Services and services trade matter for development in a least developed country like Zambia. Services include finance, communications, transport, distribution, health, education and tourism. Services 'trade' encompasses cross border trade in road and air transport, consumption by foreigners of tourism services, foreign direct investment in banking, communication, and distribution, and temporary migration of doctors and teachers.
But in practice, Zambia has so far derived only limited benefits from services trade. It has underperformed both in terms of its services exports and in terms of widening access to services for its firms, farms and households, despite a significant degree of liberalization.
The study concludes that the current crisis of access in Zambia, and hence the diminishing faith in reform, are attributable to the fact that the Government and donor organizations behaved as if they had complete faith in the power of markets. They moved aggressively, but unevenly, on the elimination of barriers to entry, sluggishly on the development of regulations to deal with market failure, and only notionally on the implementation of access-widening policies.
Zambian policy makers and trade negotiators need to be fully informed about both the opportunities for expanding trade in services, unilaterally, regionally, multilaterally, and the domestic pre-conditions for successful services liberalization. International negotiations can be harnessed to deliver much-needed reform, but there is also a danger that unbridled mercantilism could produce outcomes that are antithetical to development. The challenge is to ensure that international commitments reflect good economic policy rather than the dictates of domestic political economy or international negotiating pressure. That is a key rationale for the present study.
