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Trade in Producer Services: A Heckscher-Ohlin Approach

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Author Info
Melvin, James R
Abstract

Trade in services has become topical, but little theory has been developed. This paper assumes that one commodity and the services of capital are tradable and examines the traditional trade results. Service trade can produce the same equilibrium as commodity trade, but substantial differences exist depending on whether the tradable commodity is capital or labor intensive. Tariffs on either commodity have the same commodity price effects and will always increase the welfare of the immobile factor labor. Factor income taxes can also affect trade patterns. When both goods and capital services are tradable, there is an indeterminacy in trade patterns, and tariffs, while reducing commodity trade, may not reduce welfare. Copyright 1989 by University of Chicago Press.

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Publisher Info
Article provided by University of Chicago Press in its journal Journal of Political Economy.

Volume (Year): 97 (1989)
Issue (Month): 5 (October)
Pages: 1180-96
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Handle: RePEc:ucp:jpolec:v:97:y:1989:i:5:p:1180-96

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  1. John Whalley, 2003. "Assessing the Benefits to Developing Countries of Liberalization in Services Trade," NBER Working Papers 10181, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. John Whalley, 2003. "Liberalization in China's Key Service Sectors Following WTO Accession: Some Scenarios and Issues of Measurement," NBER Working Papers 10143, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  3. Rashmi Banga, 2005. "Critical issues in India's services-led growth," Indian Council for Research on International Economic Relations, New Delhi Working Papers 171, Indian Council for Research on International Economic Relations, New Delhi, India. [Downloadable!]
  4. Kozo Kiyota, 2001. "The Services Content of Japanese Trade," Trade Working Papers 399, East Asian Bureau of Economic Research. [Downloadable!]
  5. Rashmi Banga, 2005. "Role of Services in the Growth Process: A Survey," Indian Council for Research on International Economic Relations, New Delhi Working Papers 159, Indian Council for Research on International Economic Relations, New Delhi, India. [Downloadable!]
  6. Keshab Bhattarai & John Whalley, 1998. "The Division and Size of Gains from Liberalization of Service Networks," NBER Working Papers 6712, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  7. Hoekman, Bernard & Mattoo, Aaditya, 2008. "Services trade and growth," Policy Research Working Paper Series 4461, The World Bank. [Downloadable!]
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