Servicification in Global Value Chains and Services Trade Restrictions: The Case of Asian Economies

This study aims to quantify the contribution of services trade restrictions to underdevelopment of servicification in global value chains (GVCs) in Asian economies, while this topic was rarely explored in previous research. For the methodology and data, the study applies the “structural” gravity trade model and uses the panel data based on the database of Trade in Value Added (TiVA) 2023 edition and Services Trade Restrictiveness Index (STRI) developed by the Organization for Economic Cooperation and Development (OECD). The services sectors cover five categories: trade, transport, information and communication (I & C), finance, and professional. The main findings are: first, servicification in GVCs is less progressed in most of emerging and developing Asian economies and in most of services categories; second, services trade restrictions have negative impacts on servicification in GVCs; and third, the negative contributions of services trade restrictions on underdevelopments of servicification in GVCs account approximately for 30-50% except for the I & C category. The policy implication of the estimation results is that there should be much room to extend GVC servicification in emerging and developing economies Asian economies through removing the restrictions.