Study on the International Competitiveness of Financial Services Trade

  According to the data of the United Nations Commodity Trade (UN Comtrade) database, the world export trade in services has developed rapidly, and the world export trade in services has grown from US$1,765.439 billion in 2000 to US$4,655.991 billion in 2015 during 2000-2015, with an average annual growth rate of 7.22%. Meanwhile, with the rapid development of the Internet, the trade in financial services has also developed rapidly, as shown in the following figure, the world export trade in financial services during 2000-2015 can be divided into two stages:,.

(1) an upward trend during 2000-2007, from 108.561 billion USD to 382.044 billion USD, with an average annual growth rate of 20.49%.

(2) Between 2008 and 2015, the world’s financial services export trade fluctuated in a downward trend. According to UN Comtrade data, we can see that the world’s major countries (or regions) in the trade of services are: the United States, Singapore, Hong Kong, China, Japan, India, etc., and the overall export trade of financial services in each country is on an upward trend. Although the overall export trade of financial service industry in the world has been decreasing in recent years, the export trade of financial service industry of major trading countries in the world service industry has been increasing. In this paper, we will evaluate and compare the international competitiveness of the financial services industry of the United States, Singapore, Hong Kong, Japan, India and China from the perspective of export trade using the Revealed Comparative Advantage Index (RCA).

  Indicators of Indicative Comparative Advantage (ICI)

  The RCA index was proposed by Balassa, an American economist, in 1965. It refers to the ratio of a country’s (or region’s) share of total export trade of a certain industry (or commodity) to that of the world’s total export trade of that industry (or commodity), and is a measure of the competitiveness of a country’s industry (or commodity) in the international market. . It can be expressed by the formula as follows.

  Where, RCAij denotes the index of displayed comparative advantage of industry j in country i, EXij denotes the export trade volume of industry j in country i, EXi denotes the total export trade volume in country i in period t, EXwj denotes the export trade volume of industry j in the world, and EXwt denotes the total export trade volume in the world in period t. The relationship between the range of RCA values and the level of competitiveness can be summarized as follows.

  Assessment of International Competitiveness of Financial Services Industry

  In this paper, the international competitiveness level of financial service industry in the United States, Singapore, Hong Kong, China, Japan, India and China will be evaluated by the index of revealed comparative advantage (RCA). Now, according to the reality of this paper, the index of revealed comparative advantage index is adjusted accordingly, where EXij denotes the export trade volume of financial service industry in country i, EXi denotes the total export trade volume of service industry in period t of country i, EXwj denotes the export trade volume of financial service industry in the world, and EXwt denotes the total export trade volume of service industry in period t?r of the world.

  The displayed comparative advantage indices of financial service industries in the United States, Singapore, Hong Kong, China, Japan, India and China from 2000-2015 are shown in the table below.

  The above table shows that during the period 2000-2015, China’s revealed comparative advantage index of financial services industry shows an overall upward trend, showing rapid growth during the period 2009-2014, reaching a peak of 0.5032 in 2014, but still less than 0.8 and much smaller than those of the United States and Singapore. The displayed comparative advantage indices of financial services in the United States, Singapore, and Hong Kong, China all show an upward trend, with RCA values greater than 0.8 during 2000-2015, and RCA values of 4.0461, 4.0569, and 4.8949 in 2015, which are significantly greater than 2.5, while the RCA indices of financial services in Singapore and Hong Kong, China both exceeded those of the United States in 2015. The RCA index of Japan’s financial services industry, which showed an overall decreasing trend during 2000-2010, gradually increased during 2011-2015, and was 1.6144 in 2015, which was greater than 1.25. India’s financial services industry RCA index gradually increased in fluctuation, and was greater than 0.8 for the first time in 2010, and its RCA value fluctuated around 0.8 in recent years.

  Conclusion

  The results of the indicative comparative advantage index measure show that China’s financial service industry is not internationally competitive. The financial service industry of the United States, Singapore, and Hong Kong, China has strong international competitiveness and is much stronger than other countries and regions in the world. The international competitiveness of the financial service industry of the United States and Singapore is comparable, and Hong Kong, China is slightly weaker than the United States and Singapore, but the international competitiveness of the financial service industry of Hong Kong, China has increased significantly in 2015 and surpassed the United States and Singapore. Japan’s financial services industry has some international competitiveness. India’s financial service industry gradually presents some competitiveness in the international market, but it is weaker.