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Global Trade in Services: Fear, Facts, and Offshoring

Author

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  • J. Bradford Jensen

    () (Peterson Institute for International Economics)

Abstract

The service sector is large and growing. Additionally, international trade in services is growing rapidly. Yet there is a dearth of empirical research on the size, scope and potential impact of services trade. The underlying source of this gap is well-known—official statistics on the service sector in general, and trade in services in particular, lack the level of detail available for the manufacturing sector in many dimensions. Because services are such a large and important component of the US economy, understanding the implications of increased trade in services is crucial to the trade liberalization agenda going forward. In this path-breaking book, J. Bradford Jensen conducts primary research using a range of data sources to produce the most detailed and robust portrait available on the size, scope, and potential impact of trade in services on the US economy. Jensen presents new evidence on the prevalence of service firm participation in international trade. He finds that, in spite of US comparative advantage in service activities, service firms’ export participation lags manufacturing firms. Jensen evaluates the impediments to services trade and finds evidence that there is considerable room for liberalization—especially among the large, fast-growing developing economies. The policy recommendations coming out of this path-breaking study are quite clear. The United States should not fear trade in services. It should be pushing aggressively for services trade liberalization. Because other advanced economies have similar comparative advantage in service, the United States should make common cause with the European Union and other advanced economies to encourage the large, fast-growing developing economies to liberalize their service sectors through multilateral negotiations in the General Agreement on Trade in Services and the Government Procurement Agreement. Jensen notes that the coming global infrastructure building boom is of historic proportions and provides an enormous opportunity for US service firms if the proper policies are in place. Increased trade in services might help rebalance the global economy, and both developed and developing economies would benefit from the productivity-enhancing reallocation brought by increased trade in services.

Suggested Citation

  • J. Bradford Jensen, 2011. "Global Trade in Services: Fear, Facts, and Offshoring," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 6017.
  • Handle: RePEc:iie:ppress:6017
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    Citations

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    Cited by:

    1. Fiorini, Matteo; Lebrand, Mathilde, 2016. "The Political Economy of Services Trade Agreements," Economics Working Papers ECO2016/05, European University Institute.
    2. repec:bla:indres:v:56:y:2017:i:3:p:489-513 is not listed on IDEAS
    3. repec:cup:intorg:v:71:y:2017:i:03:p:423-457_00 is not listed on IDEAS
    4. Dincer, N. Nergiz & Tekin-Koru, Ayca, 2017. "Gains from trade due to within-firm productivity: Does services exporting matter?," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 11, pages 1-17.
    5. Ryan Rutkowski, 2015. "Service Sector Reform in China," Policy Briefs PB15-2, Peterson Institute for International Economics.
    6. Kyle Bagwell & Chad P. Bown & Robert W. Staiger, 2016. "Is the WTO Passé?," Journal of Economic Literature, American Economic Association, vol. 54(4), pages 1125-1231, December.
    7. Minondo, Asier, 2015. "The geography, variety and dynamics of service exports in Spain: a firm-level analysis," MPRA Paper 66993, University Library of Munich, Germany.
    8. Philipp Harms & Daria Shuvalova, 2016. "Cultural Distance and International Trade in Services: A Disaggregate View," Working Papers 1606, Gutenberg School of Management and Economics, Johannes Gutenberg-Universität Mainz.
    9. Barbara Dluhosch & Thorsten Hens, 2016. "A rigorous approach to business services offshoring and North--North trade," Applied Economics, Taylor & Francis Journals, vol. 48(15), pages 1390-1401, March.
    10. Kent Eliasson & Pär Hansson, 2016. "Are workers more vulnerable in tradable industries?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 152(2), pages 283-320, May.
    11. repec:eee:chieco:v:46:y:2017:i:s:p:s3-s16 is not listed on IDEAS
    12. Johannes Schwarzer, 2017. "The Effects of Exporting on Labour Productivity: Evidence from German Firms," Working Papers 1702, Council on Economic Policies.
    13. Davidson, Carl & Heyman, Fredrik & Matusz, Steven & Sjöholm, Fredrik & Zhu, Susan Chun, 2017. "Global engagement and the occupational structure of firms," European Economic Review, Elsevier, vol. 100(C), pages 273-292.
    14. Elena Popkova & Tatiana Kozhevnikova & Elena Malyshkina, 2014. "Characteristic features of new quality of economic growth at the present stage in the context of globalization," Review of Applied Socio-Economic Research, Pro Global Science Association, vol. 8(2), pages 161-169, June.
    15. repec:wsi:rpbfmp:v:16:y:2013:i:01:n:s0219091513500069 is not listed on IDEAS
    16. Jensen, J. Bradford & Quinn, Dennis P. & Weymouth, Stephen, 2017. "Winners and Losers in International Trade: The Effects on US Presidential Voting," International Organization, Cambridge University Press, vol. 71(03), pages 423-457, June.
    17. Arnarson, Björn Thor & Gullstrand, Joakim, 2016. "Linking Services to Manufacturing Exports," Working Papers 2016:27, Lund University, Department of Economics, revised 24 Feb 2017.
    18. Chiquiar Daniel & Tobal Martín & Yslas Renato, 2016. "Measuring and Understanding Trade in Service Tasks," Working Papers 2016-05, Banco de México.
    19. Dincer, Nergiz & Tekin-Koru, Ayça, 2015. "A League of Their Own: Services Exporters –A Developing Country Perspective-," MPRA Paper 64363, University Library of Munich, Germany.
    20. Johannes Schwarzer, 2015. "Services Trade and Employment," Discussion Notes 1502, Council on Economic Policies.
    21. Shafik Hebous & Niels Johannesen, 2015. "At Your Service! The Role of Tax Havens in International Trade with Services," CESifo Working Paper Series 5414, CESifo Group Munich.

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