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Trade in Business Services in General Equilibrium

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  • Markusen, James R.
  • Strand, Bridget

Abstract

Trade in business services has been attracting attention from academic researchers, policy makers, and business journalists. While there are many anecdotes, there has been little in the way of formal theory applied to this issue. In this paper, we adapt a general model of fragmentation of production activities to try to capture the specific features of business services. Following a general discussion, we calibrate a numerical general-equilibrium simulation model to a situation in which both trade and foreign investment in services are initially banned to technically infeasible. We then compute three counter-factual scenarios: one in which trade but not investment in services is feasible or allowed, one in which investment but not trade is allowed, and one in which both trade and investment in services are allowed.

Suggested Citation

  • Markusen, James R. & Strand, Bridget, 2007. "Trade in Business Services in General Equilibrium," CEPR Discussion Papers 6080, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:6080
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Tobal, Martin, 2011. "A Rationale For Evidence On Service Offshoring," University of California at San Diego, Economics Working Paper Series qt5s4056z6, Department of Economics, UC San Diego.
    2. Mulder, Nanno & Sáez, Sebastián & De Camino, Claudia & Finot, Alfonso, 2007. "Trade in services in Latin America and the Caribbean: an analysis of recent trends," Comercio Internacional 84, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    3. Rosario Crinò, 2012. "Service Offshoring and the Skill Composition of Labour Demand," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 74(1), pages 20-57, February.
    4. Chisari, Omar O. & Maquieyra, Javier & Romero, Carlos A., 2009. "Liberalization of trade in services: A CGE analysis for Argentina, Brazil and Uruguay," MPRA Paper 15336, University Library of Munich, Germany.
    5. Rosario Crinò, "undated". "Service Offshoring and White-Collar Employment," Working Papers 391, Barcelona Graduate School of Economics.
    6. Zheng, Jianghuai & Zhang, Lili & Wang, Yu, 2010. "The underdevelopment of service industry in China: an empirical study of cities in Yangtze River Delta," MPRA Paper 33125, University Library of Munich, Germany, revised Jun 2011.
    7. Zhang, Jingjing, 2012. "Inflow of labour, producer services and wage inequality," Economics Letters, Elsevier, vol. 117(3), pages 600-603.
    8. Jianghuai Zheng & Lili Zhang & Yu Wang, 2011. "The underdevelopment of service industry in china: An empirical study of cities in Yangtze River Delta," Frontiers of Economics in China, Springer;Higher Education Press, vol. 6(3), pages 413-446, September.
    9. Frank A.G. den Butter & Christiaan Pattipeilohy, 2007. "Productivity Gains from Offshoring: an Empirical Analysis for the Netherlands," Tinbergen Institute Discussion Papers 07-089/3, Tinbergen Institute.
    10. Erik der Marel & Sébastien Miroudot, 2014. "The economics and political economy of going beyond the GATS," The Review of International Organizations, Springer, vol. 9(2), pages 205-239, June.
    11. Zhang, Jingjing, 2013. "Factor mobility and skilled–unskilled wage inequality in the presence of internationally traded product varieties," Economic Modelling, Elsevier, vol. 30(C), pages 579-585.
    12. Anwar, Sajid, 2009. "Sector specific foreign investment, labour inflow, economies of scale and welfare," Economic Modelling, Elsevier, vol. 26(3), pages 626-630, May.
    13. Chiquiar Daniel & Tobal Martín & Yslas Renato, 2016. "Measuring and Understanding Trade in Service Tasks," Working Papers 2016-05, Banco de México.

    More about this item

    Keywords

    business services; foreign investment in services; fragmentation; offshoring; outsourcing; trade in services;

    JEL classification:

    • F0 - International Economics - - General
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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