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The impact of mode 4 on trade in goods and services

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  • Jansen, Marion
  • Piermartini, Roberta

Abstract

This paper estimates the impact of liberalization of temporary movements of individual service suppliers on trade in goods and services. In particular, the paper looks at the impact of the so-called forth mode to provide a service on trade in services under the other three modes: cross-border service supply (Mode 1), consumption abroad (Mode 2) and commercial presence abroad (Mode 3). Estimates are obtained using a gravity model of trade augmented for a measure of temporary movements of service suppliers. Estimates of the size of a country's Mode 4 trade in services are based on specific information regarding the number of temporary foreign workers occupied in the service sector and their estimated average earnings, thus overcoming the limitations of traditional measures of Mode 4 based on remittances or compensation for employees. We find a positive and significant effect of temporary movements of service providers on merchandise trade and services trade under Mode 1 and 3. No significant relationship is found between services trade under Mode 2 and Mode 4.

Suggested Citation

  • Jansen, Marion & Piermartini, Roberta, 2004. "The impact of mode 4 on trade in goods and services," WTO Staff Working Papers ERSD-2004-07, World Trade Organization (WTO), Economic Research and Statistics Division.
    • Handle: RePEc:zbw:wtowps:ersd200407
    DOI: 10.30875/cfdf2f5a-en
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    References listed on IDEAS

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    Cited by:

    1. Rueda-Cantuche, José & Kerner, Riina & Cernat, Lucian & Ritola, Veijo, 2016. "Trade in services by GATS modes of supply: Statistical concepts and first EU estimates," DG TRADE Chief Economist Notes 2016-3, Directorate General for Trade, European Commission.
    2. Nora Dihel & Felix Eschenbach & Ben Shepherd, 2006. "South-South Services Trade," OECD Trade Policy Papers 39, OECD Publishing.
    3. Krushna Mohan Pattanaik, 2010. "Challenges and Prospects in the Measurement of Trade in Services," Working Papers 241, Institute for Social and Economic Change, Bangalore.
    4. Cernat, Lucian & D'Andrea, Barbara & Liberatore, Antonella & Maurer, Andreas & Wettstein, Steen, 2018. "Towards a Global Data Set on Trade in Services By Sector and Mode of Supply," Conference papers 332924, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    5. Wettstein, Steen & Liberatore, Antonella & Magdeleine, Joscelyn & Maurer, Andreas, 2019. "A Global Trade In Services Data Set by Sector and by Mode of Supply (TISMOS)," Conference papers 333058, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.

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    More about this item

    Keywords

    Mode 4; trade negotiations; trade in services; FDI;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F29 - International Economics - - International Factor Movements and International Business - - - Other

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