The role of regional trade agreements in promoting international trade in services

This study presents the authors’ specification of a gravity model to assess the significance of the impact of trade agreements containing provisions on the liberalization of market access to services on the growth of their exports. The purpose of the article is to determine whether an existing trade agreement has a significant positive effect on the intensification of services flows, both in general and by sector. With the development of telecommunications technologies and the destabilization of goods trade due to the pandemic and increasing fragmentation of the global economy, trade in services has demonstrated steady growth and makes a significant contribution to nations’ GDP. Today, the share of agreements that include provisions on the liberalization of trade in services has significantly increased. The nature and specifics of service regulation complicate the application of traditional market analysis methods used for goods to assess the effects of trade agreements. The gravity model specification developed by the authors helps solve this problem. The study confirms a significant positive impact of trade agreements on the growth of trade in services. The most significant impact of trade agreements is observed in the insurance services sector. A notable but less substantial impact is found in the construction, telecommunications, computer and information, financial, and business services sectors. However, no significant impact was revealed for transport services and travel. Thus, the study empirically confirms the importance of trade agreements in developing international economic relations in the service sector.