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Linder hypothesis revisited: Does it hold for services trade?

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  • Fu, Dahai
  • Chen, Yakun
  • Zhang, Ying

Abstract

This article examines how differences in the income level and income inequality of trading partners impact their bilateral trade in services. Results show that the Linder hypothesis holds at the aggregate level. Both similar levels of per capita income and income inequality in two countries increase services trade. However, the precise impact varies with the particular service sector, which highlights the importance of addressing the heterogeneity of service sectors.

Suggested Citation

  • Fu, Dahai & Chen, Yakun & Zhang, Ying, 2020. "Linder hypothesis revisited: Does it hold for services trade?," Economics Letters, Elsevier, vol. 195(C).
    • Handle: RePEc:eee:ecolet:v:195:y:2020:i:c:s0165176520302883
    DOI: 10.1016/j.econlet.2020.109469
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    References listed on IDEAS

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    Cited by:

    1. Dongin Kim & Sandro Steinbach, 2024. "The Linder hypothesis for foreign direct investment revisited," Review of International Economics, Wiley Blackwell, vol. 32(4), pages 1901-1928, September.
    2. Socrates K. Majune & Judy K. Kaaria & Evelyne N. Kihiu, 2023. "Determinants of intra‐COMESA trade in services," African Development Review, African Development Bank, vol. 35(4), pages 416-428, December.
    3. Lin, Vera Shanshan & Qin, Yuan & Li, Gang & Jiang, Fan, 2022. "Multiple effects of “distance” on domestic tourism demand: A comparison before and after the emergence of COVID-19," Annals of Tourism Research, Elsevier, vol. 95(C).
    4. Toraubally, Waseem A., 2023. "Comparative advantage with many goods: New treatment and results," European Journal of Operational Research, Elsevier, vol. 311(3), pages 1188-1201.
    5. Kitenge, Erick, 2021. "The Linder hypothesis during the globalization era," Economics Letters, Elsevier, vol. 200(C).

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    Keywords

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    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L80 - Industrial Organization - - Industry Studies: Services - - - General

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