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Business services outsourcing and economic growth: Evidence from a dynamic panel data approach

  • Bianka Dettmer

    ()

    (Friedrich Schiller University Jena, Chair of Economic Policy)

Innovations in information- and telecommunication technology render the proximity requirement between business partners obsolete and make business service outsourcing via cross-border trade more feasible. Although the (service-led) growth prospects have been widely discussed, evidence at the country level is scarce. In this paper, we evaluate the effect of openness to trade commercial- and specialized business services on long-run growth by applying a dynamic panel data approach to account for unobserved country specific effects and endogenous growth determinants. The system GMM estimates validate that a long-run growth effect for countries taking part in the outsourcing process of producer services exists. The growth effect is significantly stronger in a sample of Non-OECD countries and suggests a kind of catching-up process. Evidence from two stage least square indicate that the impact of professional service regulation on long-run growth work rather indirectly through trade flows.

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Paper provided by Friedrich-Schiller-University Jena in its series Jena Economic Research Papers with number 2012-049.

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Date of creation: 03 Sep 2012
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Handle: RePEc:jrp:jrpwrp:2012-049
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