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The Impact of Services Trade Liberalisation on Trade in Non-Agricultural Products

Author

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  • Hildegunn Kyvik Nordås

    (OECD)

Abstract

This study finds that trade in services contributes to a broader services supplier base that supports competitiveness in high-technology and high-value added manufacturing. It is shown that with low, but still significant trade costs in services, large countries have a comparative advantage for services-intensive manufactured goods, an advantage that is enhanced if the country also produces intermediate services more effectively or has lower barriers to entry for services suppliers. Countries with superior organisational technology (using producer services more effectively) will strengthen their comparative advantage in manufacturing following services trade liberalisation. The impact of services trade liberalisation on trade in manufacturing is non-linear. Until trade costs have reached a threshold level the trade response is quite modest. Consequently, going the last mile of services trade liberalisation, including lowering regulatory barriers, will have the largest impact. Exports of labour-intensive manufactures require a host of supporting services and the need for these services has increased over time due to rapidly changing consumer tastes and growing consumer awareness of health, safety and social standards. In order to support industrial development, developing countries need to focus their services trade policy not only on offensive interests, but also on ensuring that local manufacturers have the best possible access to services. Improving market access in telecommunications and business services; particularly legal services, accounting, advertising and technical consulting services would have the largest impact.

Suggested Citation

  • Hildegunn Kyvik Nordås, 2008. "The Impact of Services Trade Liberalisation on Trade in Non-Agricultural Products," OECD Trade Policy Papers 81, OECD Publishing.
  • Handle: RePEc:oec:traaab:81-en
    DOI: 10.1787/227107117401
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    Cited by:

    1. 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.
    2. Hatzigeorgiou, Andreas & Lodefalk, Magnus, 2015. "The Role of Foreign Networks for Firm Export of Services," Working Papers 2015:6, Örebro University, School of Business.

    More about this item

    Keywords

    general equilibrium; linkages; services trade liberalisation;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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