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What drives trade in services? Lessons from the Nordics

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Abstract

The contribution of this paper to the literature is to make an empirical assessment of the relative importance of non-actionable institutional and cultural factors and actionable policy measures for services market integration, using the Nordic countries as a case study. It finds that intra-Nordic trade in services is about 2.5 times larger than predicted from the gravity model. This may not be surprising since the Nordics are perceived as a cluster of similar countries, but a detailed analysis of the Nordics’ policy framework, trade agreements, institutional and cultural factors concludes that these cannot explain the intra-Nordic bias. An unexplained “Nordicness” factor of this magnitude indicates that integration of services markets may rely on deeper institutional and cultural factors that do not readily lend themselves to trade negotiations. Conversely, trade agreements may yield the largest benefits among countries that share common cultural and institutional features.

Suggested Citation

  • Kyvik Nordås, Hildegunn, 2017. "What drives trade in services? Lessons from the Nordics," Working Papers 2017:3, Örebro University, School of Business.
  • Handle: RePEc:hhs:oruesi:2017_003
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    File URL: https://www.oru.se/globalassets/oru-sv/institutioner/hh/workingpapers/workingpapers2017/wp-3-2017.pdf
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    Cited by:

    1. Hoekman, Bernard & Shepherd, Ben, 2019. "Services Trade Policies and Economic Integration: New Evidence for Developing Countries," CEPR Discussion Papers 14181, C.E.P.R. Discussion Papers.

    More about this item

    Keywords

    Services trade; trade barriers; regulation;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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