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Measuring the Cost of International Trade in Services

  • Miroudot, Sébastien
  • Sauvage, Jehan
  • Shepherd, Ben

We present a new dataset of international trade costs in services sectors. Using a theory-based methodology combined with data on domestic shipments and cross-border trade, we find that trade costs in services are much higher than in goods sectors: a multiple of two to three times in many cases. Trade costs in services have remained relatively steady over the last ten years, whereas trade costs in goods have fallen overall at an impressive rate. We also present two examples of the ways in which our dataset could be used in future work. First, we examine the impact of regional trade agreements on trade costs in services. Although we find that intra-bloc trade costs are lower than those facing outside countries, the differential is usually quite small for services, and in some cases has even been narrowing over time. This finding accords with the observation that because service sector reform is about re-regulation, “preferential” agreements tend to involve less discrimination than in goods markets. Second, we show for the first time that services sectors with lower trade costs tend to be more productive, and experience faster productivity growth. This result lines up well with the evidence from goods markets.

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File URL: http://mpra.ub.uni-muenchen.de/27655/1/MPRA_paper_27655.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 27655.

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Date of creation: 22 Dec 2010
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Handle: RePEc:pra:mprapa:27655
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  1. James E. Anderson & Eric van Wincoop, 2004. "Trade Costs," NBER Working Papers 10480, National Bureau of Economic Research, Inc.
  2. Dennis Novy, 2012. "Gravity Redux: Measuring International Trade Costs with Panel Data," CEP Discussion Papers dp1114, Centre for Economic Performance, LSE.
  3. Holger Breinlich & Chiara Criscuolo, 2008. "Service Traders in the UK," CEP Discussion Papers dp0901, Centre for Economic Performance, LSE.
  4. Thomas Chaney, 2008. "Distorted Gravity: The Intensive and Extensive Margins of International Trade," American Economic Review, American Economic Association, vol. 98(4), pages 1707-21, September.
  5. Christian Broda & Joshua Greenfield & David Weinstein, 2006. "From Groundnuts to Globalization: A Structural Estimate of Trade and Growth," NBER Working Papers 12512, National Bureau of Economic Research, Inc.
  6. Sébastien Miroudot & Rainer Lanz & Alexandros Ragoussis, 2009. "Trade in Intermediate Goods and Services," OECD Trade Policy Papers 93, OECD Publishing.
  7. Mary O'Mahony & Marcel P. Timmer, 2009. "Output, Input and Productivity Measures at the Industry Level: The EU KLEMS Database," Economic Journal, Royal Economic Society, vol. 119(538), pages F374-F403, 06.
  8. Philippa Dee, 2003. "Modelling the Policy Issues in Services Trade," Economie Internationale, CEPII research center, issue 94-95, pages 283-300.
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