—there is signicant scope for further growth. The 2015 World
Trade Organization Nairobi Declaration resulted in an extension of preferential market access for
service suppliers from LDCs. However, research conducted by the International Centre for Trade and
Sustainable Development (ICTSD) in support of the LDC Services Waiver indicates that many of the
barriers to enhanced service exports are the result of supply-side constraints rather than market
access issues.
This paper provides a conceptual framework, developed by Professor Bernard Hoekman and Dr
Matteo Fiorini from the European University Institute, which identies the primary channels through
which services effect the SDGs. Complementing this conceptual framework is a set of criteria,
designed to guide policymakers in prioritising competitiveness-enhancing policy change in particular
service sectors, and a series of illustrative indicators, geared towards identifying the impact of
services on the SDGs. These were advanced by Marta Soprana, trade policy consultant specialised
in services trade.
The paper, the rst in a series of services and SDG-related publications, aims to not only provide the
basis for further work in this area, but also to encourage and support positive service sector policy
change in the world’s poorest countries. We hope you will nd it useful.
Ricardo Meléndez-Ortiz
Chief Executive, ICTSD
vii
Development and LDCs
EXECUTIVE SUMMARY
For the vast majority of countries, regardless of developmental status, services make a critical
contribution to Gross Domestic Product (GDP), are an important source of employment, and serve
as vital inputs into production processes. Services are crucial for the development of economies and
provide a signicant contribution towards the achievement of the Sustainable Development Goals
(SDGs) identied in the United Nation’s 2030 Agenda (UN 2015).
The nature of the relationship between services and the attainment of sustainable and inclusive
economic growth is complex and multifaceted. Services can drive sustainable development outcomes
through both growth and non-growth channels.
The growth channel includes impacts from domestic production and services trade performance as
both affect the productivity and efciency of the domestic economy. In contrast to the relationship
between economic growth and services, which has been well documented in numerous studies, less
research has been devoted to the non-growth dimensions of services.
The non-growth dimension of the contribution of services to sustainable development can be
differentiated into three components: direct effects, income effects, and other indirect effects.
The direct non-growth effect involves cases where a SDG is associated with access to a specic
services sector or activity. Improving access to educational services and improvements in educational
outcomes is an example of this dynamic.
In contrast, the income effect works through the income channel to help achieve SDGs that are
closely linked to—if not premised on—higher incomes. Improved services sector performance can
result in higher levels of economic growth which, in turn, can produce higher levels of per capita
income needed to reduce poverty rates.
So-called “other” indirect effects involve cases where a given services sector contributes to a SDG
in a way that is not linked to either the direct or income effect. For example, increasing access to
educational services can have positive impacts on environmental outcomes.
However, understanding the multidimensional relationship that exists between services and
sustainable development objectives is just the rst step in taking advantage of the developmental
potential offered by services. Establishing a set of exible, accessible, and widely applicable
criteria to identify priority services sectors is necessary.
The approach adopted in this paper is to utilise the SDGs themselves as the starting point for
criteria from which to build a list of priority sectors. Broadly, these criteria can be broken down as
follows: (i) an explicit reference is made to a services sector in a given SDG goal or target; (ii) a
given services sector is considered/not considered to be a key backbone service (such as nancial,
information and communication technologies, and transport services); and (iii) the nature of the
contribution of a services sector to a given SDG is identied as either direct or indirect.
However, establishing the direct or indirect link that services provide in their contribution to
various aspects of sustainable development may not be sufcient to establish which services
sectors policymakers should prioritise. It is necessary to complement the criteria identied with an
assessment of the extent to which a services sector contributes to achieving a SDG. By examining
the number of SDG targets a services sector contributes to, it is possible to classify the contribution
of services to sustainable development objectives as strong, moderate, weak, or negligible.
viii
The application of this classication approach reveals an interesting picture. In the majority of
cases where a service provides a direct contribution to the achievement of a SDG, this contribution
can be classied as strong. Exceptions to this include environmental services and tourism services
whose contribution to gender equality, consumption and production patterns, and protection of
marine and terrestrial ecosystems is indeed direct but with moderate impact.
In cases where a service makes an indirect contribution to a SDG, the contribution can also be
strong. For example, health services may make a strong and indirect contribution to economic
growth and employment objectives, as they improve worker productivity and are positively linked
to increases in aggregate output.
Key infrastructure-related backbone services contribute strongly to a number of the SDGs, both
directly and indirectly. In a similar vein, services that improve labour productivity, namely health
and educational services, provide a strong direct and indirect contribution to a large number of the
SDGs.
Overall, the analysis indicates that the contribution of services to the achievement of sustainable
development objectives varies widely; however, key backbone services, such as transport, nance,
and telecommunications, have the potential to make the largest impact. Intuitively this makes
sense as—for least developed countries (LDCs) and low-income countries (LICs)—many services
sectors of export interest, such as tourism services, are constrained by a lack of access to critical
backbone services which limits their export potential. That said, it is important also to recognise
the importance of services which, either directly or indirectly, enhance labour productivity and
overall competitiveness, such as health and education services.
1
Development and LDCs
1. INTRODUCTION
In a world that is increasingly characterised
by interconnectedness and technological
advancements, the importance of services for
economic growth and development cannot be
overstated. Services make up roughly 75 per
cent of gross domestic product (GDP) in high-
income economies and approximately 45 per
cent of GDP in low-income countries (LICs) and
least developed countries (LDCs); they now
account for around 50 per cent of global trade
when measured on a value-added basis.
Services have a catalytic role in sustainable
social and economic development and serve
as a means of addressing poverty, upgrading
welfare, and improving universal availability of
and access to basic amenities. It can be argued
that pursuing a sustainable development
strategy is predicated on both the development
and nurturing of domestic services sectors as
well as engagement in international trade in
services.
Many LDCs and LICs are expanding their
trade in services, but have the potential to
do much more. While services make up large
proportions of some of these economies,
the scope to promote and expand trade in
services has not yet been fully realised. The
services sector the role it plays in national
economies, in trade and investment ows, and
the opportunities it presents for supporting
sustainable development objectives, are
underappreciated in many developing
countries. Services are often not coherently
incorporated nor mainstreamed in national
development strategies. As a consequence,
policies adopted towards a developmental
strategy for the services sector have not been
as forthcoming or as effective as they could be
in order to promote necessary enhanced social
and economic development.
This paper focuses on services and the links
that exist between domestic services industries,
trade in services, and sustainable development
objectives. It aims to show that well- functioning
and properly regulated services can make a
signicant contribution to the achievement of
sustainable development goals (SDGs) in many
different ways. It does so by developing a
conceptual framework that builds upon a set of
criteria and indicators for the identication of a
priority list of services sectors that can act as
drivers of sustainable development. It should
be noted that this paper does not intend to
analyse the impacts of policy on services sector
performance.
The relationship between services and
sustainable development, with an introduction
to the internationally agreed Sustainable
Development Goals, the connection between the
development of a domestic services industry and
trade in services, and the link between services
and the SDGs will be briey discussed. Next, a
conceptual framework to guide thinking about
the linkages between services and sustainable
development objectives will be presented. Then
a set of prospective criteria that could be used
by policymakers to identify those services sectors
that would need to be prioritised with a view
to maximising their input into the attainment
of the SDGs is given. This part of the paper is
complemented by the following section which
sets out a number of indicators that policymakers
can utilise to assess the impact of the potential
contribution that different services sectors can
make to the SDGs. The nal section offers some
concluding remarks.
2
2. SERVICES AND SUSTAINABLE DEVELOPMENT
2.1. Why Services Matter
Efcient services are critical for achieving
economic development. Many services are inputs
into the production of other services and goods.
As a result, their cost and quality impact on the
growth performance of the economy (François
and Hoekman 2010).
An efcient, competitive nancial sector is
critical in ensuring that capital is deployed where
it has the highest returns. Telecommunications
are key intermediate inputs and a “transport”
mechanism for information services and other
products that can be digitised. Similarly, transport
services contribute to the efcient distribution
of goods within and between countries and are
the means through which providers of services,
as well as goods, move to where clients are
located (and vice versa). Business services such as
accounting and legal services reduce transaction
costs associated with the operation of nancial
markets and the enforcement of contracts.
Retail and wholesale distribution services are
a vital link between producers and consumers,
with the margins that apply in the provision of
such services inuencing the competitiveness of
rms on both the local and international market.
Recent improvements in services statistics, such
as the OECD–WTO Trade in Value Added (TiVA)
database, document that services account for
about half of global trade on a value-added
basis. This high share reects the fact that a
large variety of services are inputs into all traded
products and other services. Indeed, many rms
in manufacturing increasingly engage in so-called
“servicication” (also termed servication or
servitisation), a shift into or expanding the
production, sale, and consumption of services.
This is often part of a strategy to increase
productivity and “move up the value chain”
in response to competition from imports and
decisions to offshore tasks that can be done more
cheaply elsewhere, which has been the focus of
much recent analysis (e.g. Baines et al. 2009;
Breinlich and Criscoulo 2011; Swedish National
Board of Trade 2013; Breinlich, Soderbery, and
Wright 2014; Crozet and Milet 2014; Lodefalk
2014). Upgrading along a value chain often implies
(or indeed requires) servicication in the sense
that activities that generate a higher share of
the total value of a product tend to be services,
ranging from design, research and development
to retail distribution and brand management.
In addition to their crucial intermediation role,
services are also a major source of employment.
According to the World Bank’s Open Data,
services accounted for 51 per cent of total
employment worldwide in 2010; since the early
2000s, the share of services employment in total
employment has grown by roughly 6 per cent.
With around 74 per cent in services in 2010, high-
income countries account for a greater share of
services employment than the average, while
low-income countries, although lagging behind,
still saw their shares of services employment to
total employment increase from 30 to 37 per cent
in the period from 2000 to 2010.1 Importantly,
services can play a signicant role in providing
employment for the most vulnerable groups
of society, which are at greater risks of being
marginalised. For example, women account for
60 to 70 per cent of the labour force in tourism
services, and over half of the workers employed
in this sector are aged 25 or younger (UNCTAD
2013, 6).
However, it should be noted that the nature
of employment within the services sector is
heterogeneous. Sectors such as information
and communications technology (ICT), nance,
insurance, and business services are characterised
by high levels of productivity and, consequently,
higher wages (Rodrik 2014). On the other hand,
as Ghani and O’Connell (2014) have noted,
traditional services have experienced much
1 As no aggregate data on services in employment are available on least developed countries, the assessment of
employment in the services sector was based on country income.
3
Development and LDCs
lower rates of productivity growth. That said,
manufacturing has become increasingly capital-
intensive, and many developing economies
have experienced deindustrialisation at a much
earlier stage of the development process than
their developed country peers; therefore the
services sector remains a vital source of both
jobs and economy-wide productivity gains.
2.2.DeningSustainableDevelopment
Although no universal denition of sustainable
development exists, the World Commission on
Environment and Development, also known as
the Brundtland Commission, (1987) provided
what is now considered a landmark illustration
of the concept:
“Sustainable development is development
that meets the needs of the present without
compromising the ability of the future
generations to meet their own needs. It
contains within it two key concepts: (i)
the concept of needs, in particular the
essential needs of the world’s poor, to which
overriding priority should be given; (ii) the
idea of limitations imposed by the state of
technology and social organization on the
environment’s ability to meet present and
future needs”.
In the course of the 2002 World Summit on
Sustainable Development in South Africa, the
concept of sustainable development underwent
further elaboration. Point 5 of the Johannesburg
Declaration, adopted at the end of the Summit
(UN 2012), refers to three interdependent
and mutually reinforcing pillars of sustainable
development: economic development, social
development, and environmental protection.
Services can contribute to a signicant degree
to each pillar. They can be instrumental in
promoting economic development because
efcient services can stimulate economic
growth through their role as inputs in
manufacturing, agriculture, mining, and in
other services sectors. The improvement of
basic services, such as education and health-
related services, allows women and other
vulnerable people the opportunity to be more
actively engaged in the domestic economy,
while the development of ICT services can
lead to greater social inclusion. Finally, the
development of environment-related services
can contribute to reducing the impact of
negative environmental externalities linked to
enhanced production and consumption.
A closer look at the sustainable development
agenda in 2016 allows us to see how, in practice,
services can contribute in different ways to
the achievement of sustainable development
goals, which were agreed upon with a view
to covering all three pillars of sustainable
development mentioned.
2.3.SustainableDevelopment:Fromthe
MDGs to the SDGs
Advancing and implementing the sustainable
development agenda is a core activity of
the United Nations (UN) and its specialised
agencies. The Millennium Development Goals
(MDGs), agreed by governments in 2000 with
a target date of 2015, are the blueprint upon
which the UN founded its efforts to promote
and support sustainable development. In 2012
the United National Conference on Sustainable
Development, also known as Rio+20, took place
in Brazil with the explicit purpose of renewing
the commitment of its participants and the UN
membership at large to sustainable development
and the promotion of an economically, socially,
and environmentally sustainable future for the
planet (Ford 2015).
Setting the tone for the UN post-2015
development agenda and building upon the
work already done under the MDGs, the Rio+20
generated the Sustainable Development Goals
(SDGs), which were adopted during the United
Nations summit in New York in September 2015.
In an effort to learn from past mistakes, the
SDGs originated from an Open Working Group
of the UN General Assembly, which allowed for
the consultation process to include a larger
number of stakeholders than those involved
in the proposal of the MDGs. The resulting
SDGs that came into effect on 1 January 2016
dramatically expanded upon the eight MDGs,
which had been criticised for being too limited
4
in scope. By contrast, the SDGs comprise 17
wide-ranging objectives and 169 targets with
2030 as their target completion date.
In their quest to complete the Millennium
Goals’ unfinished business, the SDGs are
designed to tackle the most prominent
challenges to the peace and prosperity of our
planet. With a view to ensuring that future
generations will be left with a world where all
countries can enjoy sustainable and inclusive
growth, the objectives of the SDGs go beyond
poverty eradication, health, and education, to
include a wide range of social, economic, and
environmental goals, such as gender equality
and empowerment of women; reduction of
inequality; inclusive, sustainable, and safe
human settlements; and sustainable use of
marine and terrestrial ecosystems (see UN
2015).
5
Development and LDCs
What is the nature of the relationship between
services and the attainment of sustainable
and inclusive economic growth? This section
will provide a conceptual framework to guide
thinking about the ways in which services can
advance sustainable development objectives.
For the purposes of this discussion, the
SDGs will be used as a proxy for sustainable
development objectives more generally.
3.1.DevelopingaConceptualFramework
Various types of linkages can be proposed
between services and the realisation of the SDGs.
These linkages are both direct and indirect. One
of the most important channels through which
the services sector can drive sustainable and
inclusive development is through its impact on
economic growth. A direct relationship exists
between services sector-enabled economic
growth and the achievement of specic SDGs—
most obviously for SDG 8 (inclusive/sustainable
growth and employment), but also (for example)
for SDG 1 (ending poverty), which dependends
on economic growth to a signicant extent. In
such cases what matters is the effect of services
on growth, which—for the purposes of this
paper—is termed the growth effect. That said,
while economic growth, spearheaded by services
sector productivity and efciency gains, may
be a necessary condition for the achievement
of sustainable development ambitions, it is not
sufcient on its own (Mckay and Sumner 2008).
In addition to this growth effect, services play
a crucial role in the achievement of the SDGs
in other ways. Some of the SDGs map directly
onto (or coincide with) the performance of
specic services (e.g. health services in SDG 3,
education in SDG 4). For other SDGs a particular
service sub-sector or activity will be particularly
important, for example access to micro-nance
instruments may be a channel through which to
support greater gender equality (SDG 5), even
though this goal does not directly coincide with
the development of a more efcient nancial
industry. Furthermore, the growth channel is
also relevant indirectly for other dimensions
of sustainable development insofar as growth
generates additional resources that can be used
to pursue specic SDGs. In short, both direct
and indirect mechanisms exist that connect
the role of services to particular dimensions of
sustainable development.
The conceptual framework used to characterise
the links between services and sustainable
development is summarised in Figure 1. This
shows that the term “services” covers both
domestic service industry variables and trade
in services, since either or both can impact on
sustainable development. A key distinction made
in the framework is between two basic channels
through which services can impact on sustainable
development: (i) the relationship between
services performance and economic growth, and
then sustainable development; and (ii) the role
of services in attaining dimensions of sustainable
development that are more specic to a given
SDG (the non-growth channels).
It is important to note that both domestic
services and international trade performance will
be affected by trade and industrial policies, as
well as the overall domestic and macroeconomic
environment. While this paper will not analyse
the impacts of policy on services performance,
this is clearly a critical dimension of any effort to
increase the contribution that services can make
to sustainable development. The role of public
policies is captured by the dotted black arrows
in Figure 1.
3. SERVICES AND THE SDGS: COMPLEX LINKAGES AND MULTIDIMEN-
SIONAL IMPACTS
6
Figure1:ConceptualFrameworkforImpactofServicesonSustainableDevelopment
Source: ICTSD (developed by Hoekman and Fiorini)
3.2.Services and Sustainable Development:
TheGrowthEffect
The rst channel through which services can
contribute to the attainment of sustainable
development objectives (i.e. the SDGs) is through
direct effects on improving the overall economic
growth performance of a country; this channel
is represented by the red arrows in Figure 1. It
includes impacts from both domestic production
and services trade performance as both affect
the productivity and efciency of the domestic
economy. However, it should be noted that
impacts will not be homogenous and that wide
variation exists between services sectors in
terms of productivity, output, and employment.
Low-cost and high-quality telecommunications
will generate economy-wide benets, as the
communications network is a transport mechanism
for information services and other products that
can be digitised. Telecommunications are crucial
to the dissemination and diffusion of knowledge—
the spread of the Internet and the dynamism
that it has lent to economies around the world
is proof of their importance. Similarly, transport
services affect the cost of shipping goods and
the movement of workers within and between
countries. Business services such as accounting,
engineering, consulting, and legal services reduce
transaction costs associated with the operation
of nancial markets and the enforcement of
contracts; they are a channel through which
Services
Sustainable Development
Domestic
output / employment / productivity
input penetration / access / informality
environment accounts
Policies
regulations / trade costs
trade agreements
International
cross border trade / FDI
mode 4 / trade in value added
GVCs
Non-Income Dimensions
primary needs assessment (SDG1/2/3/7)
gender parity and social inclusion (SDG1/4/5)
environmental sustainability (SDG13/14)
Economic Growth
and other Income Dimensions
poverty reduction (SDG1)
equity (SDG10)
Effect of services on growth Effect of services on non-growth dimensions of SD
Direct Effect Indirect Growth Effect Other Indirect Effect
7
Development and LDCs
business process innovations are transmitted
across rms in an industry or across industries.
Retail and wholesale distribution services are
a vital link between producers and consumers,
with the margins that apply in the provision of
such services inuencing the competitiveness of
rms in both the local and international markets.
Health and education services are key inputs
into—and determinants of—the stock and growth
of human capital.
François (1990) notes that the growth of
intermediation services is an important
determinant of overall economic growth and
development because they allow specialisation
to occur.2 As rm size increases and labour
specialises, more activity needs to be devoted to
coordinating and organising the core businesses
of companies. This additional activity is partly
outsourced to external service providers. The
“producer services” (such as information and
communications services, business services
including accounting and logistics) that are
demanded and supplied as part of this process
are not just differentiated inputs into production.
They play an important and distinct role in
coordinating the production processes needed
to generate ever more differentiated goods
and to realise scale economies. The associated
organisational innovations and expansion of
“logistics” (network) services yield productivity
gains that in turn should affect economy-wide
growth performance.
3.3.Services and Sustainable Development:
Non-Growth Dimensions
The second component of the conceptual
framework comprises the links between services
and the non-growth dimensions of sustainable
development. Within this non-growth dimension,
it is possible to distinguish three types of
impacts that ser vices may have on sustainable
development outcomes:
• Direct Effects: where a SDG is associated
with the performance of, or access to, a
specic services sector or activity. This effect
may operate through domestic production or
supply of a service, or through the trade
channel (represented by the orange arrows
in Figure 1). Examples of the former include
the effect of improved productivity and
efciency in the medical sector on health
outcomes and access to international
telecommunication services as a mechanism
to enhance the ability of small rms to
engage in trade. Trade in services can play a
role through this channel where it promotes
domestic access to services, increases the
quality of domestic services industries, and
lowers their environmental footprint.
• Income Effect (indirect): where progress
towards achieving a SDG is associated with,
or facilitated by, economic growth that is
driven by the performance of services in an
indirect way that differs from the growth
linkage between services performance
and economic growth captured in the rst
component of the conceptual framework.
This type of effect can be active at the
level of all services variables, with the
impact on non-income dimensions of
sustainable development (i.e. specic
SDGs) represented by the combination of
the red and the blue arrows in Figure 1.
As an indirect effect it works through the
income channel to help achieve SDGs that
are closely linked to—if not premised on—
higher incomes. An example is the poverty
reduction target (SDG1), in that improved
services sector performance can result in
higher levels of economic growth which, in
turn, can produce higher levels of per capita
income.
• Other Indirect Effects: where services
contribute to the SDG’s achievement
independently of the level of economic
growth, for example, increasing access to
educational services will have a positive
effect on environmental outcomes (SDG 4).
This mechanism can be active at the level
of all services variables (represented by the
green arrows in Figure 1).
2 See also Burgess and Venables (2004) on the importance of a variety of services “inputs” that support specialisation,
creation and diffusion of knowledge, and exchange.
8
The relationship between services, cross-border
trade (mode 1), investment in services (mode 3
as dened in the General Agreement on Trade
in Services, or GATS), and movement of natural
persons (mode 4), and sustainable development is
complex and multidimensional. This relationship
touches upon a wide variety of diverse
areas (e.g. social, political, economic, and
regulatory). To fully understand these complex
interactions therefore requires specic technical
competences across a range of subject areas.
This section aims at providing a basic foundation
for the assessment of the contribution that
services can make to sustainable development
objectives, in the form of criteria and indicators
that should be:
• Accessible to any policymaker, irrespective
of the eld of expertise;
• Simple to explain, grasp, and apply;
• General enough to be applied by any country
but also exible enough to be adapted to
specic domestic contexts.
4.1. Why Criteria Are Needed
The Open Working Group of the UN General
Assembly proposed a number of SDGs with
the aim of addressing the most pressing issues
faced by the international community at large
in promoting sustainable development. While
all countries, regardless of their income, have
pledged to pursue these objectives, their
attainment is particularly important for LDCs
which tend to face more challenges in their
quest to achieve sustainable development than
their higher-income counterparts. Insufcient
logistics, lack of adequate skills within the
workforce, limited infrastructure, and poor
business environments are only a handful of
the obstacles that LDCs must overcome in the
services sector.
Services can signicantly contribute to reaching
SDGs by the target date of 2030 as long as they are
sufciently developed to help yield the desired
results. Hence, it is of paramount importance
for LDCs to make use of a number of tools to
estimate the current status and importance of
their services sectors, both at the domestic and
international level, to gauge the potential need
for policy changes in various services sectors so
as to improve performance, and to determine a
plausible order of priority for such changes to be
carried out. An assessment of this nature should
not take place in a vacuum, or occur as a stand-
along exercise, but should rather take place
within the framework of each country’s national
development strategy.
Although desirable it is rather improbable that
each and every country could pursue all 17
SDGs with the same determination, vigour, and
effectiveness. Policymakers in each country will
choose those SDGs and targets that, in their
view, warrant greater effort, given constraints
of time, resources, natural endowments, level
of development, political interests, strategic
needs, and national development goals.
In order to take full advantage of the potential
contribution that services can make to the
attainment of the SDGs, policymakers, especially
from LDCs, should identify a priority list of
services that may be in need of development
and can provide the greatest contribution to
sustainable development, which is consistent
and coherent with their country’s national
development strategy. This can best be done
by applying criteria that have been designed
to serve a two-fold purpose: (i) provide some
guidance on how to look at services from a
sustainable development perspective; and (ii)
offer practical and objective tools for analysis.
Any criteria identied should allow for both the
denition of a general priority list applicable to
all the countries that are determined to pursue
the SDGs proposed at Rio20+, as well as a certain
margin of exibility to incorporate a country’s
specic needs in determining its services
development agenda.
4. PRIORITISING SERVICES SECTORS: A CALL FOR CRITERIA
9
Development and LDCs
4.2. CriterionA:ExplicitReference
Where should policymakers start? How
can they build a priority list? As this paper
seeks to provide a deeper understanding
of the relationship between services and
the SDGs adopted as part of the post-2015
UN development agenda, one reasonable
option is to approach the SDGs themselves as
the starting point for building a list of the
services sectors that should be prioritised in
the journey towards 2030.
Policymakers could begin by verifying
whether any SDG, including its targets,
explicitly refers to the development of one or
more services sectors either as a means to an
end or as the purpose itself. The application
of this criterion (termed here “A—explicit
reference”) can result in three different
outcomes, which may be used to determine
a preliminary priority classification of the
relationship between services in the domestic
economy, trade in services, and SDGs:
• Category A.i.: the SDG in question makes
an explicit reference to one or more
services sectors in the title of the goal;
• Category A.ii.: one or more targets of the
SDG in question explicitly mention one or
more services sectors;
• Category A.iii.: neither the title nor the
targets of the SDG in question make any
express reference to any services sector.
Based on this first criterion of “explicit
reference”, the 17 SDGs could be roughly
classified as set out in Table 1, which
shows that almost all services sectors are
of significant relevance to the successful
attainment of many of the SDGs and their
targets. Indeed, of the 11 sectors identified
under the services sectoral classification
list used by WTO Members to schedule
their commitments under the GATS (i.e.
business services; communication services,
construction and related engineering services;
distribution services; educational services;
financial services; health-related and social
services; tourism and travel related services;
recreational, cultural, and sporting services;
transport services), only two—distribution
services and recreational, cultural, and
sporting services—are not explicitly mentioned
in some form in the SDGs.
The titles of four goals make unambiguous
reference to health, educational, and
environmental services, thus explicitly
linking SDGs 3, 4, 6 and 13—and their relevant
targets—to the performance of these services
sectors. Regarding the remaining SDGs,
services are mentioned in at least one target
for each of them, with the possible exception
of SDG 16, although trade-related institutions
such as the World Trade Organization, which
governs (inter alia) rules on trade in services,
could fall under the category of “inclusive
institutions”.
Still, this picture can be misleading; for
example, the absence of any explicit reference
to distribution services does not mean that
they do not contribute to SDGs either directly
or indirectly. As a matter of fact, by connecting
suppliers with consumers, distribution services
can be instrumental in ensuring sustainable
consumption and production patterns, i.e.
SDG 12. Recreational, cultural, and sporting
services, on the other hand, may play a strong
indirect role in supporting the functioning
of tourism services, which in turn foster
employment and economic growth, thus
contributing to the attainment of SDG 8.
In conclusion, the application of the “explicit
reference” criterion to the 17 goals and 169
targets shows that services are indeed relevant
to all SDGs and that additional criteria are
necessary to establish a priority list for a
developmental services strategy.
10
Table1:CriterionA–ExplicitReferencetoServicesintheSDGs
Category SD Goal/
Target Reference Services sector
A.i. Goal 3 Ensure healthy lives and promote well-being for all at all ages Health services
A.i. Goal 4 Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all Educational services
A.i. Goal 6 Ensure availability and sustainable management of water and sanitation for all Environmental services
A.i. Goal 13 Take urgent action to combat climate change and its impacts Environmental services
(protection of ambient air and
climate; nature and landscape
protection services)
A.ii. Target 1.4 Ensure that all men and women, in particular the poor and the vulnerable, have equal rights to economic resources,
as well as access to basic services, ownership and control over land and other forms of property, inheritance, natural
resources, appropriate new technology and financial services, including microfinance
All basic services
Financial services
A.ii. Target 2.3 Double the agricultural productivity and incomes of small-scale food producers, in particular women, indigenous
peoples, family farmers, pastoralists and fishers, including through secure and equal access to land, other
productive resources and inputs, knowledge, financial services, markets and opportunities for value addition and
non-farm employment
Financial services
A.ii. Target 5.6 Ensure universal access to sexual and reproductive health and reproductive rights […] Health services
A.ii. Target 5.7 Undertake reforms to give women equal rights to economic resources, as well as access to ownership and control
over land and other forms of property, financial services, inheritance and natural resources, in accordance with
national laws
Financial services
A.ii. Target 5.8 Enhance the use of enabling technology, in particular information and communications technology, to promote the
empowerment of women
Communication services
Computer services
A.ii. Target 7.b Expand infrastructure and upgrade technology for supplying modern and sustainable energy services for all in
developing countries, in particular least developed countries, small island developing States, and land-locked
developing countries, in accordance with their respective programmes of support
Other business services (services
incidental to energy distribution)
Construction services
(installation and assembly work)
A.ii. Target 8.3 Promote development-oriented policies that support productive activities, decent job creation, entrepreneurship,
creativity and innovation, and encourage the formalization and growth of micro-, small- and medium-sized
enterprises, including through access to financial services
Financial services
A.ii. Target 8.9 Devise and implement policies to promote sustainable tourism that creates jobs and promotes local culture and
products
Tourism services
A.ii. Target 8.10 Strengthen the capacity of domestic financial institutions to encourage and expand access to banking, insurance and
financial services for all
Financial services
A.ii. Target 9.1 Develop quality, reliable, sustainable and resilient infrastructure, including regional and transborder infrastructure,
to support economic development and human well-being, with a focus on affordable and equitable access for all
Construction services
A.ii. Target 9.3 Increase the access of small-scale industrial and other enterprises, in particular in developing countries, to financial
services, including affordable credit, and their integration into value chains and markets
Financial services
11
Development and LDCs
Category SD Goal/
Target Reference Services sector
A.ii. Target 9.c Significantly increase access to information and communications technology and strive to provide universal and
affordable access to the Internet in least developed countries by 2020
Communication services
Computer services
A.ii Target 9.4 Upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency and
greater adoption of clean and environmentally sound technologies and industrial processes, with all countries taking
action in accordance with their respective capabilities
Environmental services
A.ii. Target 10.5 Improve the regulation and monitoring of global financial markets and institutions and strengthen the
implementation of such regulations
Financial services
A.ii. Target 11.1 Ensure access for all to adequate, safe and affordable housing and basic services and upgrade slums All basic services
Construction services
A.ii. Target 11.2 Provide access to safe, affordable, accessible and sustainable transport systems for all, improving road safety,
notably by expanding public transport, with special attention to the needs of those in vulnerable situations, women,
children, persons with disabilities and older persons
Transport services
A.ii Target 11.6 Reduce the adverse per capita environmental impact of cities, including by paying special attention to air quality
and municipal and other waste management
Environmental services
A.ii. Target 12.b Develop and implement tools to monitor sustainable development impacts for sustainable tourism that creates jobs
and promotes local culture and products
Tourism services
A.ii Target 12.4 Achieve the environmentally sound management of chemicals and all wastes throughout their life cycle, in
accordance with agreed international frameworks, and significantly reduce their release to air, water and soil in
order to minimize their adverse impacts on human health and the environment
Environmental services
A.ii. Target 14.7 Increase the economic benefits to Small Island developing States and least developed countries from the sustainable
use of marine resources, including through sustainable management of fisheries, aquaculture and tourism
Tourism services
A.ii. Target 15.b Mobilize significant resources from all sources and at all levels to finance sustainable forest management and
provide adequate incentives to developing countries to advance such management, including for conservation and
reforestation
Other Business services
(services incidental to
forestry; Advisory and
consulting services relating to
forestry)
A.ii. Target 17.8 Fully operationalize the technology bank and science, technology and innovation capacity-building mechanism
for least developed countries by 2017 and enhance the use of enabling technology, in particular information and
communications technology
Communication services
Computer services
A.iii Goal 16 Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build
effective, accountable an inclusive institutions at all levels
NO explicit mention of services
either in the Goal title itself
or its targets, though trade-
related organization such
as WTO could fall under
the ‘inclusive institutions’
category
Table 1: Continued
12
4.3. CriterionB:BackboneServices
The second criterion relates to the nature of
the services sectors identified under criterion
A; it is based on the idea that certain sectors
constitute the “backbone” of an economy,
by virtue of the role they play in productive
activities and how they respond to basic
needs, and therefore deserve to be at the
forefront of a prioritised list and development
agenda.
But what exactly does the notion of being
the “backbone of the economy” entail?
Although it has not been universally defined,
this concept is usually associated with those
services that traditionally were provided
by the government in the form of state
monopolies, since the costs for entering the
market (i.e. high capital requirements and
significant sunk costs) were usually too high
for the emergence of other competitors, and
were likely to respond to public policy goals
(as the economy and society could not properly
function efficiently and independently
without them). Backbone services can also
be viewed as those services indispensable as
inputs into all other productive, as well as
socially-oriented, activities in the economy,
without which an economy could not function.
Transport Services and telecommunications
exemplify the concept of backbone services in
the domestic economy as they are: (i) typically
provided by the state because they rely on
infrastructure (e.g. railroads, roads, cables)
that is costly to build and maintain; and (ii)
instrumental and even critical to the functioning
of all other industries. For instance, a country
with excellent accommodation services,
outstanding consumer service skills, and world-
famous historical and cultural sites, and thus
with a potentially protable tourism sector,
would not be able to fully benet from this
competitive advantage if transport services were
lacking, making it almost impossible for tourists
to reach these attractions or their hotels.
In an increasing number of cases, governments
have allowed a partial or full privatisation of
services that were previously monopolies of
the state. The role that these services play
in the economy is not necessarily diminished
as a consequence, as they still serve public
policy-relevant purposes for the economy:
i.e. communication services ensure the
diffusion of knowledge), increase productivity
of labour, foster research and innovation;
transport services ensure geographical
connectivity across the national territory
and internationally; and financial services
support entrepreneurship through access to
credit and financial resources.
Once the concept of “backbone” of the
economy has been established and clarified,
the application of the second criterion to the
services sectors identified under criteria A.i.
and A.ii. can yield two different results:
• Category B.i.: the services sector can
be considered to be a backbone of the
economy;
• Category B.ii.: the services sector at issue
does not belong into the backbone of the
economy category.
In summarising the results of the application
of criterion B to the SDGs, Table 2 includes
communication services, transport services,
distribution services, financial services, as
backbone services, whereas business services,
tourism services, construction services,
educational services, health services, and
environmental services are not considered as
such.
Table 2 also displays a residual category
that includes distribution and recreational
services which, as previously explained,
contribute to different degrees to
sustainable development, even though they
are not explicitly mentioned in any SDG. As
distribution services serve a critical function
in facilitating cross-border transactions and
the flow of resources they can be considered
to form part of the backbone of the economy.
On the other hand, recreational services,
while an important source of growth, foreign
exchange, and employment, do not fulfil this
same critical facilitating function as other
13
Development and LDCs
backbone services and, as such, should be
considered as non-backbone services.
The combination of criteria A and B allows
policymakers to draw an outline of the
relative importance that SDGs attach to
certain services sectors. As illustrated in
Table 2, the UN Open Working Group seems to
have recognised the central role of financial
services for economic development, as their
proper functioning is deemed necessary
for the pursuit of a notable set of targets
(seven) across a considerable number of
goals (six), ranging from the eradication of
poverty and the reduction of inequality to the
achievement of gender equality. Likewise and
unsurprisingly, environmental services are
considered a key feature for the attainment
of five different sustainable development
objectives, for a total of sixteen targets.
However, the significance of the contribution
that other services sectors could make to
economic growth and development should
not be underestimated, nor minimised
simply because the proposal put forward
by the UN Open Working Group links the
performance of such sectors to achieving only
a limited number of sustainable development
objectives. For example, well-functioning
health and educational services, although
explicitly mentioned in only in one or two SDGs
each, are fundamental to the achievement of
the wide variety of targets identified under
each of these development objectives. In
the absence of adequate health services,
a country is highly unlikely to be able to
ensure healthy lives and promote the well-
being for all its citizens. Similarly, a lack of
suitable educational services is highly likely
to compromise the pursuit of inclusive and
equitable quality education. Furthermore,
educational services are critical in ensuring
that people have the ability to acquire
necessary skills to work in the predominantly
skills-intensive services area.
B.i. - BACKBONE SERVICES
Services sector Total SDGs Total targets Detail
Financial services 6 7
Target 1.4
Target 2.3
Target 5.7
Target 8.3
Target 8.10
Target 9.3
Target 10.5
Communication services 4 4
Target 1.4
Target 5.8
Target 9.c
Target 17.8
Transport services 1 1 Target 11.2
Distribution services Not explicitly mentioned
Table2:CriterionB–BackboneServicesandtheSDGs
14
Table 2: Continued
B.ii. NON BACKBONE SERVICES
Environmental services 516
Target 6.1
Target 6.2
Target 6.3
Target 6.4
Target 6.5
Target 6.6
Target 6.a
Target 6.b
Target 9.4
Target 11.6
Target 12.4
Target 13.1
Target 13.2
Target 13.3
Target 13.a
Target 13.b
Business services 4 4
Target 1.4
Target 5.8
Target 9.c
Target 17.8
Tourism services 3 3
Target 8.9
Target 12.b
Target 14.7
Construction services 3 3
Target 7.b
Target 9.1
Target 11.1
Business services
(other business services) 2 2 Target 7.b
Target 15.b
Health services 214
Target 3.1
Target 3.2
Target 3.3
Target 3.4
Target 3.5
Target 3.6
Target 3.7
Target 3.8
Target 3.9
Target 3.a
Target 3.b
Target 3.c
Target 3.d
Target 5.6
Educational services 110
Target 4.1
Target 4.2
Target 4.3
Target 4.4
Target 4.5
Target 4.6
Target 4.7
Target 4.a
Target 4.b
Target 4.c
Recreational services Not explicitly mentioned
15
Development and LDCs
4.4. CriterionC:NatureofContribution
Looking at the links between backbone and
non-backbone services to SDGs and their
targets falls short of explaining what the
actual impact of each services sector might
be on sustainable development. As previously
noted, services that have not been explicitly
highlighted by the UN Open Working Group,
such as distribution services, cannot be
labelled as irrelevant to the pursuit of the
sustainable development objectives adopted
under the post-2015 Agenda, even if they are
not explicitly mentioned (as shown in Table 2).
Also, the contribution that a services sector
provides to sustainable development may
extend beyond those SDG(s) whose targets
specifically and explicitly rely on the
performance of that service industry. As a
case in point, tourism, which is not mentioned
under SDG 1, can be key to the eradication
of poverty for many developing and least-
developed countries, as it provides a valuable
source of employment and contributes to
promoting economic growth. However, the
development of a viable tourism sector is tied
to the presence of efficient enabling services
such as transport, telecommunications, and
financial services.
In order to determine which services sectors
offer the greatest contribution to SDGs and
how they should be prioritised for reform, it
is necessary to establish additional criteria,
which should address the following issues:
• The level of direct connection between
the functioning of a service and the SDG it
relates to;
• The potential indirect contribution that
certain services may have on goals and
target that do not explicitly refer to these
services;
• The strength of the link between services
sectors and SDGs.
In order to understand how domestic services
sectors and trade in services actually
contribute to sustainable development and
what factors may influence the form and
degree of such a contribution, it is necessary
to introduce another criterion that aims
at distinguishing services sectors, based
on how directly their implementation and
performance affects the attainment of SDGs.
The application of criterion C allows for the
categorisation of all services sectors into two
categories:
• Category C.i.: direct contributor, i.e. the
attainment of a SDG is closely dependent
or associated with the implementation
and performance of the services sector in
question;
• Category C.ii.: indirect contributor, i.e.
a services sector that is not explicitly
mentioned in the SDG in question but
whose performance plays a role in the
attainment of the goal in question.
16
GOAL 1 GOAL 2 GOAL 3 GOAL 4 GOAL 5 GOAL 6
SERVICES SECTORS Poverty
Hunger,achievefood
security, nutrition,
sustainable agriculture
Healthy lives, well-
being
Education,
learning Gender equality Water and
sanitation
Business services DIRECT INDIRECT DIRECT
Communication services DIRECT INDIRECT DIRECT
Construction and related engineering
services
INDIRECT INDIRECT
Distribution services DIRECT DIRECT
Educational services DIRECT INDIRECT DIRECT INDIRECT INDIRECT
Environmental services INDIRECT DIRECT
Financialservices INDIRECT DIRECT DIRECT
Health-related and social services DIRECT DIRECT DIRECT DIRECT INDIRECT
Tourism and travel related services INDIRECT INDIRECT
Recreational,culturalandsporting
services
Transportservices INDIRECT INDIRECT INDIRECT
Table3:CriterionC–NatureofDirect/IndirectContributionofServicestotheSDGs
GOAL 7 GOAL 8 GOAL 9 GOAL 10 GOAL 11 GOAL 12
SERVICES SECTORS Energyfor
all
Economic growth,
employment
Infrastructure,
industrialization,
innovation
Inequality Cities and human
settlements
Consumptionand
production
patterns
Business services DIRECT INDIRECT DIRECT
Communication services INDIRECT DIRECT
Construction and related engineering
services DIRECT INDIRECT DIRECT DIRECT
Distribution services DIRECT DIRECT
Educational services INDIRECT INDIRECT INDIRECT
Environmental services DIRECT DIRECT DIRECT
Financialservices DIRECT DIRECT DIRECT
Health-related and social services INDIRECT INDIRECT
Tourism and travel related services DIRECT DIRECT
Recreational,culturalandsporting
services INDIRECT
Transportservices INDIRECT DIRECT
17
Development and LDCs
GOAL 7 GOAL 8 GOAL 9 GOAL 10 GOAL 11 GOAL 12
SERVICES SECTORS Energyfor
all
Economic growth,
employment
Infrastructure,
industrialization,
innovation
Inequality Cities and human
settlements
Consumptionand
production
patterns
Business services DIRECT INDIRECT DIRECT
Communication services INDIRECT DIRECT
Construction and related engineering
services DIRECT INDIRECT DIRECT DIRECT
Distribution services DIRECT DIRECT
Educational services INDIRECT INDIRECT INDIRECT
Environmental services DIRECT DIRECT DIRECT
Financialservices DIRECT DIRECT DIRECT
Health-related and social services INDIRECT INDIRECT
Tourism and travel related services DIRECT DIRECT
Recreational,culturalandsporting
services INDIRECT
Transportservices INDIRECT DIRECT
GOAL 13 GOAL 14 GOAL 15 GOAL 16 GOAL 17
SERVICES SECTORS Climate
change
Oceans, seas,
marine resources
Terrestrialecosystems,forests,
desertification,landdegradation,
biodiversity loss
Peacefulandinclusive
societies, justice
Global
partnership
Business services DIRECT DIRECT
Communication services DIRECT
Construction and related engineering
services
Distribution services
Educational services INDIRECT INDIRECT INDIRECT INDIRECT
Environmental services DIRECT
Financialservices
Health-related and social services
Tourism and travel related services DIRECT
Recreational,culturalandsportingservices
Transportservices
Table 3: Continued
18
Table 3 summarises the results of the
application of criterion C to all 11 services
sectors in relation to the 17 SDGs adopted at
Rio+20. At a quick glance, it appears to support
the idea that services contribute to all goals,
albeit with different degrees of significance.
The table also shows that some services
sectors are of great relevance to a greater
number of SDGs than others, and some tend
to play a more direct role in the attainment
of certain development objectives.
In order to better understand Table 3 and
the reasoning behind its construction, a
few clarifications will be provided in the
following section as to the nature and
type of contribution that each services
sector is understood to make to sustainable
development objectives, in the order in which
they appear in Table 3.
4.4.1. Business services
Based on the GATS services sectoral
classification list (WTO 1991), business
services comprise a broad group of services
including professional services (such as legal
and accounting); computer and related
services; research and development services;
real estate services; rental/leasing services
without operators; and other business
services, which include services incidental
to agriculture, forestry, fishing, mining,
manufacturing, and energy distribution. Table
3 indicates that business services directly
contribute to six different development
objectives, namely SDGs 1, 5, 7, 15 and 17.
Business services can also directly impact the
access to affordable, reliable, sustainable,
and modern energy for all (SDG 7) in the
form of services incidental to energy
distribution, which include transport and
distribution of electricity and gas operated
by an independent service supplier (WTO
1998, 3–4). Moreover, business services can
also be instrumental in promoting innovation
(SDG 9), forest management (SDG 15), and
in revitalising the global partnership for
sustainable development (SDG 17), primarily
by means of granting access to new and
advanced technology and advisory and
consulting services relating to forestry.
But business services may also indirectly
contribute to promoting inclusive education
(SDG 4), economic growth and productive
employment (SDG 8), as information
technology (IT) can enable the provision
of educational services through new and
diverse platforms (e.g. online teaching),
which can reach communities and students
that would otherwise be left out; promote
the development of new types of services; or
make proximity irrelevant for the supply of
other services, thus potentially creating new
employment opportunities.
4.4.2. Communication services
According to the GATS services sectoral
classification list (WTO 1991), communication
services include postal services, courier
services, telecommunication services, and
audiovisuals . The role these services play
in advancing sustainable development
objectives is akin to that of business, including
IT, services. Indeed, Table 3 shows that there
is a striking similarity between the SDGs that
business and communication services affect
both directly and indirectly. This is mainly due
to the fact that technology and technological
processes is tightly linked to the availability of
computer services and telecommunications.
Therefore, the direct contribution that
communication services provide to SDGs 1, 5,
9 and 17—as well as the indirect impact they
have on SDGs 4 and 8—can be explained using
much the same reasoning that was previously
given for business services.
According to the UN Open Working Group,
in order to eradicate poverty by 2030 (SDG
1), countries must strive to ensure that all
men and women, in particular the poor and
vulnerable, have access to appropriate new
technology, which would enable them—
including those in remote areas—to connect
19
Development and LDCs
with markets and suppliers to reach consumers.
As computer and related services are a
fundamental component of technology, they
can directly contribute to support the fight
against poverty. By the same token, granting
access to IT services can help promote a more
active participation of women and other more
vulnerable members of society in economic
and social activities, thus providing a direct
contribution to achieving gender equality and
empowerment of women (SDG 5).
4.4.3. Construction services
Construction and related engineering services
refer to all those services that are required in
the creation of buildings and facilities, which
the GATS services sectoral classification
list (WTO 1991) identifies as general
construction work for buildings and for civil
engineering, installation and assembly work
as well as building completion and finishing
work. Unsurprisingly, the contribution of
these services to sustainable development
focuses primarily on the direct role that
infrastructure plays in ensuring access to
affordable and sustainable energy for all,
sustainable industrialisation, and inclusive
and safe human settlements.
Adequately developed construction services
can be instrumental in the creation of a
properly functioning energy system that
is readily accessible to all individuals,
including those in the most remote areas, at
affordable prices, which is key to ensuring
reliable and sustainable energy for all (SDG
7). It is also evident that, in order to build
resilient infrastructure (SDG 9) and make
cities and human settlements safe and
sustainable (SDG 11), access to sound and
well-performing construction services is
essential. For example, access to consulting
services provided by experts on earthquake
engineering can be crucial to all those
earthquake-prone countries, such as a
number of Pacific Islands that would greatly
benefit from the construction of earthquake-
resistant structures in their quest to make
infrastructure more resilient.
The efficient functioning of construction
services can also play a role in ensuring
healthy lives (SDG 3) and promoting inclusive
education (SDG 4), a role that, albeit indirect,
should by no means be underestimated.
Indeed, by ensuring that road infrastructure
and school buildings are safe, governments
would be able to reduce potential risk of
deadly accidents (target 3.6), on the one
hand, and to facilitate access to learning
environments where students can concentrate
and fulfil their potential without worrying
about the suitability of the facilities they
use, on the other.
4.4.4. Distribution services
The GATS services sectoral classification list
(WTO 1991) considers distribution services
to include commission agents’ services,
wholesale trade services, retailing services,
franchising, and other residual types of
distribution services. As previously pointed
out, although not explicitly mentioned in
any of the 17 SDGs, distribution services
can still provide a valuable and significant
contribution to a number of them in the form
of direct intervention. Indeed, as they provide
the necessary link between producers and
consumers, access to affordable and reliable
distribution services can be instrumental in
ensuring the efficiency of the cold chain,
consequently limiting food waste, and hence
guaranteeing access for the consumer to
greater food supplies, which can be crucial in
achieving food security (SDG 2). For this very
same reason, distribution services are directly
involved in promoting the sustainability of
consumption and production patterns (SDG
12); target 12.3 calls for a reduction in half of
per capita global food waste at the retail and
consumer levels and the contraction of food
losses along production and supply chains,
including post-harvest losses.
Moreover, well-functioning distribution
services can be crucial to the achievement of
sustainable economic growth (SDG 8). Indeed,
a potential approach to the promotion of
global resource efficiency in production and
20
consumption (target 8.4) involves enabling
distribution services to operate in a manner
that maximises their efficiency whilst
minimising their impact on environmental
degradation.
In addition, distribution services can work
as a contributing factor in the promotion of
healthy lives and well-being for all (SDG 3).
In order to ensure access to safe, effective,
quality, and affordable essential medicines
and vaccines for all (target 3.8), the length,
efficiency, and complexity of distribution
channels can be as relevant to the supply
of pharmaceutical products to consumers as
the enforcement of adequate intellectual
property rights.
4.4.5. Educational services
Unsurprisingly, educational services, which
comprise primary, secondary, and higher
education services, as well as adult education
and other education services (WTO 1991),
offer the most significant contribution to
sustainable development in terms of the
number of goals that they impact, whether
directly or indirectly. Educational services
are the key contributor to the attainment
of SDG 4, as greater access to primary,
secondary, tertiary education, and improved
participation of adults in lifelong education
are instrumental in ensuring that education is
inclusive, equitable, and offers opportunities
for all to fulfil their potential.
Education can also be a powerful tool to use
in the pursuit of other SDGs, as education
allows the transfer of knowledge, which drives
economic growth, empowerment, innovation,
and understanding. By ensuring access to
better education for a larger proportion
of their communities, governments can
foster entrepreneurship, promote women’s
participation to the economy, increase the
supply of skilled labour, and reduce inequality—
all of which are critical for economies seeking
to tap into and move up within global value
chains. Thus, educational services provide
an important contribution to the fight to
eradicate poverty (SDG1); the promotion of
gender quality (SDG 5); the promotion of
inclusive and sustainable economic growth
as well as full and productive employment
(SDG 8); the fostering of innovation (SDG
9); and the efforts towards the reduction of
inequality within and among countries (SDG
10).
Education means providing people with
tools and skills to learn about, understand,
and address specific issues. For example,
policymakers can use educational services
to promote health and wellness for all, as
educating people on health issues related
to sexuality and reproduction, as well
as fitness and nutrition can, on the one
hand, help reduce the risk of exposure to
sexually transmitted diseases and, on the
other, encourage a healthier lifestyle, thus
contributing to the fight against malnutrition.
Healthier people resort less often to hospital
treatments and other public health services,
thus contributing to alleviating the costs of
such services.
In the same vein, environment-related
development objectives could greatly benefit
from the provision of educational services that
target specific issues such as water treatment
and sanitation (SDG 6), the sustainable use of
marine and terrestrial resources (SDGs 14 and
15), as well as the perils of climate change
(SDG 13). Education can also be a vehicle
for peace (SDG 16), when teaching focuses
on the importance of mutual understanding
and cooperation and allows people to
integrate better in their local, national, and
international communities.
4.4.6. Environmental services
Environmental services include sewage, refuse
disposal, sanitation, and similar services as
well as many other related environmental
services. It is not surprising, therefore, that
they are particularly relevant to all those
SDGs that involve the environment. For
instance, the attainment of SDG 6, which
promotes sustainable management of water
and sanitation, is reliant on, among other
factors, the provision of access to adequate
21
Development and LDCs
water management services. Environmental
services can also help to respond to the
negative effects of climate change on water
resources (SDG 13). They can also make a
direct contribution to those SDGs that require
environmentally-friendly production or
technology such as SDG 11 (i.e. make cities and
human settlements inclusive, safe, resilient,
and sustainable), which calls for the creation
of cities that implement policies to mitigate
and adapt to climate change and develop
resource efficiency, including water, or SDG
12 (i.e. ensure sustainable consumption and
production patters).
4.4.7. Financial services
As financial services include insurance
services as well as all banking services that
can grant access to credit, financial support,
and incentives, they are particularly relevant
to all those SDGs that rely on economic
growth and entrepreneurship as an essential
contributing factor for their achievement. As
pointed out by Ellis, Lemma, and Rub (2001),
among others, access to financial services
enables households to invest in activities
that may contribute to improving future
earnings prospects and consequently to
foster economic growth, which, if sustainable
and inclusive, can be a powerful instrument
for reducing poverty (SDG 1). But financial
services can also provide a valuable source of
employment as an economic sector in its own
right, thus contributing to promoting full and
productive employment, as well as inclusive
and sustainable economic growth (SDG 8).
Together with economic growth, one of the
most important contributions offered by
providing access to well-functioning financial
services is in relation to entrepreneurship
development. For instance, financial
services can play a crucial role in promoting
sustainable agriculture (SDG 2), because
farmers who are able to access loans to
start a new agricultural business may rely on
online payment systems to sell their produce,
or utilise insurance services to mitigate risk
resulting from climate variation (Graf and
Dalla Valle 2014, 34).
Similarly, the ability of women to access loans
or other forms of financial support encourages
their greater autonomy and participation in
the domestic economy. Thus, access to credit
may be beneficial to the empowerment of
women (SDG 5). Innovation (SDG 9) also relies
on the availability of well-functioning financial
services, as demonstrated by the extensive
use that highly technological and innovative
start-ups have made of different forms of
financial support. Similarly, as pointed out
by Demirgüç-Kunt, Beck and Honohan (2008,
138—9), financial development and access to
financial services is a contributing factor in
reducing income inequality (SDG 10).
4.4.8. Health services
Health services, which include hospital,
other human health, and social services, can
be considered somewhat akin to educational
services in that they play a particularly
significant role in one specific development
objective, i.e. ensuring healthy lives and
promoting the well-being for all at all ages
(SDG 3). However, they are also indirectly
involved in the attainment of a number of
other SDGs.
Granting access to better health services
means improving the living conditions of
people, including workers, hence indirectly
contributing to their greater productivity and
thus to economic growth (SDG 8), which plays
a key role in the fight against poverty (SDG 1)
and hunger (SDG 2), as well as in promoting
employment (SDG 8). Health services also
indirectly contribute to the safety and
sustainability of human settlements (SDG
11), insofar as prevention and disease control
ensure a good standard of living and reduced
exposure to health risks that may accompany
urbanisation and proximity. The fight to
ensure availability and sustainability of water
and sanitation for all (SDG 6) may benefit from
the presence of adequate health services, in
the form of information, consultation. and
other related services provided by hospitals
or other health facilities aimed at assisting
individuals in learning about proper hygiene
and sanitation.
22
4.4.9. Tourism services
For many LDCs, tourism services are particularly
important, as they are often the most important
sector in the economy in terms of employment
and share of GDP. The tourism sector is the rst or
second most important source of export revenue
for 20 of the world’s LDCs (UNCTAD 2013). With
respect to SDGs, tourism plays a signicant role
in the attainment of three objectives which
explicitly refer to tourism as a means to create
jobs (SDG 8), to promote the production of local
goods (SDG 12), and to support the sustainable
use of marine resources (SDG 14). For example,
these services may create ties with local
artisans and small manufacturers, who often
sell their products in locations inside or close to
hotels, resorts, or restaurants (although this is
dependent on the type of tourism involved).
Tourism can also play a signicant role in
combating poverty (SDG1), because of its role
in generating economic growth, which in turn
can lead to additional opportunities in other
areas such as increased access to education for
children or entrepreneurial opportunities for
women, thus also potentially contributing to
their empowerment (SDG 5).
4.4.10. Recreational, Cultural, and Sporting
services
Recreational, cultural, and sporting services,
which include entertainment services, news
agency services, archives, museums, and other
cultural services, as well as sporting and other
recreational services, are not referred to by
any SDG goal or target. It could be argued that
entertainment and sports could be used to
promote tourism and, consequently, employment
and economic growth (SDG 8). However, unless
a particularly compelling argument can be made
for the prioritisation of recreational, cultural,
and sporting services, policymakers should not
consider the development of these services as
a priority in their quest to fulfil the SDGs.
4.4.11. Transport services
Although the proponents of the SDGs
explicitly acknowledged the direct role that
safe, affordable, accessible, and sustainable
transport systems play in making cities and
human settlements inclusive, safe, resilient,
and sustainable (SDG 11), the contribution
of transport services is not limited to this
SDG only. Indeed, transport services, which
include maritime transport services, internal
waterways transport, air transport services,
space transport, rail transport services, road
transport services, pipeline transport, and
services auxiliary to all modes of transport,
indirectly contribute to SDGs 2, 3, 4 and 8.
Proper, efficient, and sustainable road, rail,
and air transport services are instrumental in
ensuring the efficiency of the cold chain, thus
indirectly operating to support improving
people’s access to food (SDG 2). Access to
newer and better-equipped vehicles can
help reduce the risks of road accidents, thus
indirectly contributing to saving lives (SDG
3). In the same vein, transport services can
boost the effects of educational services as
increased access to safe, sustainable, and
affordable transport can help increase the
number of students enrolled in primary,
secondary, and tertiary education (SDG 4).
Transport can also contribute indirectly to
the promotion of inclusive and sustainable
growth (SDG 8), as it is critical in connecting
workers to their workplace and in ensuring
the timely movement of goods domestically
and internationally. A reliable and multimodal
transport system may help reduce commuting
time and the stress that it generates, thus
potentially increasing a worker’s employability
and productivity, with positive repercussions
on economic growth. Furthermore, transport
services are critical for the development of
sectors of export interest to LDCs such as
tourism.
23
Development and LDCs
Establishing the direct or indirect link that
services provide in their contribution to various
aspects of sustainable development may not be
sufcient to establish which services sectors
policymakers should prioritise.
In light of this, it would be useful to complement
the above analysis through the application of a
number of indicators that will help to identify
the effective impact of services on SDGs.
Identifying what makes an indicator appropriate
for the purpose at issue is not an easy task, as
several conditions apply.
5.1. Issues With Indicators
First of all, indicators that allow for a quantitative
assessment are generally to be preferred.
Quantitative indicators, such as indexes, ratios,
numbers, and percentages, are able to provide
a clearer, more objective, and readily accessible
measure than qualitative assessments. If
designed correctly, quantitative indicators yield
the same expected results when applied to an
event or activity, irrespective of who measures
them. The same cannot be said for qualitative
indicators, which are based on descriptions
rather than numbers, so tend to be more
subjective as they depend on who carries out
the measurement. Quantitative indicators lend
themselves better to comparing performances
over time and also across countries or sectors.
Yet recognising that a purely quantitative
assessment of performance may not sufce
to capture all nuances and that qualitative
indicators can sometimes be better equipped
to identify effects or constraints that are not
immediately apparent through quantitative
indicators, the use of qualitative indicators
to measure the contribution of services to
sustainable development should not be rejected
out of hand. However, in order to overcome
some of the issues related to their reliability,
veriability, and subjectivity, qualitative
assessments will be linked as much as possible
to the use of numerical indicators. For example,
the quality of hospital services could be assessed
by a comparison between the number of people
treated in the facilities and the number of deaths
resulting from these treatments.
Secondly, it is advisable to use indicators that
are directly relatable to the targets listed under
each sustainable development goal. This would
make it easier for policymakers to identify the
extent and signicance of the contribution that
services offer to development objectives more
effectively and readily. Although a number of
targets are phrased in such a way that is it hard
to understand exactly what is promised and how
the targets should be implemented, monitored,
or evaluated (e.g. target 1.5),3 others refer
to specic parameters that should be met
by the target year 2030 (e.g. targets 2.3 and
3.1).4 Therefore, it would be useful to identify
indicators that measure, for instance, how
services contribute to doubling the agricultural
productivity and incomes of small-scale food
producers (target 2.3) or reducing the global
maternal mortality ratio (target 3.1).
Moreover, in order to assess the effective
impact of the contribution that services offer
to sustainable development, it is necessary to
make use of both economic and non-economic
indicators. Non-economic indicators may be
related, for example, to the quality or the
social impact of the service provided. They
can be especially important for measuring the
5. THE ROLE OF INDICATORS: MEASURING IMPACT AND ASSESSING
THE CONTRIBUTION OF SERVICES
3 Ta rge t 1.5 is to bu ild th e res ili enc e of the po or and th ose in vu lner abl e sit uat ion s and re duce th eir expos ure an d
vulnerability to climate-related extreme events and other economic, social, and environmental shocks and disasters.
4 Ta rge t 2.3 st ate s t hat by 20 30, th e a gric ultur al pro duct ivit y a nd i nco mes of sma ll-s cal e f oo d pr oduc er s, i n p art icul ar
women, indigenous peoples, family farmers, pastoralists and shers, should be doubled, including through secure and
equal access to land, other productive resources and inputs, knowledge, nancial services, markets, and opportunities
for valu e addition and non-farm employment. Target 3.1 calls for the reduction of the global maternal mortality ratio
to less than 70 per 100,000 live births.
24
impact of a services sector on certain aspects
of sustainable development that are specic to
a given SDG. Overall, it is advisable to identify
a set of indicators that cover three fundamental
features of the impact of services, through the
non-growth channels of action, on sustainable
development: access, utilisation, and quality.
• Indicators for access measure the extent to
which specic groups of individuals are able
to make use of a certain service: the number
of women with access to home-banking
services or the number of children enrolled
in primary schools constitute examples of
this type of indicator;
• Indicators of utilisation, on the other
hand, serve to assess how much a service
is actually used: an example of this would
be the number of tourists accommodated in
four or ve star hotels per year in a specic
country;
• Indicators of quality measure the degree or
level of excellence of the service provided:
the connection speed of internet services
would be an example of this type of indicator.
Indicators that measure the effect of services on
income growth, economic growth, employment,
or productivity would fall within the rst category.
As previously explained, a services sector may
indirectly impact a sustainable development
objective by means of promoting economic
growth, which in turn can be instrumental in
the attainment of that specic SDG. Therefore,
economic indicators can help understand how
signicant an indirect contribution by a services
sector can be to a particular development
objective. As regards the second category,
Last but not least, indicators should allow
policymakers to measure how strongly services
contribute to SDGs, irrespective of the direct
or indirect nature of the contribution itself.
Economic indicators seem particularly useful
for this purpose. For example, although tourism
provides an indirect contribution to poverty
reduction through the generation of economic
growth and employment, which in turn may
produce virtuous circles of prosperity and
opportunity, this contribution may be strong,
moderate, or weak, depending on the level of
economic growth generated. Unsurprisingly, the
picture that would emerge from this type of
approach would vary across time and economies.
Indeed, this may be to such an extent as to
render it difcult to provide a general picture of
the potential strength of contribution that each
services sector may offer to SDGs.
5.2.StrengthofContribution
A different approach, however, could serve this
latter purpose better. By assessing the extent
to which a services sector contributes to a
development objective in terms of number of
targets affected or by determining whether the
sector plays a key, complementary, or accessory
role in the performance of other activities with
are, in turn, instrumental in attaining the SDG
at issue, it would be possible to classify the
contribution of services to SDGs according to the
following scheme, which is portrayed in Table 6:
• Strong, which includes all instances when
the operation of the services sector at issue
affects half or more of the targets of a SDG or
plays a key role in the performance of other
activities which are in turn instrumental in
the attainment of that specic goal;
• Moderate, which identies all those cases
where the contribution of a services sector
is conned to less than half of the targets or
the services sectors plays a complementary—
but not essential—role in the performance of
activities that are crucial to the pursuit of a
particular SDG;
• Weak, which comprises all the instances
when the performance of the services sector
is only remotely related to an aspect of
sustainable development or affects only a
target of relatively marginal importance in
the overall attainment of a SDG;
• Negligible, which usually describes all those
instances where the contribution of services
to sustainable development is imperceptible,
trivial or inconsequential; by default it
includes all those situations where a services
sector provides no type of contribution,
either direct or indirect, to a given SDG.
25
Development and LDCs
GOAL 1 GOAL 2 GOAL 3 GOAL 4 GOAL 5 GOAL 6
SERVICES SECTORS Poverty
Hunger,achievefood
security, nutrition,
sustainable agriculture
Healthy lives,
well-being
Education,
learning Gender equality Water and sanitation
Business services DIRECT / STRONG INDIRECT / STRONG DIRECT / MODERATE
Communication services DIRECT / STRONG INDIRECT / STRONG DIRECT / MODERATE
Construction and related engineering services INDIRECT / STRONG INDIRECT / STRONG
Distribution services DIRECT / STRONG DIRECT / STRONG
Educational services INDIRECT / STRONG INDIRECT / STRONG DIRECT / STRONG INDIRECT / STRONG INDIRECT / WEAK
Environmental services INDIRECT / MODERATE DIRECT / STRONG
Financialservices INDIRECT / STRONG DIRECT / STRONG DIRECT / STRONG
Health-related and social services INDIRECT / STRONG INDIRECT / STRONG DIRECT / STRONG DIRECT / MODERATE INDIRECT / MODERATE
Tourism and travel related services INDIRECT / STRONG INDIRECT / STRONG
Recreational,cultural,andsportingservices
Transportservices INDIRECT / STRONG INDIRECT / STRONG INDIRECT / STRONG
Table4:StrengthofContributionofServicesSectorstoAttainmentofSDGs–APotentialApproach
GOAL 7 GOAL 8 GOAL 9 GOAL 10 GOAL 11 GOAL 12
SERVICES SECTORS EnergyforallEconomic growth,
employment
Infrastructure,
industrialization,
innovation
Inequality Cities and human
settlements
Consumptionand
productionpatterns
Business services DIRECT / MODERATE INDIRECT / STRONG DIRECT / STRONG
Communication services INDIRECT / STRONG DIRECT / STRONG
Construction and related engineering services DIRECT / STRONG DIRECT / STRONG DIRECT / STRONG
Distribution services DIRECT / MODERATE DIRECT / STRONG
Educational services INDIRECT / STRONG INDIRECT / STRONG INDIRECT / STRONG
Environmental services DIRECT / MODERATE DIRECT / STRONG DIRECT / MODERATE
Financialservices DIRECT / STRONG DIRECT / STRONG DIRECT / STRONG
Health-related and social services INDIRECT / STRONG INDIRECT /
MODERATE
Tourism and travel related services DIRECT / STRONG DIRECT / WEAK
Recreational,cultural,andsportingservices INDIRECT/WEAK
Transportservices INDIRECT / STRONG DIRECT / STRONG
26
Table 4: Continued
GOAL 13 GOAL 14 GOAL 15 GOAL 16 GOAL 17
SERVICES SECTORS Climate change Oceans, seas, marine
resources
Terrestrialecosystems,forests,
desertication,landdegradation,
biodiversity loss
Peacefuland
inclusive societies,
justice
Globalpartnership
Business services DIRECT / WEAK DIRECT / STRONG
Communication services DIRECT / STRONG
Construction and related engineering services
Distribution services
Educational services INDIRECT / MODERATE INDIRECT / MODERATE INDIRECT / MODERATE INDIRECT / MODERATE
Environmental services DIRECT / STRONG
Financialservices
Health-related and social services
Tourism and travel related services DIRECT/ MODERATE
Recreational,cultural,andsportingservices
Transportservices
27
Development and LDCs
The picture that emerges from Table 4 is
enlightening for three reasons. First of all,
it highlights the existence of a potentially
positive correlation between the directness
of the contribution of certain services sectors
to aspects of sustainable development and
the strength of such a contribution. In almost
all cases where a service provides a direct
contribution to a SDG, this contribution can
be classied as strong; the only exceptions are
environmental, health, and tourism services,
whose contribution to gender inequality,
energy, and consumption and production
patterns as well as marine and terrestrial
ecosystems is direct but moderate, since their
performance affects only a limited number
of targets or plays a secondary role to the
attainment of such goals with respect to other
sectors.
Secondly, it becomes apparent that a number
of services sectors can still provide a strong
contribution to certain SDGs even when their
contribution is an indirect one. For example,
construction services can play a key role in
promoting access for all to education, as the
proximity of safe school buildings can be key
to incentivising students to attend classes.
Last but not least, certain sectors, which tend
to fall within the category of basic services (i.e.
the backbone of the economy), contribute more
strongly than others to the attainment of SDGs,
both directly or indirectly. Indeed, as illustrated
in Table 4, nancial, transport, communication,
and construction services strongly contribute to
a variety of SDGs, thus making them the sectors
that policymakers may want to prioritise in the
quest to promote sustainable development.
Similarly, services which improve the productivity
of labour, such as education and health services,
contribute both directly and indirectly, with
varying degrees on impact, on the achievement
of the SDGs.
5.3.TypesofIndicators
Taking into account the elements presented in
the previous section, it is possible to classify the
indicators for the assessment of the impact of
services on SDGs according to scope or purpose.
As regards the former, indicators can be divided
into three different categories: (i) development-
specic, which groups all the indicators that
refer specically to a single SDG—they often
coincide or are directly related to the indicators
that SDGs explicitly mention in their targets; (ii)
sector-specic, which includes all the indicators
that are relevant to a particular services sector
and cannot be applied to other sectors—they
may coincide with or refer to specic targets,
when the relationship between the goal and
service is a particularly close one, such as health
services and SDG 3, or educational services and
SDG 4; and (iii) horizontal, which comprises
all those indicators that can apply across
sectors and goals—they tend to be indicators of
indirect contribution of services to sustainable
development. Table 5 across provides some
examples for each category.
Indicators can also be classified according
to their purpose, or rather the focus of their
assessment. As previously mentioned, in order
to fully understand the impact that a services
sector may have on a particular aspect of
sustainable development it is useful to look
at three different aspects of the supply of
that service: (i) access, which concerns the
right of individuals to make use of a service;
(ii) utilisation, which refers to the effective
use of the service provided; and (iii) quality,
which pertains to the level of excellence
of the service provided. As the regulatory
framework may affect both utilisation and
quality, the indicators identified do take
this issue into consideration. Table 6 offers
selected examples of indicators for each of
the three categories.
28
DEVELOPMENT-SPECIFIC SECTOR-SPECIFIC HORIZONTAL
SDG 3 (Health):
• ratio of hospitals per 100
inhabitants
• number of doctors and nurses per
100 inhabitants
• number of ambulances per 100
inhabitants
• mortality rates
Financialservices:
• proportion of people with access to credit
• number of banks per 100 inhabitants
• number of people with access to traditional
banking
• number of people with access to mobile
banking
• amount of revenue
generated in each services
sector
SDG 4 (Education):
• number of primary, secondary,
and tertiary schools
• number of students per school
• number of enrolments in primary,
secondary and tertiary education
• ratio of teachers to students
Transport:
• number of vehicles owned by road transport
companies
• age of vehicles owned by road transport
companies
• share of paved road
• kilometres of railroads
• number of passengers traveling by rail
• number of passengers traveling by air
• amount of revenue
generated and reinvested
in other activities
(e.g. infrastructure,
SME-related support
programmes, education)
SDG 5 (Gender):
• number of women employed in
each services sector
• number of women who own a
mobile phone
• number of women with Internet
access
ICT:
• share of population with access to Internet
• share of population with access to mobile
phones
• number of people who own a computer
• amount of foreign direct
investment in each
services sector
SDG 7 (Energy):
• share of population with access
to renewable energy
Distribution:
• ratio of supermarkets per 100 inhabitants
• degree of international
connectedness
SDG 8 (Growth):
• number of workers employed in
each services sector
Tourism:
• number of tourists in hotels
• number of local artisanship shops located in
hotels or resorts
Table5:ImpactofServicesSectorsonSDGs–IndicatorsbyScope
ACCESS UTILISATION QUALITY
• numberoffarmerswithaccess
to home-banking services
• ratio between transactions made
by farmers through home banking
and those made through traditional
banking
• rate of stability of the broadband
connection
• densityofpublichospitalsper
1,000 inhabitants
• number of hospitals per x
inhabitants
• ratio between number of deaths
in private hospitals and those in
public hospitals
• numberofwomenwithaccess
to credit
• percentage of loans granted to
female entrepreneurs
• number of patients per doctor
• numberofwomenwithaccess
to Internet
• percentage of enterprises or start-
ups founded by women
• number of nurses per doctor
• days necessary to obtain a licence in
every services sector
• amount of investment spend to
repair roads
• amount of damage caused by
natural disasters in urban settings
Table6:ImpactofServicesSectorsonSDGs–SampleIndicatorsbyPurposeorFocusofAssessment
29
Development and LDCs
Services account for roughly 75 per cent of GDP
or more in high-income countries. In low-income
economies and the LDCs the share of services is
substantially less, although services generally
still account for upwards of 50 per cent of
economic activity. Sustainable development
is interlinked with the development of the
services sector. In part this is simply because
economic development is associated with
structural change that results in a greater
share of total output and employment being
generated by services activities.
As discussed, the channels through which
the performance of services sectors impacts
on sustainable development are numerous.
Domestic services production and trade in
services can directly impact on sustainable
development because the goal at stake—
e.g. improving public health, education, or
connectivity—is generated as an output of
a specic service activity or set of service
industries. Services also matter for the
attainment of sustainable development goals
because the efciency and performance of
many services sectors is a determinant of an
economy’s growth rate. Increasing aggregate
and per capita incomes is an important channel
for achieving the SDGs as this generates
additional resources that can be used to fund
the investment required for the pursuit of
specic SDGs.
Assessing the role that services can play in
attaining sustainable development goals is
complex. The operation of services sectors will
impact on the SDGs through a mix of direct
and indirect effects. The indirect channels
are numerous, including not just the effect
of services performance on growth and real
incomes, but also a variety of spillover and
interaction effects.
The impact of services’ contribution to the
achievement of the SDGs may vary according to
sector and objective, with backbone services,
such as transport, nance, telecommunications,
and construction services, potentially making
the largest contribution. Intuitively this makes
sense, as the economies of LDCs, LICs, and
other developing economies are, in many cases,
constrained by a lack of key basic services which
are critical to the functioning of other services
sectors of key export and developmental
interest such as tourism services and business
services.
This is not to say that other non-backbone
services sectors do not matter—they certainly
do, but the functioning of many non-backbone
services sectors is contingent on the ability
of service producers to access the necessary
services inputs in order to operate efciently
and productively. For example, the development
of a competitive tourism sector, something of
interest to many LDCs and LICs, requires, at a
bare minimum, access to stable and reliable
communications, transportation, and nancial
services, as well as access to non-backbone
services such educationaland health services.
6. CONCLUSION
30
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www.ictsd.org
ICTSD’s Programme on Development and LDCs aims to empower low income countries to leverage
trade opportunities for inclusive growth and sustainable development. Programmatic activities
cover regional integration, global value chains, and services trade.
Other publications from the Development and LDCs programme include:
• The Gender Dimensions of Services. By Julia Lipowiecka and Tabitha Kiriti Nganga, 2016.
• SMEs in a Services World. By Sonja Grater, Ali Parry, and Wilma Viviers, 2016
• Inclusive and Sustainable Growth: The SDG Value Chain Nexus. By Raphael Kaplinsky, 2016.
• The Gender Dimensions of Global Value Chains. By Cornelia Staritz and Penny Bamber, 2016.
• Global Value Chains and Trade Facilitation: Opportunities for Sustainable Development. By
Ben Shepherd, 2016.
About ICTSD
The International Centre for Trade and Sustainable Development (ICTSD) is an independent think-
and-do-tank, engaged in the provision of information, research and analysis, and policy and
multistakeholder dialogue, as a not-for-profit organisation based in Geneva, Switzerland. Established
in 1996, ICTSD’s mission is to ensure that trade and investment policy and frameworks advance
sustainable development in the global economy.
