UNIT 6: SERVICES

1. UNIT 6: SERVICES

2. Contents • What are services? • Types of trade • Land, sea and air transport • Tourism • Otherservices • Tourism • Otherservices • Trade, transports and tourism in Spain

3. Keywords • Turnover, volumen de negocios. • Layout: diseño. • Balance of trade: balanza comercial. • Free tradearea: área de libre comercio. • Customunion: unión aduanera. • OPEC: Asociación de países productores y exportadores de petróleo. • GDP, grossdomesticproduct: PIB, producto interior bruto. • Transportnetwork: red de transportes. • Domestictourism: turismo interior. • E-commerce: comercio electrónico. • Franchises: franquicias. • Loans, savings: préstamos, ahorros. • Services, tertiary sector: servicios, sector terciario. • Outsourcing: subcontratación de una parte de la producción a otra empresa. • Balance of trade: balanza comercial. • Free tradearea: área de libre comercio. • Customunion: unión aduanera. • OPEC: Asociación de países productores y exportadores de petróleo. • GDP, grossdomesticproduct: PIB, producto interior bruto. • Transportnetwork: red de transportes. • Wholesalers: comercio mayorista. • Retailers: comercio minorista.

4. 1. Services Where are serviceslocated? Traditionally, serviceshavemainlybeenlocated in urbanareas, wherethere are manyconsumers, companies and officialinstitutions. Manyadvancedservices are located in businessdistricts in metropolitanareas. Improvements in internationalcommunications and transporthaveledtooutsourcing. Thisprocessisthe transfer of servicesfromdevelopedeconomiesto places wherelabourischeaper (forexample India). The growth of the tertiary sector Services consist of all activities which do not directly produce tangible goods, but help to satisfy people’s wants and needs. They include the work of teachers, doctors, bus drivers or hairdressers. The tertiary sector of the economy has expanded in the 20th and 21st centuries. In particular, developed countries have experienced tertiarization; today service provide over 70% of wealth and employment in developed countries. Types of services Services can be classified into two groups: • Public services, are financed by the state from taxes. They run public institutions in areas like administration, security or justice and also basic needs like education or health. • Private services are offered by private companies or individuals. Consumers pay for them. Some services are commercial or cultural, others services belong to transports, health or communications.

5. 2. Trade Whatistrade? Tradeistheexchange of goods and servicesbetweenproducers and consumers. Itisthemostimportanttype of service in terms of turnover and thenumber of workersemployed. Tradedependsprimarily in threefactors: transport and infraestructures, marketsize and wealth. Domestictradetakes place within a country’sborders. Itdistributesdomestic and foreignproductsthroughouttheterritory. Wholesalers and retailerssupplyproductstoconsumers. A wholesalerbuyslargequantities of a productdirectlyfromtheproducertoselltoretailers. A retailersellsproducts in smallquantitiesto a customer. Foreigntradetakes place withothercountries. Imports are thepurchases of goods and servicesfrom a foreign country, whileexports are the sales of goods and servicesto a foreign country. The balance of tradeisthedifferencebetweenthevalue of a country’sexports and thevalue of itsimports.

6. Theorganisation of worldtrade Worldtradeisregulatedbyagreementsbetweencountries and WorldTradeOrganisation (WTO). Itaimstoachieveagreementsthatpromoteworldtradebyreducingtradebarriers, and eliminatingunfairpractisessuch as sellingproducts at pricesthat are lowerthatthecost of production. Manycountriesformtrade blocs in ordertopromotetradewitheachother: • Free tradearea. Thisismade up of a number of countrieswhosetradewitheachotherisexemptfromcustomtaxes (NAFTA forexample). • Customsunion. Thisis a free tradeareawhichalsoestablishes a commoncustomspolicywithregardto non-memberscountries (EU forexample). • The are alsoassociationscreatedforthetrade of a specificproduct, liketheOrganisation of thePetroleumExportingCountries (OPEC).

9. 3. Characteristics of worldtrade • Tradepatterns • Traditionally, theworld’sgreat trading regionswere EU, theUnitedStates and Japan. Today new tradepatternshavedeveloped as a result of globalisation, theemergence of new economicpowers and theeconomic crisis thatbegan in 2007. • TheUnitedStates and China are responsibleforthelargestvolume of exports and imports in theworld. Thetwocountrieshavebecome trading partners, buttheirtradeisimbalanced. • Theemergingcountrieshavebeguntoplay a key role in theinternationaleconomy. There has been and increasingvolume of theflowsbetweenemergingcountries and traditionalpowers (EU and USA) butalsobetweenthem (LatinAmerica, Asia and Africa). • Trade in EU • Eu isthelargest trading power in theworld. More than 20% of theworld’sexports are from EU. • 70% of theexportsfrom EU merberstates are tootherparts of EU. • Outside EU themaindestinationsforitsexports are USA, China, Russia and Turkey. • TheEU’smainimportsmainly come from China, Russia, theUnitedStates, Norway and Switzerland. • Germanyistheleadingexporting country in EU. • 86% of the EU exports are industrial goods, such as machinery, transportvehicles, chemicalproducts and rawmaterials. Theremainig 14% are mainlyagriculturalproducts. • The USA and EU as trading partners • Tradebetween USA and EU amountsto 2000 million euros eachday. Italsocreatesaround 15 millionjobs, which are sharedequallybetweenthetwoareas. Tradebetween USA and the EU representsaround 31% of theworldtrade, and 53% of theworld GDP.

10. 4. Transportnetworks and landtransport • Transportservices • Transportisthemovement of people and goodsfromone place toanother: • Means of transport are thedifferentvehiclesusedfortravel (car, train, plainorboat). • Infraesructures are theelementsnecessaryfortransportsuch as roadsforvehicles, railwaysfortrains, airportsforaircraft and portsforships. • Thefunctions of transport • Transport has beenthefastest-growingtertiaryactivitiesfortwocenturies. Thisisduetoindustrialisation, and increasingtrade and travel, as well as technicaladvances, whichhaveresulted in ingreaterspeed, capacity and safety at lowercost. Threemainfunctions: • Economic: Transportallowstheexchange of goods and theeverydaytravel of population. • Political: Itreinforcestheintegration of thedifferentregions and areas in a territory. • Social: Itfacilitates human relations and activitiessuch as leisure and learningaboutother cultures. • Transportnetworks • A transportnetworkistheinfraestructurewhichisnecessaryforvehiclestocirculate. Itconsists of a series of nodes (cities, stations) and axesorlines, whichconnectthenodes. • Thelevel of development of a transportnetworkismainlymeasuredbythedegree of conectivitybetweenthenodes: • Developedcountrieshave a dense, structured and hierarchicalnetwork. • Lessdevelopedcountrieshave a less dense and lesssructurednetwork. • Thelayout of networksisdeterminedbyhistorical, political, socio-economic and natural factors. Consequently, thedistribution of population centres, industries, rawmaterials and energysources has a decisiveinfluence.

12. Landtransport Road. Cars, buses and lorriestravelbyroad. Thistype of transportisvery flexible and veryusefulformovingpeople and goods. However, it has somedisadvantages: • Itisveryexpensivetobuild and maintaintheroads. • There are more accidents in thistype of transport and italsocreatespollution. Rail. Rail transportincludestrains, metros and trams. Largecitiesneedgood rail infraestructures so thatpeople can travelby local trains and metro. Rail transport has severaldisadvantages: • High speedtrains are veryusefultotravelrapidlytodistant places. • Trains can transportgoods in containersrefrigeratorcomparments, etc. • Rail transportischeap, fast and safe and doesnotcontaminate as much as transportbyroad.

13. 5. Ship and air transport • Ship transport • Ship transport includes transport by sea and navigable rivers. It is mainly used to transport big heavy goods, and it is used for over 90% of world trade. Its main characteristics are: • It is cheap but slow. • It needs port infraestructures to handle large ships. These require huge investments. • It is very polluting means of transport. Fuel is lost when the tanks are cleaned at sea or when ships have accidents and produce oil slicks. • Huge containers are used to carry goods. These are easy to load onto the ships and then place on lorries or special trains. Modern ports have large containers terminals. • The main shipping routes are the North Atlantic, the Pacific and the Mediterranean (Suez Canal).

14. Air transport • Air transport is mainly used to move people over long distances. Some goods are also transported by air, but these are usually only small, urgent or valuable products. • Air travel is a quick, safe and expensive means of transport. • Planes cause noise pollution and their fuel causes air pollution. New airports are therefore built at some distances from the cities . Consequently, roads and rail lines have to be built to connect the cities and the airports. • The infraestructures required for air travel are complex, technical and expensive. • In the last ten years, traditional airlines have been faced with competition from low cost companies. As a result, governments have privatized or merged their companies to make them more competitive. • Airports attract businesses from other economic sectors because od the colume of passengers who uses them (catering, banking, retail trade and travel agencies).

15. 6. Tourism • What is tourism? • Tourism consists of the activities that people do for pleasure during their travels. Many services satisfy tourists’ needs for travel, accommodation, food and leisure. Tourism has important benefits: • It creates business opportunities and jobs, both directly (hotels, restaurants, shops) and indirectly (construction, transport, trade). • It adds economic value to a region’s natural and cultural heritage, which may contribute to its conservation. • It leads to cultural exchanges between different countries. • At the same time, tourism has negative effects : • Seasonal and precarious employment. • Coastal tourism has a strong impact on the environment and requieres the construction of many new buildings. This causes environmental impact, pollution and increased pressure on natural resources such as water. • There is sometimes a threat to a region’s local traditions.

16. Growth of tourism Tourism grew rapidly in the second half of the 20th century, when developed countries experienced a period of high economic growth, and tourism became a mass phenomenon. In 2012, the volume of international tourist passed the the figure of 1.000 million for the first time. There were also between 5.000 and 6.000 million domestic tourist, who did not leave their own countries.

19. International tourist flows • Until recently, nearly all international tourist came from developed countries. Today the inhabitants of emerging countries also practise international tourism. • Europe is the main torurist destination in the world. France, USA, Spain and China are the countries which receive most foreign visitors and income. • Europe received 52% of all international tourist in 2013. Europe’s artistic and cultural heritage, and its Mediterranean climate and beaches, were amog its attractions. • The Asian-Pacific region grew the fastest in 2013, when it received 23% of all tourists. Asian culture is a great tourist attraction for western visitors (China, Thailand). • America. The United States has many attractions, such as its cities and natural spaces. Mexico’s cultural heritage and beaches also atracts tourists. • Africa. The natural environment and lack of infraestructures limits the growth of tourism. • Middle East. Tourism has declined as a result of inestability, which has affected countries like Egypt or Syria.

20. 7. Otherservices • Financialservices • Financialactivitiesincludealltheactivities and businessesrelatedtothemanagement of money: investment, loans and savings. A country’sfinancialsystemconsists of alltheinstitutions, instruments and practicesthatenabletransfers of moneytotake place. • Banks and savingsbanks are themostimportantfinancialinstituttions. Theyattractmoneyfromsavers and lenit at aninterest. • Insurancecompanies. In exchangefor regular payments, thesescompaniescoverrisktopeople and goods. • At thesame time, tourism has negativeeffects: • Investmentfunds. A largenumber of peoplemakecontributionstothesefunds, which a managementcompanyadministers. • Every country has supervisorybodiesto control theseinstitutions. • Information and communicationservices • We use differentmeans of communication: persontoperson, mass media orthe internet. • Communicationnetworksenableustoconnectwiththerest of theworld in real time. ICT haveledtomanychanges: • Business, forexample e-commerce. • Work, forexampleteleworkingfrom home. • Culture and leisureactivitieshavechanged. • Business services • Theseservices are designedtomeettheneeds of businesses (improvingcompetitiveness): • Knowledge-intensiveservices. Highlyqualifiedpeopleprovide legal and fiscal advisoryservices, marketing, design, IT and training. • Operatingserviceslikecleaning, securityortansport.

21. Personal services • Personal services are serviceswhich are provideddirectlyby a personor a smallgroup of people: Theyinclude: • Domesticstaffwhowork in people’shomes. • Assistancetotheelderly at home or in centres. • Childcare at nurseryschool. • Maintenance and repair, ieelectriciansorpainters. • Independentprofessionalservicesfromlawyersorarchitects. • Otherservices, such as thoseprovidedbyhairdressers, etc.

22. 8. Trade, transport and tourism in Spain • Trade • Trade makes a large contribution to Spain’s GDP (32’3%), and in 2014 it employed nearly 3 million people (16’5% of the total employed population). • Domestic trade. Over half (56%) of the people employed in this sector work in retail trade. Including a very large number of women (61%). However, more than half the revenues in the trade sector come from wholesale trade. More than 95% of companies employ less than ten workers, although they only generate a third of total revenues in the trade sector. In adittion to traditional commercial activity and self-service, another like e-commerce or franchises have growth rapidly. • - Foreing trade. Spain used to have a negative balance of trade or a trade deficit. This means that it imported more than it exported. In recent years, this trend has been reversed because expotrs have increaded and imports have fallen. Spain’s main trading partners are France and Germany and its larger trade deficit is with China. Spain’s imports petroleum and agricultural, metal and mineral products; it exports manufacturated goods, agricutural, metal and mining products.

24. Transport in Spain • Spanishroad and rail networksare better and denser in theareaswiththelargestpopulations and greatesteconomicactivity. • Landtransportis radial withits centre in Madrid. Betterroads and highspeed rail lines (AVE) havebeendeveloped. • Shiptransport, spanishportsplay a key role in tradebetween EU and otherparts of theworld. • Air travel, theleadingairports are in Madrid, Barcelona and Palma.

25. Tourism in Spain • Tourismisthekeyeconomicactivity in Spain, as itaccountsfornearly 11% of the GDP and 12% of theemployment. Spainraksthird in theworldforthenumber of foreignvisitors. Thisleading position can be explainedbynumber of factors: • Excellentbeaches. • Governmentpoliciespromotingtourism. • Largeinvestments and improvements in infraestructurestomeettourists’ needs. • Spain’scultural heritage. • In thepast, tourism in Spainwasmainlybeachtourism. However, sincethe 1990s greateffortshavebeenmade in otherareas, such as buesiness, or cultural and rural tourism.

26. National and foreign tourism National tourism includes travel in Spain and Spanish people’s trips abroad. Overall, around 160 million trips are made every year, although the figure fell after the crisis in 2007. The largest volume corresponds to domestic toursim, with 144.5 million trips in 2013. Spanish people made 11.2 million trips abroad in 2013. Their main destination is Europe (77%), especially countries in the EU (France, Portugal and Italy). As regards foreign tourism, Spain received 60’6 million foreign visitors in 2013. They spent 59.082 million euros on tourism. The main reasons for their visits are holidays and leisure (86%) The majority of tourists are from UK, Germany and France. However, tourism from emerging markets, especially Russia and China, is increasing. The main destinations for foreing tourist are Catalonia (26%), Balearic Islands (18,5%), the Canary Islands and Andalusia.

29. HOMEWORK!!! • Define: services, transportnetwork, publicservices, privateservices, balance of trade, free tradearea, customunion, OPEC. • Describe in yourownwordsservices and types of services. Why are services so importanttoday? • Whatisdomestictrade? Whatisforeigntrade? • Explain in yourownwordsthe balance of trade. • Make a mindmap of services. • Explainbrieflylandtransports. • Explainbrieflytransports. • Whatis a transportnetwork? Giveexamples in yourregion of transportnetworks. • Describe brieflythefunctions of transport. • Describe benefits and negativeeffects of tourism. • Describe brieflythoseotherservices(onpages 20 and 21).

30. HOMEWORK!!! • Explainwidelymapon page 24 (transports in Spain). • Explainwidelymapon page 27 (tourism in Spain). • Explainstatisticon page 28 (tourism in Spain) • Explainwidelyforeigntourism in Spain. Whyisit so importantfortheSpanisheconomy?

31. Made by Francisco Javier AbadesAnsián History teacher at Castilla y León (Spain) Feel free to study or share this presentation