IDEAS home Printed from https://ideas.repec.org/p/nbb/reswpp/201710-329.html
   My bibliography  Save this paper

The interconnections between services and goods trade at the firm-level

Author

Listed:
  • Andrea Ariu

    () (Economics Department, LMU University Munich, Germany; IFO, Germany; CRENOS)

  • Holger Breinlich

    () (School of Economics, University of Nottingham, UK, CEP, UK and CEPR, UK)

  • Gregory Corcos

    () (CREST and Economics Department, Ecole polytechnique, France.)

  • Giordano Mion

    () (Department of Economics, University of Sussex, UK; CEP, UK; CEPR, UK and CESifo, Germany.)

Abstract

In this paper we study how international trade in goods and services interact at the firm level. Using a rich dataset on Belgian firms during the period 1995-2005, we show that: i) firms are much more likely to source services and goods inputs from the same origin country rather than from different ones; ii) increases in barriers to imports of goods reduce firm-level imports of services from the same market, and conversely. We build upon a discrete-choice model of goods and services input sourcing that can reproduce these facts to design our econometric strategy. The results suggest that a liberalization of service trade has direct and sizable effects on goods trade and vice-versa. Moreover, sourcing goods and services from the same origin brings substantial complementarities to both.

Suggested Citation

  • Andrea Ariu & Holger Breinlich & Gregory Corcos & Giordano Mion, 2017. "The interconnections between services and goods trade at the firm-level," Working Paper Research 329, National Bank of Belgium.
  • Handle: RePEc:nbb:reswpp:201710-329
    as

    Download full text from publisher

    File URL: https://www.nbb.be/doc/oc/repec/reswpp/wp329en.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Mary Amiti & Oleg Itskhoki & Jozef Konings, 2014. "Importers, Exporters, and Exchange Rate Disconnect," American Economic Review, American Economic Association, vol. 104(7), pages 1942-1978, July.
    2. Gabriel Felbermayr & Mario Larch, 2013. "The Transatlantic Trade and Investment Partnership (TTIP): Potentials, Problems and Perspectives," CESifo Forum, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 14(2), pages 49-60, August.
    3. Thomas Chaney, 2008. "Distorted Gravity: The Intensive and Extensive Margins of International Trade," American Economic Review, American Economic Association, vol. 98(4), pages 1707-1721, September.
    4. Christian Broda & David E. Weinstein, 2006. "Globalization and the Gains From Variety," The Quarterly Journal of Economics, Oxford University Press, vol. 121(2), pages 541-585.
    5. Ariu, Andrea, 2016. "Crisis-proof services: Why trade in services did not suffer during the 2008–2009 collapse," Journal of International Economics, Elsevier, vol. 98(C), pages 138-149.
    6. Jonathan Eaton & Samuel Kortum & Francis Kramarz, 2011. "An Anatomy of International Trade: Evidence From French Firms," Econometrica, Econometric Society, vol. 79(5), pages 1453-1498, September.
    7. repec:bla:worlde:v:40:y:2017:i:9:p:1866-1889 is not listed on IDEAS
    8. Breinlich, Holger & Criscuolo, Chiara, 2011. "International trade in services: A portrait of importers and exporters," Journal of International Economics, Elsevier, vol. 84(2), pages 188-206, July.
    9. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, vol. 93(1), pages 170-192, March.
    10. Crozet, Matthieu & Milet, Emmanuel & Mirza, Daniel, 2016. "The impact of domestic regulations on international trade in services: Evidence from firm-level data," Journal of Comparative Economics, Elsevier, vol. 44(3), pages 585-607.
    11. Joseph Francois & Bernard Hoekman, 2010. "Services Trade and Policy," Journal of Economic Literature, American Economic Association, vol. 48(3), pages 642-692, September.
    12. Marcel P. Timmer & Bart Los & Robert Stehrer & Gaaitzen J. Vries, 2013. "Fragmentation, incomes and jobs: an analysis of European competitiveness," Economic Policy, CEPR;CES;MSH, vol. 28(76), pages 613-661, October.
    13. Breinlich, Holger & Soderbery, Anson & Wright, Greg C., 2014. "From selling goods to selling services: firm responses to trade liberalization," LSE Research Online Documents on Economics 60523, London School of Economics and Political Science, LSE Library.
    14. Pol Antràs & Teresa C. Fort & Felix Tintelnot, 2017. "The Margins of Global Sourcing: Theory and Evidence from US Firms," American Economic Review, American Economic Association, vol. 107(9), pages 2514-2564, September.
    15. Kasahara, Hiroyuki & Lapham, Beverly, 2013. "Productivity and the decision to import and export: Theory and evidence," Journal of International Economics, Elsevier, vol. 89(2), pages 297-316.
    16. Andrea Ariu & Giordano Mion, 2017. "Service Trade and Occupational Tasks: An Empirical Investigation," The World Economy, Wiley Blackwell, vol. 40(9), pages 1866-1889, September.
    17. Lee, Lung-Fei, 1983. "Generalized Econometric Models with Selectivity," Econometrica, Econometric Society, vol. 51(2), pages 507-512, March.
    18. Thierry Mayer & Gianmarco Ottaviano, 2007. "The happy few: the internationalisation of European firms New facts based on firm-level evidence," Sciences Po publications info:hdl:2441/10147, Sciences Po.
    19. Matthieu Crozet & Emmanuel Milet, 2014. "The Servitization of French Manufacturing Firms," Working Papers 2014-10, CEPII research center.
    20. Mion, Giordano & Zhu, Linke, 2013. "Import competition from and offshoring to China: A curse or blessing for firms?," Journal of International Economics, Elsevier, vol. 89(1), pages 202-215.
    21. repec:bla:jemstr:v:26:y:2017:i:4:p:820-841 is not listed on IDEAS
    22. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, March.
    23. Mirabelle Muûls & Mauro Pisu, 2009. "Imports and Exports at the Level of the Firm: Evidence from Belgium," The World Economy, Wiley Blackwell, vol. 32(5), pages 692-734, May.
    24. François Bourguignon & Martin Fournier & Marc Gurgand, 2007. "Selection Bias Corrections Based On The Multinomial Logit Model: Monte Carlo Comparisons," Journal of Economic Surveys, Wiley Blackwell, vol. 21(1), pages 174-205, February.
    25. Thierry Mayer & Gianmarco Ottaviano, 2008. "The Happy Few: The Internationalisation of European Firms," Intereconomics: Review of European Economic Policy, Springer;German National Library of Economics;Centre for European Policy Studies (CEPS), vol. 43(3), pages 135-148, May.
    26. Francois, Joseph & van Meijl, Hans & van Tongeren, Frank, 2003. "Trade Liberalization and Developing Countries Under the Doha Round," CEPR Discussion Papers 4032, C.E.P.R. Discussion Papers.
    27. Matthieu Crozet & Emmanuel Milet, 2017. "Should everybody be in services? The effect of servitization on manufacturing firm performance," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 26(4), pages 820-841, December.
    28. repec:spo:wpecon:info:hdl:2441/10147 is not listed on IDEAS
    29. Andrea Ariu, 2016. "Services versus goods trade: a firm-level comparison," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 152(1), pages 19-41, February.
    30. James E. Anderson & Catherine A. Milot & Yoto V. Yotov, 2014. "How Much Does Geography Deflect Services Trade? Canadian Answers," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 55, pages 791-818, August.
    31. Andrew B. Bernard & Ilke Van Beveren & Hylke Vandenbussche, 2010. "Multi-product exporters, carry-along trade and the margins of trade," Working Paper Research 203, National Bank of Belgium.
    32. Markus Kelle & Jörn Kleinert, 2010. "German Firms in Service Trade," Applied Economics Quarterly (formerly: Konjunkturpolitik), Duncker & Humblot, Berlin, vol. 56(1), pages 51-72.
    33. Andrea Ariu, 2016. "Services versus goods trade: a firm-level comparison," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 152(1), pages 19-41, February.
    34. Egger, Peter & Larch, Mario & Staub, Kevin E, 2012. "Trade Preferences and Bilateral Trade in Goods and Services: A Structural Approach," CEPR Discussion Papers 9051, C.E.P.R. Discussion Papers.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Andrea Ariu & Florian Mayneris & Mathieu Parenti, 2018. "One way to the top : How services boost the demand for goods," Working Paper Research 340, National Bank of Belgium.

    More about this item

    Keywords

    Trade in Services; Trade in Goods; Complementarity; Firm-level Analysis; Discrete Choice Models.;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • L80 - Industrial Organization - - Industry Studies: Services - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbb:reswpp:201710-329. 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: (). General contact details of provider: http://edirc.repec.org/data/bnbgvbe.html .

    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 CitEc recognized a reference but did not link an item in RePEc 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.