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

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  • Nordås, Hildegunn Kyvik

Abstract

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.

Suggested Citation

  • Nordås, Hildegunn Kyvik, 2010. "Trade in goods and services: Two sides of the same coin?," Economic Modelling, Elsevier, vol. 27(2), pages 496-506, March.
  • Handle: RePEc:eee:ecmode:v:27:y:2010:i:2:p:496-506
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    References listed on IDEAS

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    Cited by:

    1. Martin Leroch & Carlo Reggiani & Gianpaolo Rossini & Eugenio Zucchelli, 2012. "Religious attitudes and home bias: theory and evidence from a pilot study," The School of Economics Discussion Paper Series 1206, Economics, The University of Manchester.
    2. Francesca Barbiero & Michael Blanga-Gubbay & Valeria Cipollone & Koen De Backer & Sébastien Miroudot & Alexandros Ragoussis & André Sapir & Reinhilde Veugelers & Erkki Vihriälä & Guntram B. Wolff & Ge, . "Manufacturing Europe’s future," Blueprints, Bruegel, number 795.
    3. Alege, Philip & Ogundipe, Adeyemi, 2013. "The Role of Services Trade in Economic Development," MPRA Paper 51695, University Library of Munich, Germany.
    4. Gheorghe Savoiu & Consuela Necsulescu & Marian Taicu & Luminita Serbanescu, Emil Crisan, 2014. "Level of Satisfaction of Educational Services Consumers. Impact and Consequences for the Responsibility of an Economics Faculty," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 16(35), pages 1-88, February.
    5. Magnus Lodefalk, 2014. "The role of services for manufacturing firm exports," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), pages 59-82.
    6. Lodefalk, Magnus, 2015. "Servification of Firms and Trade Policy Implications," Working Papers 2015:1, Örebro University, School of Business, revised 17 May 2016.
    7. Karam, Fida & Zaki, Chahir, 2015. "Trade volume and economic growth in the MENA region: Goods or services?," Economic Modelling, Elsevier, vol. 45(C), pages 22-37.
    8. Bianka Dettmer, 2012. "Business services outsourcing and economic growth: Evidence from a dynamic panel data approach," Jena Economic Research Papers 2012-049, Friedrich-Schiller-University Jena.

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