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Trade in goods and services: Two sides of the same coin?

  • Nordås, Hildegunn Kyvik

This study analyzes the interrelationship between goods and services in production and trade using the most recent input-output tables for all OECD countries. It first describes the role of services in production and trade in goods. Next, it proposes two models for analyzing the impact of services trade liberalization on industrial structure. The first captures the role of trade in tasks when countries have different technology i) in production of services; and ii) in organizing production. The latter has to the author's knowledge not been analyzed in the trade literature before. Countries with superior organizational technology (e.g. Japan) will strengthen their comparative advantage in manufacturing following trade liberalization in services. The second model explores the interrelationship between intermediate goods and services i) when they are substitutes; and ii) when they are complements. In both models the gains from trade liberalization is non-linear in trade costs. Going the last mile of liberalization has a much larger impact than taking the first steps.

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Article provided by Elsevier in its journal Economic Modelling.

Volume (Year): 27 (2010)
Issue (Month): 2 (March)
Pages: 496-506

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Handle: RePEc:eee:ecmode:v:27:y:2010:i:2:p:496-506
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/30411

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  1. Joseph Francois & Hans Van Meijl & Frank Van Tongeren, 2005. "Trade liberalization in the Doha Development Round," Economic Policy, CEPR;CES;MSH, vol. 20(42), pages 349-391, 04.
  2. Markusen, James R, 1989. "Trade in Producer Services and in Other Specialized Intermediate Inputs," American Economic Review, American Economic Association, vol. 79(1), pages 85-95, March.
  3. Piermartini, Roberta & Teh, Robert, 2005. "Demystifying modelling methods for trade policy," WTO Discussion Papers 10, World Trade Organization (WTO), Economic Research and Statistics Division.
  4. Krugman, Paul R & Venables, Anthony J, 1995. "Globalization and the Inequality of Nations," The Quarterly Journal of Economics, MIT Press, vol. 110(4), pages 857-80, November.
  5. Essaji, Azim, 2008. "Technical regulations and specialization in international trade," Journal of International Economics, Elsevier, vol. 76(2), pages 166-176, December.
  6. Manova, Kalina, 2008. "Credit constraints, equity market liberalizations and international trade," Journal of International Economics, Elsevier, vol. 76(1), pages 33-47, September.
  7. James Markusen & Thomas Rutherford & David Tarr, 2005. "Trade and direct investment in producer services and the domestic market for expertise," Canadian Journal of Economics, Canadian Economics Association, vol. 38(3), pages 758-777, August.
  8. van Marrewijk, Charles & Stibora, Joachim & de Vaal, Albert & Viaene, Jean-Marie, 1997. "Producer services, comparative advantage, and international trade patterns," Journal of International Economics, Elsevier, vol. 42(1-2), pages 195-220, February.
  9. Hildegunn Kyvik Nordås, 2008. "The Impact of Services Trade Liberalisation on Trade in Non-Agricultural Products," OECD Trade Policy Papers 81, OECD Publishing.
  10. Rudolf Adlung, 2006. "Services Negotiations in the Doha Round: Lost in Flexibility?," Journal of International Economic Law, Oxford University Press, vol. 9(4), pages 865-893, December.
  11. Sébastien Miroudot & Rainer Lanz & Alexandros Ragoussis, 2009. "Trade in Intermediate Goods and Services," OECD Trade Policy Papers 93, OECD Publishing.
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