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Understanding UK construction professional servicesexports: definitions and characteristicsCarol Jewell a , Roger Flanagan a & Caner Anaç aa School of Construction Management and Engineering , University of Reading , Reading, UKPublished online: 19 Mar 2010.

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Construction Management and Economics

(

March 2010)

28

, 231–239

Construction Management and Economics

ISSN 0144-6193 print/ISSN 1466-433X online © 2010 Taylor & Francishttp://www.informaworld.com

DOI: 10.1080/01446191003587729

Understanding UK construction professional servicesexports: definitions and characteristics

CAROL JEWELL

*

, ROGER FLANAGAN and CANER ANAÇ

School of Construction Management and Engineering, University of Reading, Reading, UK

Taylor and Francis

Received 4 March 2009; accepted 2 January 2010

10.1080/01446191003587729

Services are very important to the UK balance of trade; a surplus has been recorded for trade in servicesevery year since 1966. Construction professional services exports (CPS), which cover architecture,engineering and surveying (AES), have also increased, contributing over £3bn to the UK trade balance in2007. The changing environment of construction professional services exports complicates the validity of thecharacteristics and definitions of services as described in the research literature and official export statistics.Through semi-structured interviews undertaken with large consulting engineers and a roundtable discussionwith industry and government representatives, the research found that the impact of globalization and thechanges in the construction business environment, such as increasing foreign ownership and changing formsof procurement, are not fully reflected in the official statistics. There have also been rapid changes intechnology, procurement and methods of delivery which have impacted on exporting AES firms and a moreappropriate set of characteristics is needed to better reflect the project-specific and knowledge-intensivenature of AES firms.

Keywords:

Exports, services, construction, globalization, knowledge-based economy.

Introduction

The definition of services, their classification andmeasurement has prompted much debate, movingfrom being referred to as anything that is not a goodto something much more complex. This paper is anoverview of the research into services with a view toestablishing how well the definitions and classifica-tions apply to construction professional services. Itlooks at how researchers and economists have definedservices over a period of time, focusing on boththe definitions used in the literature and those usedby ‘official’ bodies such as the United Nations,World Trade Organization (WTO),

1

Organisation forEconomic Co-operation and Development (OECD)and national and international statistical offices. TheUK balance of payments in the

Pink Book

2

(ONS,2008) includes construction-related services undertwo headings—‘Construction’ and ‘Other businessservices’. The former covers ‘work done on construc-tion projects and installations by employees of anenterprise in locations outside the resident economic

territory of the enterprise’ (p. 183). The latterincludes architectural, engineering and other technicalservices being delivered overseas.

This research was prompted by the importance ofCPS exports to the UK balance of trade. Discussionswith UK professional organizations, government repre-sentatives, multinational companies and internationalbodies such as the OECD and the World TradeOrganization, and semi-structured interviews under-taken with chief executive officers (CEOs) of UK firmshave supported the authors’ view that the area of CPSexports is under-researched. This gap in the body ofknowledge is partly due to the rapidly changing inter-national transactions in business environment and alsobecause much of the professional services research hasfocused on other (non-construction-related) profes-sional services such as accounting, managementconsulting, law, IT and similar.

Von Nordenflycht (2009) undertook a review ofpublications (between 1990 and 2007) looking atthe different types of professional services that hadbeen cited. The construction-related professional

*

Author for correspondence. E-mail: c.a.jewell@reading.ac.uk

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services—engineering consulting/design, architectureand quantity surveying—were cited 16, 13 and 1time(s) (respectively) out of a total of 30. Accounting,law and management consulting were cited 26, 26 and25 times respectively. Von Nordenflycht’s study high-lights two issues. First, the problem of generalizing andapplying findings (from the literature) without beingclear on the research focus; and second, the need forgreater research in those areas which are not coveredvery well.

Architectural, engineering and surveying servicesmay be found together in the official statistics, but theydiffer in their operations and strategies. The overlapbetween the construction-related services is increasingwith changing forms of procurement and the growth indesign and build, build-operate-transfer (BOT) andother integrated procurement approaches. This overlapis however not reflected in the official statistics becauseof the standard industrial classification systems used:systems that are based on international agreements forstatistical methodologies.

This paper focuses on architectural, engineering andother technical services and defines CPS as thoseservices provided by firms under Section M, Activity 71of the UK SIC 2007 (ONS, 2007):

●

Architectural activities;

●

Urban planning and landscape architecturalactivities;

●

Engineering activities and related technicalconsultancy;

●

Engineering design activities for industrialprocess and production; and

●

Other engineering activities.

CPS differ from construction services in their industryclassification, and they are classified as knowledge-intensive business services (KIBS), services thatconcentrate on their inputs of technology and humancapital (Styles

et al

., 2005).Research was undertaken by interviews and case

studies with a sample of 16 leading UK CPS firms inorder to understand the types of service provided andtheir modes of delivery. These services are mostlysupplied directly by providers in foreign markets andare associated with the international movement ofcapital and labour and accompanying knowledge.Professional services can also be traded by profession-als travelling overseas (mode 4)

3

and cross-border(mode 1), or transmitted via the telecommunicationsnetworks being facilitated by advances in informationcommunication technologies (ICT). Today’s CPSfirms operate very differently from just two decadesago, with changing forms of procurement, the increas-ing use of information and communication technolo-gies and the impact of globalization.

Background

The services sector is growing around the world andaccounts for 70% of total employment and valueadded in OECD economies.

4

The sector is responsi-ble for almost all employment growth in these econo-mies (OECD, 2005). The G7 countries

5

account for45% of world exports of services (Brook, 2008).However, not all developed countries follow the samegrowth pattern. Japan shows a consistent deficit in itsexternal trade in services (Eurostat, 2007). The WorldBank’s World Development Report (2009) shows thevariance between high, middle and low income coun-tries for value added services as a percentage of GDP.The world figure is 69% with the high, middle andlow income countries being 72%, 59% and 48%respectively.

The UK has always been a strong trading nation,relying upon export manufactured goods to balance theimport of raw materials. Since the 1970s there has beena strong growth of exports in professional services(ONS, 2009). This has helped to counterbalance thedecline in exporting manufactured goods and theincrease in importing manufactured products from lowwage economies overseas and high tech products. TheUK has seen a steady rise in its service exports; in 2005they accounted for 8% of world service exports (Brook,2008). Employment in the UK in the service industriesrepresented 81% of total employment (in Q4 2008),with 21% of total employment in finance and businessservices, the classification that includes architectural,engineering and surveying services. Services accountedfor 12% of UK GDP in 2007, with construction profes-sional services contributing £3 billion to the balance ofpayments, making it an important part of the economy,representing 45% of all service export balances and15% of ‘Other business services’ (ONS, 2008). TheCPS trade balance increased by 40% between 1997and 2007 (ONS, 2008). This increase was achieved ina period of continuing change in overseas business andglobal competition.

Globalization is driving major changes in the waybusiness is undertaken in the construction sector. Theglobal economy has been transformed in recent yearsby the fall of international barriers to the flow of goods,services, capital and labour, and a marked accelerationin the pace of technological and scientific progress. Theglobal sourcing of services, materials, components andlabour is important in maintaining competitive advan-tage in an increasingly competitive marketplace. Thepressures of competition in the domestic market fromoverseas and where firms have outgrown the domesticmarket mean there is a need to seek alternativemarkets, including overseas projects. The ease of cross-border trading and transferring services overseas has

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changed the nature of services trade, but have theservices themselves changed? The following twosections look at the definitions and characteristics of aservice from the perspective of services researchers.

Previous studies

Services’ impact on an economy is the main concern ofbusiness literature, mostly from an economic point ofview as services are key to any economy as they are amajor driver (Weissenberger-Eibel and Koch, 2007).The status of services in economics has developed overthe last two centuries, from the dismissive view ofSmith (1776), Ricardo (1817) and Marx (1863) torecognition by researchers more recently that tradi-tional manufacturing is no longer the key economicagent in a post-industrial society (Beyers, 1985), andthat services industries are gaining importance.

Figure 1 shows a timeline of the economists and theirtheories on the definition of services. The timeline isdivided into three eras of services research—‘Out in thecold’ (1766–1870); ‘Warming up’ (between the worldwars); and ‘Hot topic’ (1970s to present).

Figure 1

A timeline of economic theories on services

Out in the cold

Classical economists such as Smith and Ricardo madea distinction between productive and unproductivelabour, the doctrine of the physiocratic school of

thought. People that work in the primary (agriculture)sector were seen as productive, while people providingservices, such as domestic labour, were consideredunproductive:

The labour of a manufacturer adds, generally, to thevalue of the materials which he works upon, that of hisown maintenance and of his master’s profit. The labourof a menial servant, on the contrary, adds to the valueof nothing. (Smith, 1776, p. 220)

Karl Marx was similarly dismissive of services; in theSoviet Union and other communist countries, serviceswere not even counted in the national output (Melvin,1995). By the beginning of the 20th century there wasa movement towards defining services as a distinctactivity, rather than one that was ‘tied’ to manufactur-ing (Anderson and Corley, 2002).

Warming up

In the 1930s and 1940s, Fisher (1935) and Clark(1940) developed theories to explain the growth inservices. Fisher applied the term ‘tertiary’ to serviceindustries, while Clark further divided this sector intoconstruction and craft activities (Camacho

et al

.,2005). The Fisher–Clark theory of stages of develop-ment suggests that as a country develops, it goesthrough three stages: agriculture, industrial andservices. The primary (agricultural) sector diminishesas the secondary (manufacturing) sector increases.Primary production dominates low-income countries,secondary production dominates middle-income coun-tries and a large or rising tertiary sector is a sign ofeconomic maturity in a country’s development process.

Hot topic

Hirschorn (1988) showed there is a changing relation-ship between goods and services; it is not the case thatservices have replaced goods and a country’s manufac-turing base has declined as a result. Instead, he pointsout that there is a different combination of goods andservices in the post-industrial economy. Questionssuch as how a company should position itself in aproduct to service continuum have been raised (Olivaand Kallenberg, 2003). A high percentage of the work-ers in manufacturing are indeed undertaking servicejobs such as management, marketing and sales. Thissignifies a growth in tertiarization in the productionprocess (Kox and Rubalcaba, 2007).

Defining services

The difficulties of discussing services arise the momentone tries to define them (Griliches, 1992). A definitionFigure 1 A timeline of economic theories on services

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of services that has widespread support is ‘Servicesare activities, deeds or processes and iterations’(Edvarsson

et al

., 2005, p. 108). Edvardsson

et al

.(2005) refers to a range of definitions in the servicesliterature, highlighting definitions by Hill (1977,p. 318): ‘Services are changes in the condition of aperson or something in the possession of thecustomer’; and Lovelock (1991, p. 13)—‘a process orperformance rather than a thing’. Vargo and Lusch(2004, p. 2) define services as ‘the application ofspecialized competences (knowledge and skills)through deeds, processes, and performances for thebenefit of another entity or the entity itself’. Grönroos(2000) points out that most of the definitions focus onthe customer and how services are provided in answerto customer problems. These studies mainly indentifythe role of customer in the transaction due to theirinvolvement in the process. Since the essence ofprofessional services is the high level of technicalknowledge of the professional, the level of informationavailable to the provider and the consumer is different.In addition, the OECD (2009) suggests professionalservices are often credence goods, the quality of whichcan almost never be adequately assessed and externalquality assurances may thus be required.

Characteristics of a service

Zeithaml

et al

. (1985) found that, between 1963 and1983, the most frequently cited characteristics of aservice in the literature are: intangibility, inseparability(simultaneous production and delivery), heterogeneity(reflecting the ability to customize the ‘product’) andperishability (cannot be stored or carried forward)(Regan, 1963; Rathmell, 1966; Shostack, 1977; andZeithaml

et al.

1985). Other dimensions include thetime and place of delivery, the level of customization,and the role of technology. Lovelock (1992) summedup the characteristics of a service business as: labourintensity, consumer interaction, and service customiza-tion. Kotler (1991) developed four categories of goodsand services. Figure 2 shows these as a continuum,ranging from a pure tangible good to a pure service(the examples from the construction sector are theauthors’).

Figure 2

The good-service continuum

Service definitions in the official statistics

Measuring the export of services is problematicalbecause of the fluidity and interpretation of the data.The measurement system uses an agreed definition ofservices according to the System of National Accounts(SNA), a framework that consists of agreed concepts,definitions and classifications. The SNA (1993) defini-tion of services is:

Outputs produced to order and which cannot be tradedseparately from their production. Services are not sepa-rate entities over which ownership rights can be estab-lished. They cannot be traded separately from theirproduction. Services are heterogeneous outputsproduced to order and typically consist of changes inthe conditions of the consuming units realized by theactivities of producers at the demand of the consumers.By the time their production is completed they musthave been provided to the consumers.

This definition is used by national statistical offices, incollecting and disseminating data on services, theirvalue, the sectors’ employment, and import and exports.Conforming to both the SNA and the internationallyrecognized United Nations system—InternationalStandard Industrial Classification (ISIC) allows cross-country/international comparisons by industry. Basedon the ISIC, country/region-specific industrial classifi-cations are used, including: the Standard IndustrialClassification (SIC) in the UK, the North AmericanIndustry Classification System (NAICS) and Nomen-clature Générale des Activités Économiques dans lesCommunautés Européennes (NACE) in Europe.

The measurement of a service by the statisticaloffices relies upon the SNA definition to identify aservice, as opposed to a good, and the industry classifi-cation to record the transaction or data in the correctplace. The 2007 UK Standard Industrial Classification(SIC) (ONS, 2007) classifies construction under SIC(2007) 41 (Construction of buildings), 42 (Civil engi-neering), 43 (Specialized construction activities), andconstruction services under 71 (Architectural and engi-neering activities; technical testing and analysis) and 74(Other professional, scientific and technical activities),each with a number of subsections. Architecture coversboth town and city planning and landscape architec-ture (ONS, 2007) but comes under one heading of

Figure 2 The good-service continuum

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architecture in the balance of payments (ONS, 2008).However, engineering includes a wide range of servicesranging from architectural engineering to geophysical,geological or acoustics. The difficulty comes in break-ing down the data into the correct sections for thepurposes of supplying the data to the Office forNational Statistics (ONS). For example, with engi-neering, procure, construct (EPC) projects, it is diffi-cult to separate the design and services componentsfrom the project value.

The

Pink Book

lists two headings: ‘Constructiontrade’ and ‘Other business services trade’. Construc-tion covers ‘work done on construction projects andinstallations by employees of an enterprise in locationsoutside their resident economic territory’ —ONS(2008, p. 183). There are some limitations on thescope and detail of these headings. For example, withconstruction, if a permanent base is set up overseas andoperations are likely to exceed 12 months, then trans-actions are treated as foreign direct investment (FDI)and are excluded. This is significant because most largeconsulting enterprises will establish local offices in aregion with the aim of localizing and winning furtherwork in that region. Hence, this will mask the trueextent of the UK influence in the export of services instatistics. If a firm chooses FDI as a means of servingits overseas markets, it is considered to become a multi-national enterprise, defined as a firm that ‘acquires asubstantial controlling interest in a foreign firm or setsup a subsidiary in a foreign country’ (Markusen, 1995,p. 170).

The OECD, the European Commission (throughEurostat) and a number of countries produce ForeignAffiliates Trade in Services (FATS) data, but thecoverage is limited. FATS statistics are useful as (1) afocus on services; (2) measuring commercial presence;and (3) helping to understand the phenomenon ofglobalization.

The UK only produces data on inward FATS, i.e.the activities of foreign affiliates operating in the UKand not the operation of foreign affiliates overseas. Yet,they are particularly applicable for CPS exportsbecause of the tendency of large CPS organizations toset up branch offices in order to operate overseas.FATS data cover number of employees, turnover,exports and imports, and value added.

The data for this research were collected from thesemi-structured interviews undertaken with largeconsulting engineers and a roundtable discussion withindustry and government representatives. The inten-tion of construction and engineering organizations isto record their business activities either according togeographical area or by type of work (business unit).The interviewees highlighted the mismatch betweenhow they produce their management accounts and the

format in which the information and data is requestedby the ONS. Cannon (1994) substantiates this indus-try view in her study of how well the official statisticsmeet the needs of the industry. She points out thatthe government’s data collection is to provide‘evidence for the ultimate management of the econ-omy rather than statistics which should be helpful tothe industry’ (p. 308).

Interviews confirmed the view of Cannon (1994)that the industry found supplying information forofficial statistics was burdensome. Importantly, thecompanies found the output not useful because itprovides a historical snapshot how UK companies areperforming at an aggregate level and it is requested in aform very different from the way they collect and clas-sify their own business data. The export data aremainly used by policy makers to ascertain a country’sexport performance. Construction professional servicesfirms are interested in the overseas turnover of theircompetitors to benchmark themselves; they are inter-ested in where firms are working, in what sectors andwhat services are being provided. Some of these datahave, in the past, been available from trade organiza-tions that collect information from their members. Thelack of disaggregated statistics was recognized by theinterviewees as a problem.

Characteristics of construction professional services as a hot topic

The construction sector is heterogeneous; it covers along and fragmented value chain. Even withinconstruction professional services, there is a substantialdifference between a company providing consultingengineering services for a nuclear power plant, and alandscape management company. They may be similarin size, but they differ in levels of technology, the skillsset of their staff, and their competencies. One thing allconstruction professional service organizations have incommon is that they provide knowledge-intensive busi-ness services (KIBS) and concentrate on their inputs oftechnology and human capital (Styles

et al

., 2005).KIBS are defined by Miles

et al.

(1995, p. 28) as

services which rely heavily upon professional knowl-edge, and either supply products which are themselvesprimarily sources of information and knowledge to theirusers, or use their knowledge to produce services whichare intermediate inputs to their clients’ own knowledgegenerating and information processing activities, havingother businesses as their main clients.

KIBS are an important part of a knowledge-basedeconomy, which responds to globalization through astrong record of exporting (Ofori, 2003).

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A construction professional service fits thisdescription but there is greater benefit in focusing onthe characteristics in order to distinguish one servicefrom another (Gershuny and Miles, 1983). Their char-acteristics better reflect their mode of production anddelivery.

A number of researchers have considered the charac-teristics of the firm and the relationship with thecustomer rather than just the service provided (Bell,1973; Shostack, 1977; Lovelock, 1980; Maister andLovelock, 1982; Løwendahl, 2007; Liu

et al

., 2008).Løwendahl (2007) suggests a number of typical charac-teristics of professional services firms. These are ‘basedon the 1960s sociological literature on professions andprofessionals and interviews with a number of execu-tives’ (Løwendahl, 2007, p. 22):

●

knowledge intensive;

●

involves professional assessment and judgement;

●

highly customized;

●

high degree of interaction;

●

professional training;

●

constrained by professional norms.

Our research suggests that two more should beadded for CPS firms: heterogeneity and location speci-ficity. Heterogeneity is substantiated by the range ofconstruction professional services in the standardindustry classification taxonomy—see Table 1.

These wide-ranging activities are delivered to abroad spectrum of customers, from small to medium to

large (in either the public or private sector) and a vari-ety of types of construction such as residential, non-residential, civil engineering, heavy engineering and soon. Location specificity reflects the project-specificnature of CPS.

While the characteristics are useful to understand thenature of CPS, they need to be considered in the contextof the project-based nature of construction. Consider atwo-year bridge project in Turkey. The project willinvolve construction services (building the bridge) anda wide range of CPS, from seismic surveys, to architec-tural engineering, to planning. The majority of transac-tions from the project will be reported by individualfirms, but as the project duration is longer than a year,they will be treated in the national statistics as a foreigndirect investment, not an export. Furthermore, thetransaction will ‘be allocated to the most importantmode in terms of time and resources associated with it’(UN, 2002, p. 21). Some of the CPS provided may orig-inate from the local branch office of the CPS firm andonly part of the revenue remitted back to the parentcompany.

The changing environment of CPSs

The changing environment in which ConstructionProfessional Services (CPS) organizations operate canbe classified under two main headings. These changeshave significant impact on export data in national and

Table 1

UK Standard Industrial Classification of Economic Activities 2007 (SIC, 2007)

Architectural and engineering activities; technical testing and analysis

71 Architectural and engineering activities; technical testing and analysis

71.1 Architectural and engineering activities and related technical consultancy

71.11

Architectural activities

71.11/1 Architectural activities71.11/2 Urban planning and landscape architectural activities71.12

Engineering activities and related technical consultancy

71.12/1 Engineering design activities for industrial process and production71.12/2 Engineering related scientific and technical consulting activities71.12/9 Other engineering activities (not including engineering design for

industrial process and production or engineering related scientific and technical consulting activities)

71.2 Technical testing and analysis74 Other professional, scientific and technical activities

74.1 Specialized design activities

74.10

Specialized design activities

74.9 Other professional, scientific and technical activities n.e.c.74.90

Other professional, scientific and technical activities n.e.c.

74.90/1 Environmental consulting activities74.90/2 Quantity surveying activities74.90/9 Other professional, scientific and technical activities (not including

environmental consultancy or quantity surveying)

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international statistics. This section investigates theseshifts and concludes with recommendations forimprovement.

Globalization

The OECD (2002, p. 16) has stated that

the share of production (or turnover) stemming fromoutside a country’s borders is one of the most relevantindicators for measuring the scale of globalization—notonly at global and sectoral levels, but also at the level ofthe individual firm. In some sectors, the said output isoften twice as high as the value of the exports, whichshows that, in order to penetrate a market, direct invest-ment may be a more important instrument thanexports.

Globalization has led to a changing geography offoreign ownership with mergers and acquisitions.Many of the major CPS companies have overseasshareholders and Board members, creating complexglobal financial and business links. Of the top 20consulting engineers (registered in the UK) in the NewCivil Engineer’s 2009 Top Consultants file, five areoverseas firms (NCE, 2009). This contrasts with nonein 1995. Foreign ownership can complicate the collec-tion of statistics, particularly where money is remittedback to the parent company. Several intervieweesexplained that their branch offices were autonomousand the head office ‘top sliced’ the revenue from eachof its overseas operations.

Procurement

Evolving procurement strategies complicate the under-standing of services exports. Public–private partner-ships, BOT and design and build all involve severalorganizations and a high degree of subcontracting,which can involve a large number of small firms. Luand Sexton (2006) point out that the majority ofconstruction professional service firms are smallcompanies; the UK is no exception. The roundtablediscussions highlighted a concern that the SMEs werenot being included in the export statistics, yet theknowledge-intensive nature of the sector and theadvances in ICT mean that small consultants are ableto operate internationally.

Joint ventures and strategic alliances are a majorstrategy for many companies, for global effectiveness.Outsourcing and off-shoring has become increasinglypopular as enterprises concentrate on their corecompetencies and use other agents to provide businessservices. Examples of this are CAD design officeslocated in developing countries such as China, Pakistanand India. The office undertakes the design work using

CAD systems located anywhere in the world; the driveris the lower cost of production with lower wage costsand overheads. These contribute to further complexi-ties in data collection as the parent company mayaggregate the project income as it is remitted by theoverseas office. Their accounts reflect the work of thehead office and, if applicable, their overseas office(s) ifthey are set up as a ‘legal entity’.

Recommendations

The following recommendations are an attempt toaddress the gaps identified by the research in theconstruction professional services data.

Recommendation 1

: Outward FATS statistics are neededto give a more accurate picture of UK CPS exports andthis is only possible with close-up studies on deliverymethods and characteristics of services in construction.

Recommendation 2

: Consideration should be given to theproduction of joint statistics—construction services andconstruction professional services—that reflect theproject-based nature of construction.

These recommendations form the bases for the nextphase in the research.

Conclusions

Construction professional services (CPS) represent animportant part of the UK’s growing positive balance oftrade in services. Understanding their global spreadand breadth in scope is essential. However, the defini-tions of services in the literature are generic due to theircomplex delivery modes and intangible and hetero-genic structure.

The emerging business environment of CPS, mostlydue to the effects of globalization, and more recently,the global economic recession, prompts the need for abetter definition of CPS characteristics and classifica-tion. The measurement of CPS export performance isunderpinned by the definitions and classifications usedin national and international statistics. Yet, these clas-sifications fail to reflect the changing landscape of CPSexports as they are activity-specific. Our study reviewedthe definitions of service activities over time and devel-oped specific CPS characteristics. The multiplicity ofexport strategies that CPS firms adopt has been listedand the gaps between the ‘theoretical’ definitions andthe reality of CPS business today highlighted. In theview of the selected architectural, engineering andsurveying companies, the construction professionalservices data do not reflect how the sector operatesoverseas. The data are highly aggregated and do nottake account of the project-based nature of the work or

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adequately distinguish between sub-sectors. Based onthis, the two recommendations in the previous sectionwere developed.

According to the OECD (2008), ‘there is no unifiedstatistical system to quantify the various modes ofservice provision at the international level’ (p. 15).Based on this, and the concerns highlighted in the datacollection phase, two recommendations were putforward. The first is about what data are collected andthe second is about the output of the data. Taking actionon these recommendations involves further research,which is being undertaken by the authors. The researchis into: better classifications to inform a more reliablecalculation of the growth of construction professionalservices; the use of cross-classification to produce moreappropriate data; and how the data could be collectedin a more disaggregated form to provide better informa-tion for the industry and the policy makers.

Notes

1. The WTO, formerly GATT, formulated the GATS(General Agreement on Trade in Services) Treaty in1995.

2. Detailed annual estimates of UK balance of paymentsincluding estimates for the current account (trade ingoods and services, income and current transfers); thecapital account, the financial account and the interna-tional investment position.

3. World Trade Organization, General Agreement on Tradein Services (GATS). Mode 1—services supplied fromone country to another (e.g. international telephonecalls), officially known as ‘cross-border supply’. Mode2—consumers or firms making use of a service in anothercountry (e.g. tourism), officially ‘consumption abroad’.Mode 3—a foreign company setting up subsidiaries orbranches to provide services in another country (e.g.foreign banks setting up operations in a country), offi-cially ‘commercial presence’. Mode 4—individuals trav-elling from their own country to supply services inanother (e.g. fashion models or consultants), officially‘presence of natural persons’.

4. Most of the 30 OECD members are high-income econo-mies and are regarded as developed countries.

5. United States, Japan, Germany, France, United Kingdom,Italy and Canada.

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