Regional Liberalization of Trade in Services
AbstractAs the impact of trade in services on the current global financial crisis appears to overtake that of trade in goods, we propose to examine liberalization of trade in services through regional trade agreements (RTAs). The regional liberalization of trade in services is expected to generate significant welfare gains both in the services and goods sectors. However, the quantitative effect of RTAs under GATS (General Agreement on Trade in Services) Article V has not been sufficiently investigated. We attempt to fill this gap by applying a gravity regression analysis to four major services sectors—financial services, business services, communication services, and transportation services—while controlling for both country-specific and time-varying importer and exporter fixed effects. We find that (i) the RTAs under GATS Article V create services trade among members and do not divert services trade from nonmembers, but the trade-enhancing effect is sector-specific; (ii) the sector-specific trade-enhancing effect ranges from the highest in business services sector to the lowest in transportation services; (iii) the trade effect on aggregate services trade is weaker when we control for the time-varying multilateral trade resistance factor with the time-varying exporter and importer fixed effect, however, the sectoral effects show a reverse pattern; (iv) there is no anticipatory effect expected from services RTA negotiations, unlike the case of trade in goods; (v) there is a complementary relationship between goods and services imports; and (vi) the trade-enhancing effect of RTAs is stronger between developed members compared to the effect between developed and developing countries.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 19758.
Date of creation: 04 Jan 2010
Date of revision:
trade in services; regional trade agreements; gravity; GATS;
Other versions of this item:
- F15 - International Economics - - Trade - - - Economic Integration
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
This paper has been announced in the following NEP Reports:
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.:
- Scott L. Baier & Jeffrey H. Bergstrand, 2005.
"Do free trade agreements actually increase members’ international trade?,"
Working Paper, Federal Reserve Bank of Atlanta
2005-03, Federal Reserve Bank of Atlanta.
- Baier, Scott L. & Bergstrand, Jeffrey H., 2007. "Do free trade agreements actually increase members' international trade?," Journal of International Economics, Elsevier, Elsevier, vol. 71(1), pages 72-95, March.
- Stephenson, Sherry M., 2002. "Regional versus multilateral liberalization of services," World Trade Review, Cambridge University Press, Cambridge University Press, vol. 1(02), pages 187-209, July.
- Konan, Denise Eby & Maskus, Keith E., 2006.
"Quantifying the impact of services liberalization in a developing country,"
Journal of Development Economics, Elsevier,
Elsevier, vol. 81(1), pages 142-162, October.
- Konan, Denise Eby & Maskus, Keith E., 2003. "Quantifying the impact of services liberalization in a developing country," Policy Research Working Paper Series 3193, The World Bank.
- Keith Walsh, 2006. "Trade in Services: Does Gravity Hold? A Gravity Model Approach to Estimating Barriers to Services Trade," The Institute for International Integration Studies Discussion Paper Series, IIIS iiisdp183, IIIS.
- Fukunari Kimura & Hyun-Hoon Lee, 2006. "The Gravity Equation in International Trade in Services," Review of World Economics (Weltwirtschaftliches Archiv), Springer, Springer, vol. 142(1), pages 92-121, April.
- Ingo Borchert & Aaditya Mattoo, 2009.
"The Crisis Resilience of Services Trade,"
World Bank Other Operational Studies
11123, The World Bank.
- Ingo Borchert & Aaditya Mattoo, 2009. "The crisis-resilience of services trade," The Service Industries Journal, Taylor & Francis Journals, Taylor & Francis Journals, vol. 30(13), pages 2115-2136, August.
- James E. Anderson & Eric van Wincoop, 2000.
"Gravity with Gravitas: A Solution to the Border Puzzle,"
Boston College Working Papers in Economics, Boston College Department of Economics
485, Boston College Department of Economics.
- James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, American Economic Association, vol. 93(1), pages 170-192, March.
- James E. Anderson & Eric van Wincoop, 2001. "Gravity with Gravitas: A Solution to the Border Puzzle," NBER Working Papers 8079, National Bureau of Economic Research, Inc.
- Hoekman, Bernard & Mattoo, Aaditya, 2008. "Services trade and growth," Policy Research Working Paper Series 4461, The World Bank.
- Baldwin, Richard & Taglioni, Daria, 2006.
"Gravity for Dummies and Dummies for Gravity Equations,"
CEPR Discussion Papers, C.E.P.R. Discussion Papers
5850, C.E.P.R. Discussion Papers.
- Richard Baldwin & Daria Taglioni, 2006. "Gravity for Dummies and Dummies for Gravity Equations," NBER Working Papers 12516, National Bureau of Economic Research, Inc.
- Mattoo, Aaditya & Fink, Carsten, 2002. "Regional agreements and trade services - policy issues," Policy Research Working Paper Series 2852, The World Bank.
- Chisari, Omar O. & Maquieyra, Javier & Romero, Carlos A., 2009. "Liberalization of trade in services: A CGE analysis for Argentina, Brazil and Uruguay," MPRA Paper 15336, University Library of Munich, Germany.
- John Whalley, 2003.
"Assessing the Benefits to Developing Countries of Liberalization in Services Trade,"
NBER Working Papers
10181, National Bureau of Economic Research, Inc.
- John Whalley, 2004. "Assessing the Benefits to Developing Countries of Liberalisation in Services Trade," The World Economy, Wiley Blackwell, Wiley Blackwell, vol. 27(8), pages 1223-1253, 08.
- Gootiiz, Batshur & Mattoo, Aaditya, 2009. "Services in Doha : what's on the table ?," Policy Research Working Paper Series 4903, The World Bank.
- Joseph F. Francois & Olga Pindyuk & Julia Woerz, 2008.
"Trade Effects of Services Trade Liberalization in the EU,"
FIW Research Reports series, FIW
- Joseph Francois & Olga Pindyuk & Julia Woerz, 2008. "Trade Effects of Services Trade Liberalization in the EU," IIDE Discussion Papers, Institue for International and Development Economics 20080801, Institue for International and Development Economics.
- Juan Blyde & Natalia Sinyavskaya, 2007. "The Impact of Liberalizing Trade in Services on Trade in Goods: An Empirical Investigation," Review of Development Economics, Wiley Blackwell, Wiley Blackwell, vol. 11(3), pages 566-583, 08.
- K.C. Fung & Alan Siu, 2008. "Political Economy Of Service Trade Liberalization And The Doha Round," Pacific Economic Review, Wiley Blackwell, Wiley Blackwell, vol. 13(1), pages 124-133, 02.
- Gani, Azmat & Clemes, Michael D., 2013. "Modeling the effect of the domestic business environment on services trade," Economic Modelling, Elsevier, Elsevier, vol. 35(C), pages 297-304.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).
If references are entirely missing, you can add them using this form.