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International service transactions: Is time a trade barrier in a connected world?

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  • Bianka Dettmer

    ()
    (Friedrich-Schiller-University Jena)

Abstract

The firms' international fragmentation of production has recently widened its focus from outsourcing of intermediates to off-shoring of business services such as software program development and international call centre networks. Although a large number of business services are intangible and non-storable, gravity model estimates show that geographical distance between business partners is still relevant even when information and communication technologies (ICT) provide alternatives for face-to-face interaction. It has recently been argued that time zones can be a driving force of international service transactions by allowing for continuously operating over a 24 hours business day. In this paper, we find empirical evidence for the continuity effect in trade of business and commercial services which is even higher for trade with Non-OECD countries and robust to measurement and sample size. We show that the time zone effect in trading business services is dependent on the level of ICT infrastructure.

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File URL: http://pubdb.wiwi.uni-jena.de/pdf/wp_2011_003.pdf
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Bibliographic Info

Paper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics in its series Jena Economic Research Papers with number 2011-003.

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Date of creation: 05 Jan 2011
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Handle: RePEc:jrp:jrpwrp:2011-003

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Keywords: international trade; business services; gravity model; distance; time zones; digital divide;

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  1. Marjit, Sugata, 2007. "Trade theory and the role of time zones," International Review of Economics & Finance, Elsevier, vol. 16(2), pages 153-160.
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Cited by:
  1. Kikuchi, Toru & Marjit, Sugata & Mandal, Biswajit, 2011. "Trade with Time Zone Differences: Factor Market Implications," MPRA Paper 37931, University Library of Munich, Germany, revised 2012.
  2. Edward Anderson, 2014. "Time differences, communication and trade: longitude matters II," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 150(2), pages 337-369, May.
  3. João Amador & Sónia Cabral, 2014. "Global Value Chains: Surveying Drivers, Measures and Impacts," Working Papers w201403, Banco de Portugal, Economics and Research Department.
  4. Egger, Peter H. & Larch, Mario, 2013. "Time zone differences as trade barriers," Economics Letters, Elsevier, vol. 119(2), pages 172-175.
  5. Mandal, Biswajit & Marjit, Sugata & Nakanishi, Noritsugu, 2013. "Time Zones, Factor Prices and Inflow of Educational Capital: Changing Sectoral Composition," MPRA Paper 50883, University Library of Munich, Germany.

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