IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this paper

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.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://pubdb.wiwi.uni-jena.de/pdf/wp_2012_049.pdf
Download Restriction: no

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

as
in new window

Length:
Date of creation: 03 Sep 2012
Handle: RePEc:jrp:jrpwrp:2012-049
Contact details of provider: Postal:
Carl-Zeiss-Strasse 3, 07743 JENA

Phone: +049 3641/ 9 43000
Fax: +049 3641/ 9 43000
Web page: http://www.jenecon.de

More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Debaere, Peter & Görg, Holger & Raff, Horst, 2010. "Greasing the wheels of international commerce: how services facilitate firms' international sourcing," Open Access Publications from Kiel Institute for the World Economy 37475, Kiel Institute for the World Economy (IfW).
  2. Smarzynska, Beata K., 2002. "Does foreign direct investment increase the productivity of domestic firms : in search of spillovers through backward linkages," Policy Research Working Paper Series 2923, The World Bank.
  3. Hoekman, Bernard & Mattoo, Aaditya & Sapir, André, 2007. "The Political Economy of Services Trade Liberalization: A Case for International Regulatory Cooperation?," CEPR Discussion Papers 6457, C.E.P.R. Discussion Papers.
  4. King, Robert G. & Levine, Ross, 1993. "Finance, entrepreneurship and growth: Theory and evidence," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 513-542, December.
  5. Görg, Holger & Hanley, Aoife, 2008. "Services outsourcing and innovation: An empirical investigation," Kiel Working Papers 1417, Kiel Institute for the World Economy (IfW).
  6. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth through Creative Destruction," Econometrica, Econometric Society, vol. 60(2), pages 323-51, March.
  7. Nazrul Islam, 1995. "Growth Empirics: A Panel Data Approach," The Quarterly Journal of Economics, Oxford University Press, vol. 110(4), pages 1127-1170.
  8. Anita Wölfl & Isabelle Wanner & Tomasz Koźluk & Giuseppe Nicoletti, 2009. "Ten Years of Product Market Reform in OECD Countries: Insights from a Revised PMR Indicator," OECD Economics Department Working Papers 695, OECD Publishing.
  9. Pol Antras & Elhanan Helpman, 2003. "Global Sourcing," Harvard Institute of Economic Research Working Papers 2005, Harvard - Institute of Economic Research.
  10. Caselli, Francesco & Esquivel, Gerardo & Lefort, Fernando, 1996. "Reopening the Convergence Debate: A New Look at Cross-Country Growth Empirics," Journal of Economic Growth, Springer, vol. 1(3), pages 363-89, September.
  11. Jesper Jensen & Thomas Rutherford & David Tarr, 2014. "The Impact of Liberalizing Barriers to Foreign Direct Investment in Services: The Case of Russian Accession to the World Trade Organization," World Scientific Book Chapters, in: APPLIED TRADE POLICY MODELING IN 16 COUNTRIES Insights and Impacts from World Bank CGE Based Projects, chapter 6, pages 125-149 World Scientific Publishing Co. Pte. Ltd..
  12. Anderson, T. W. & Hsiao, Cheng, 1982. "Formulation and estimation of dynamic models using panel data," Journal of Econometrics, Elsevier, vol. 18(1), pages 47-82, January.
  13. Robert J. Barro & Jong-Wha Lee, 2010. "A New Data Set of Educational Attainment in the World, 1950-2010," NBER Working Papers 15902, National Bureau of Economic Research, Inc.
  14. Ricardo Hausmann & Jason Hwang & Dani Rodrik, 2005. "What You Export Matters," NBER Working Papers 11905, National Bureau of Economic Research, Inc.
  15. David Roodman, 2009. "How to do xtabond2: An introduction to difference and system GMM in Stata," Stata Journal, StataCorp LP, vol. 9(1), pages 86-136, March.
  16. Anke E. Hoeffler, 2000. "The Augmented Solow Model and the African Growth Debate," CID Working Papers 36, Center for International Development at Harvard University.
  17. Stephen S. Golub & Dana Hajkova & Daniel Mirza & Giuseppe Nicoletti & Kwang-Yeol Yoo, 2003. "The Influence of Policies on Trade and Foreign Direct Investment," OECD Economic Studies, OECD Publishing, vol. 2003(1), pages 7-83.
  18. Yanikkaya, Halit, 2003. "Trade openness and economic growth: a cross-country empirical investigation," Journal of Development Economics, Elsevier, vol. 72(1), pages 57-89, October.
  19. Edwards, Sebastian, 1993. "Openness, Trade Liberalization, and Growth in Developing Countries," Journal of Economic Literature, American Economic Association, vol. 31(3), pages 1358-93, September.
  20. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
  21. Richard Blundell & Steve Bond, 1999. "GMM estimation with persistent panel data: an application to production functions," IFS Working Papers W99/04, Institute for Fiscal Studies.
  22. Francois, Joseph F, 1990. "Producer Services, Scale, and the Division of Labor," Oxford Economic Papers, Oxford University Press, vol. 42(4), pages 715-29, October.
  23. Eschenbach, Felix & Hoekman, Bernard, 2005. "Services policy reform and economic growth in transition economies, 1990-2004," Policy Research Working Paper Series 3663, The World Bank.
  24. Blundell, R. & Bond, S., 1995. "Initial Conditions and Moment Restrictions in Dynamic Panel Data Models," Economics Papers 104, Economics Group, Nuffield College, University of Oxford.
  25. Röller, Lars-Hendrik & Waverman, Leonard, 2000. "Telecommunications Infrastructure And Economic Development: A Simultaneous Approach," CEPR Discussion Papers 2399, C.E.P.R. Discussion Papers.
  26. Nicholas Oulton, 2000. "Must the growth rate decline? Baumol's unbalanced growth revisited," Bank of England working papers 107, Bank of England.
  27. Fink, Carsten & Mattoo, Aaditya & Rathindran, Randeep, 2002. "An assessment of telecommunications reform in developing countries," Policy Research Working Paper Series 2909, The World Bank.
  28. Juan Blyde & Natalia Sinyavskaya, 2007. "The Impact of Liberalizing Trade in Services on Trade in Goods: An Empirical Investigation," Review of Development Economics, Wiley Blackwell, vol. 11(3), pages 566-583, 08.
  29. Arnold, Jens Matthias & Javorcik, Beata & Lipscomb, Molly & Mattoo, Aaditya, 2012. "Services reform and manufacturing performance : evidence from India," Policy Research Working Paper Series 5948, The World Bank.
  30. Nordås, Hildegunn Kyvik, 2010. "Trade in goods and services: Two sides of the same coin?," Economic Modelling, Elsevier, vol. 27(2), pages 496-506, March.
  31. Chris Papageorgiou, . "Trade as a Threshold Variable for Multiple Regimes," Departmental Working Papers 2001-06, Department of Economics, Louisiana State University.
  32. Paul Romer, 1989. "Endogenous Technological Change," NBER Working Papers 3210, National Bureau of Economic Research, Inc.
  33. Seev Hirsch, 1989. "Services and service intensity in international trade," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 125(1), pages 45-60, March.
  34. Judith Giles & Cara Williams, 2001. "Export-led growth: a survey of the empirical literature and some non-causality results. Part 2," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 9(4), pages 445-470.
  35. Levine, Ross, 1996. "Financial development and economic growth : views and agenda," Policy Research Working Paper Series 1678, The World Bank.
  36. Fernandes, Ana M. & Paunov, Caroline, 2012. "Foreign direct investment in services and manufacturing productivity: Evidence for Chile," Journal of Development Economics, Elsevier, vol. 97(2), pages 305-321.
  37. Fernandes, Ana M., 2007. "Structure and performance of the services sector in transition economies," Policy Research Working Paper Series 4357, The World Bank.
  38. de Bruijn, Roland & Kox, Henk & Lejour, Arjan, 2008. "Economic benefits of an Integrated European Market for Services," Journal of Policy Modeling, Elsevier, vol. 30(2), pages 301-319.
  39. Grossman, Gene M & Helpman, Elhanan, 1990. "Comparative Advantage and Long-run Growth," American Economic Review, American Economic Association, vol. 80(4), pages 796-815, September.
  40. Holger Görg & Aoife Hanley & Eric Strobl, 2008. "Productivity effects of international outsourcing: evidence from plant-level data," Canadian Journal of Economics, Canadian Economics Association, vol. 41(2), pages 670-688, May.
  41. Jones, R.W. & Ruane, F., 1988. "Appraising The Options For International Trade In Services," RCER Working Papers 146, University of Rochester - Center for Economic Research (RCER).
  42. Balistreri, Edward J. & Rutherford, Thomas F. & Tarr, David G., 2008. "Modeling services liberalization : the case of Kenya," Policy Research Working Paper Series 4544, The World Bank.
  43. Bayraktar, Nihal & Wang, Yan, 2006. "Banking sector openness and economic growth," Policy Research Working Paper Series 4019, The World Bank.
  44. Guglielmo Barone & Federico Cingano, 2008. "Service regulation and growth: evidence from OECD countries," Temi di discussione (Economic working papers) 675, Bank of Italy, Economic Research and International Relations Area.
  45. Gorg, Holger & Strobl, Eric, 2001. "Multinational Companies and Productivity Spillovers: A Meta-analysis," Economic Journal, Royal Economic Society, vol. 111(475), pages F723-39, November.
  46. Konan, Denise Eby & Maskus, Keith E., 2003. "Quantifying the impact of services liberalization in a developing country," Policy Research Working Paper Series 3193, The World Bank.
  47. Rolf J. Langhammer, 2005. "The EU Offer of Service Trade Liberalization in the Doha Round: Evidence of a Not-Yet-Perfect Customs Union," Journal of Common Market Studies, Wiley Blackwell, vol. 43(2), pages 311-325, 06.
  48. Djajic, Slobodan & Kierzkowski, Henryk, 1989. "Goods, Services and Trade," Economica, London School of Economics and Political Science, vol. 56(221), pages 83-95, February.
  49. Markusen, James R. & Trofimenko, Natalia, 2007. "Teaching locals new tricks: foreign experts as a channel of knowledge transfer," CEPR Discussion Papers 6118, C.E.P.R. Discussion Papers.
  50. El Khoury, Antoine C. & Savvides, Andreas, 2006. "Openness in services trade and economic growth," Economics Letters, Elsevier, vol. 92(2), pages 277-283, August.
  51. Rivera-Batiz, Francisco L. & Rivera-Batiz, Luis A., 1990. "The effects of direct foreign investment in the presence of increasing returns due to specialization," Journal of Development Economics, Elsevier, vol. 34(1-2), pages 287-307, November.
  52. Mishra, Saurabh & Lundstrom, Susanna & Anand, Rahul, 2011. "Service export sophistication and economic growth," Policy Research Working Paper Series 5606, The World Bank.
  53. Maurizio Pugno, 2003. "The service paradox and endogenous economic growth," Department of Economics Working Papers 0301, Department of Economics, University of Trento, Italia.
  54. Van Long, Ngo & Riezman, Raymond & Soubeyran, Antoine, 2005. "Fragmentation and services," The North American Journal of Economics and Finance, Elsevier, vol. 16(1), pages 137-152, March.
  55. Judith Giles & Cara Williams, 2001. "Export-led growth: a survey of the empirical literature and some non-causality results. Part 1," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 9(3), pages 261-337.
  56. Francois, Joseph & Reinert, Kenneth A, 1995. "The Role of Services in the Structure of Production and Trade: Stylized Facts from a Cross-Country Analysis," CEPR Discussion Papers 1228, C.E.P.R. Discussion Papers.
  57. Banga Rashmi, 2005. "Trade in Services: A Review," Global Economy Journal, De Gruyter, vol. 5(2), pages 1-24, June.
  58. Gelauff, George & Lejour, Arjan, 2006. "The new Lisbon Strategy: An estiamtion of the impact of reaching 5 Lisbon targets," MPRA Paper 16168, University Library of Munich, Germany.
  59. Windmeijer, Frank, 2005. "A finite sample correction for the variance of linear efficient two-step GMM estimators," Journal of Econometrics, Elsevier, vol. 126(1), pages 25-51, May.
  60. Ricardo A. López, 2005. "Trade and Growth: Reconciling the Macroeconomic and Microeconomic Evidence," Journal of Economic Surveys, Wiley Blackwell, vol. 19(4), pages 623-648, 09.
  61. Arnold, Jens M. & Javorcik, Beata S. & Mattoo, Aaditya, 2011. "Does services liberalization benefit manufacturing firms?: Evidence from the Czech Republic," Journal of International Economics, Elsevier, vol. 85(1), pages 136-146, September.
  62. Chrysost BANGAKE & Comlanvi Jude EGGOH, 2010. "Further Evidence on Finance-Growth Causality: A Panel Data Analysis," LEO Working Papers / DR LEO 671, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.
  63. Luis A. Rivera-Batiz & Paul M. Romer, 1991. "Economic Integration and Endogenous Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 531-555.
  64. Holger Görg & David Greenaway, 2004. "Much Ado about Nothing? Do Domestic Firms Really Benefit from Foreign Direct Investment?," World Bank Research Observer, World Bank Group, vol. 19(2), pages 171-197.
  65. Jens Matthias Arnold & Aaditya Mattoo & Gaia Narciso, 2008. "Services Inputs and Firm Productivity in Sub-Saharan Africa: Evidence from Firm-Level Data," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 17(4), pages 578-599, August.
  66. Joseph Francois & Julia Woerz, 2008. "Producer Services, Manufacturing Linkages, and Trade," Journal of Industry, Competition and Trade, Springer, vol. 8(3), pages 199-229, December.
  67. Gable, Susanna Lundstrom & Mishra, Saurabh, 2011. "Service Export sophistication and Europe's new growth model," Policy Research Working Paper Series 5793, The World Bank.
  68. Cyrille Schwellnus, 2007. "The Effect of Domestic Regulation on Services Trade Revisited," Working Papers 2007-08, CEPII research center.
  69. Bianka Dettmer, 2012. "The European Union's service directive: Contrasting ex ante estimates with empirical evidence," Jena Economic Research Papers 2012-019, Friedrich-Schiller-University Jena.
  70. Blalock, Garrick & Gertler, Paul J., 2008. "Welfare gains from Foreign Direct Investment through technology transfer to local suppliers," Journal of International Economics, Elsevier, vol. 74(2), pages 402-421, March.
  71. Nickell, Stephen J, 1981. "Biases in Dynamic Models with Fixed Effects," Econometrica, Econometric Society, vol. 49(6), pages 1417-26, November.
  72. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  73. Sasaki, Hiroaki, 2007. "The rise of service employment and its impact on aggregate productivity growth," Structural Change and Economic Dynamics, Elsevier, vol. 18(4), pages 438-459, December.
  74. Oscar Bajo-Rubio & Antonio G. GÛmez-Plana, . "Simulating the effects of the European single market: a CGE analysis for Spain," Studies on the Spanish Economy 208, FEDEA.
  75. Baumol, William J, 1982. "Contestable Markets: An Uprising in the Theory of Industry Structure," American Economic Review, American Economic Association, vol. 72(1), pages 1-15, March.
  76. Ishikawa, Jota, 1992. "Trade patterns and gains from trade with an intermediate good produced under increasing returns to scale," Journal of International Economics, Elsevier, vol. 32(1-2), pages 57-81, February.
  77. B. Bhaskara Rao & Maheshwar Rao, 2009. "Openness and growth in Fiji: some time series evidence," Applied Economics, Taylor & Francis Journals, vol. 41(13), pages 1653-1662.
  78. Musleh-Ud Din & Ejaz Ghani & Omer Siddique, 2003. "Openness and Economic Growth in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 42(4), pages 795-807.
  79. Judith A. Giles, & Cara L. Williams, 1999. "Export-led Growth: A Survey of the Empirical Literature and Some Noncausality Results," Econometrics Working Papers 9901, Department of Economics, University of Victoria.
  80. Ghani, Ejaz & Kharas, Homi, 2010. "The Service Revolution," World Bank - Economic Premise, The World Bank, issue 14, pages 1-5, May.
  81. Paul Conway & Giuseppe Nicoletti, 2006. "Product Market Regulation in the Non-Manufacturing Sectors of OECD Countries: Measurement and Highlights," OECD Economics Department Working Papers 530, OECD Publishing.
  82. Markusen, James R, 1989. "Trade in Producer Services and in Other Specialized Intermediate Inputs," American Economic Review, American Economic Association, vol. 79(1), pages 85-95, March.
  83. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
  84. James Markusen & Thomas Rutherford & David Tarr, 2005. "Trade and direct investment in producer services and the domestic market for expertise," Canadian Journal of Economics, Canadian Economics Association, vol. 38(3), pages 758-777, August.
  85. Melvin, James R, 1989. "Trade in Producer Services: A Heckscher-Ohlin Approach," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1180-1196, October.
  86. repec:hrv:faseco:4784029 is not listed on IDEAS
  87. Fernandes, Ana Margarida & Mattoo, Aaditya, 2009. "Professional services and development : a study of Mozambique," Policy Research Working Paper Series 4870, The World Bank.
  88. Ros, Agustin J, 1999. "Does Ownership or Competition Matter? The Effects of Telecommunications Reform on Network Expansion and Efficiency," Journal of Regulatory Economics, Springer, vol. 15(1), pages 65-92, January.
  89. van Marrewijk, Charles & Stibora, Joachim & de Vaal, Albert & Viaene, Jean-Marie, 1997. "Producer services, comparative advantage, and international trade patterns," Journal of International Economics, Elsevier, vol. 42(1-2), pages 195-220, February.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:jrp:jrpwrp:2012-049. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Markus Pasche)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.