Trade in services and trade in goods: differences and complementarities
AbstractThe purpose of this paper is double. First, we empirically explore to what extent the determinants of trade in services differs from those of trade in goods and, second, by the use of instrumental variables, we explore for potential complementarities between bilateral trade in goods and bilateral trade in services. By the use of gravity equations, the main results show that "bilateral trust and contract enforcement environment", "networks", "labor markets" and "technology and technology of communication" have higher impact on service trade than on trade in goods; finally, after instrumenting for endogeneity, we found that bilateral trade in goods explains bilateral trade in services: the resulting estimated elasticity is close to 1. Reciprocally, though to a lesser extent, bilateral trade in services affects positively bilateral trade in goods: a 10% increase in trade in services raises traded goods by 4.6%.
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Date of creation: Sep 2008
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international trade in services ; trade in goods ; gravity equations;
Other versions of this item:
- Carolina Lennon, 2009. "Trade in Services and Trade in Goods: Differences and Complementarities," wiiw Working Papers 53, The Vienna Institute for International Economic Studies, wiiw.
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- F15 - International Economics - - Trade - - - Economic Integration
- L8 - Industrial Organization - - Industry Studies: Services
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Carolina LENNON & Daniel MIRZA & Giuseppe NICOLETTI, 2009. "Complementarity of Inputs across Countries in Services Trade," Annales d'Economie et de Statistique, ENSAE, issue 93-94, pages 183-205.
- Mary Amiti & Shang-Jin Wei, 2004. "Fear of Service Outsourcing," IMF Working Papers 04/186, International Monetary Fund.
- van Marrewijk, Charles & Stibora, Joachim & de Vaal, Aldert, 1996. "Services Tradability, Trade Liberalization and Foreign Direct Investment," Economica, London School of Economics and Political Science, vol. 63(252), pages 611-31, November.
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