In the short run, the non tradable sector is, by definition, subject to domestic demand constraints. A shortfall in non tradable demand inevitably limits growth on that side of the economy.

In such economies, that pattern not only typically depended on leverage it also enlarged the non tradable side of the economy and shrank the tradable side. And yet, given that the non tradable sector is constrained by its reliance on domestic demand, recovery if it comes will depend on the tradable sector s growth potential.

To be effective and properly targeted, policies need to include an accurate diagnosis of growth potential and impediments in both the tradable and non tradable parts of the economy. Focusing on one (say, the competitiveness problem in the tradable sector) to the exclusion of the other (perhaps a serious non tradable demand shortfall or stagnant absolute productivity) will not be enough.

The main point is that restoring growth requires a careful analysis of structural balance, attention to demand constraints in the non tradable sector, and a focus on the impediments to expanding the tradable sector. Some of those impediments are supply side rigidities others have more to do with bloated domestic demand.

In the non tradable sector (60 70 of the economy in advanced countries), the main growth inhibitors are weak demand, as in the United States following the financial crisis, and structural and competitive impediments to productivity, as in Japan. In the tradable sector, growth depends on a country s productivity relative to incomes and competitiveness.

Rising incomes require rising productivity. That means increasing capital and human capital intensity across both the tradable and non tradable sectors of the economy.

An undervalued currency also tends to produce an unbalanced growth model of the opposite kind an outsize tradable sector and insufficient domestic aggregate demand. Because the non tradable sector in advanced economies tends to create more jobs, this model can lead to an employment problem (even if it is partly masked by cutting hours rather than workers).

The challenge is to apply these insights in a world characterized by global economic interdependence, major imbalances, and a worsening growth and employment problem. It is a world in which economies are connected directly in the tradable sector of the global economy, and indirectly through the demand and employment linkages between the tradable and non tradable sectors of individual economies.

But there is more to the productivity conundrum than the 2008 crisis. In the two decades that preceded the crisis, the sector of the US economy that produces internationally tradable goods and services one third of overall output failed to generate any increase in jobs, even though it was growing faster than the non tradable sector in terms of value added.

Non tradable activities are akin to a country s sports leagues different people like different teams.

Tradable Prosperity

In fact, the employment generated by the tradable sector has been in services at the upper end of the distributions of value added per person, education, and income. As a result, growth and employment in the tradable sector have gone separate ways, with healthy growth and stagnant employment.

Moreover, not only is the tradable sector of Japan s economy highly vulnerable to a slowdown in China, but the recent conflict over the Senkaku Diaoyu Islands raises the prospect of economic decoupling. Apart from that, Japanese economic performance is set to remain weak, because the non tradable side is not a strong growth engine.

But, for individual economies, relative productivity versus income levels determines the share of global tradable aggregate demand that is accessible. Unlike the non tradable side of the economy, the domestic component of global tradable demand is not an absolute constraint on growth nor is the rate of growth of global tradable demand an absolute constraint, given the possibility of increasing share.

Unfortunately for advanced economies, the gains in per capita value added in the tradable sector were not large enough to overcome the effect of moving labor from manufacturing jobs to non tradable service jobs (many of which existed only because of credit fueled domestic demand in the halcyon days before 2008). Hence the muted overall productivity gains.

Non governmental sector 250

For several decades, that tendency has been offset by ever more intensive trading of tradable goods, often passing through many countries in complex supply chains. In the future, however, the shift to non tradable consumption may dominate.

The alternative is muted wage and income growth shared across the income spectrum, combined with productivity enhancing measures. This was a component of Germany s successful reform program of a decade ago, which included labor market and social security reforms, the combined effect of which was to restore competitiveness and growth potential in the tradable sector, while improving productivity on the non tradable side.

Market fragmentation in the more diversified economies is often due to intraregional investment priorities in non tradable sectors, particularly real estate.

Non governmental agencies and private sector

Until the crisis of 2008, middle and lower income job growth occurred entirely in the non tradable sector of the economy, which accounts for roughly two thirds of advanced countries output and employment. Here, incomes and value added per employee remained largely flat.

Non governmental organizations, including the private sector

Over the next decade, for example, China will replace much of its labor intensive assembly employment with higher value added employment in manufacturing and services, not only in the tradable sector, but also even more noticeably in the rapidly growing non tradable part of its economy. The expanding scope and diminishing costs of automation and additive manufacturing may affect labor intensive functions globally, including in earlier stage developing countries.

Developing the service sector could also diversify the production base, thereby enhancing economic resilience and boosting growth momentum. Modern services are becoming increasingly tradable, providing new export opportunities.

Senior positions in profit and non profit sector

Intergovernmental and non governmental organizations and the private sector

While this applies to many non tradable services, it may also be relevant for manufactured goods that need adapting to local conditions (UNCTAD 2005 9 10).

The speed of structural adjustment is also strongly influenced by how easily employment can shift from an economy s non tradable to its tradable side and across segments of global supply chains. Countries degree of labor market flexibility varies considerably, and the reforms that increase it are critically important.

This scheme implements tradable quotas among the EU States.

This practice almost exclusively exists in the non liner sector.

As mentioned already, gender centres have included the non governmental sector in their activities, and launched an initiative for designating at a regional level a person from the non governmental sector to act as a contact point between non governmental sector and gender centres.

These mechanisms can be classified into two broad categories government sector and non government sector wage fixing mechanisms.

(4) As regards tradable financial assets, it is required to separately list the beginning of period and end of period fair value of tradable bond investment, tradable equity instrument investment, financial assets which are specified to be measured on fair value and whose fluctuations are included in the current profits and losses, derivative financial assets and other tradable financial assets.

At the level of non governmental organizations and the private sector

Participation of non governmental organizations, civil society and the private sector

In addition, 129 non governmental and private sector organizations were represented.

This applies to many services that are non tradable , but may also be relevant for manufactured goods that need adaptation to local conditions. In such situations, outward FDI is

Accumulating excessive debt usually entails moving some part of domestic aggregate demand forward in time, so the exit from that debt must include more savings and diminished demand. The negative shock adversely impacts the non tradable sector, which is large (roughly two thirds of an advanced economy) and wholly dependent on domestic demand.

These trends reflect a combination of technological and global market forces that have been operating over the last two decades. On the technology side, labor saving innovations in network based information processing and transactions automation have helped to drive a wedge between growth and employment generation in both the tradable and non tradable sectors.

Within the non agriculture sector, the major portion i.e. two thirds (64.6 ) of the employed persons was engaged in informal sector.

A somewhat more sensible concern might be that the dollar s reserve currency status causes it to be over valued with respect to every currency, not just the renminbi. That could create additional pressure on the tradable part of the US economy, and thus might help to explain why the US tradable sector has not generated net employment for two decades.

1 The definition of the service sector used in the present report, encompasses all non agricultural and non manufacturing industries.

As China becomes richer, its middle class citizens will not just buy more tradable goods like cars, electronics, and appliances they will buy housing and a host of non tradable services, too. An efficient supply side response to this large and growing source of demand requires regulatory reform in many services, including finance, product safety, transport, and logistics.

The Agreement on Cooperation was signed between the non governmental and governmental sector.

Expand non governmental and private sector participation in the international arrangement on forests