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Productivity and Trade Growth in Services: How Services Helped Power Factory Asia

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  • Ben Shepherd

    (Asian Development Bank Institute)

Abstract

This paper uses a theory-based measure of productivity-based comparative advantage to examine the trade performance of developing Asian economies in manufacturing and services over the 1995–2011 period. We find that the growth in service exports was nearly as rapid as that in manufacturing over this period—a little-appreciated fact. Services are therefore an integral part of “Factory Asia.” Moreover, the results from a quantitative model of trade show that revealed productivity measures are often comparable between manufacturing and services at a disaggregated level, although the results differ markedly across sectors and economies. We also find evidence of rapid growth in revealed productivity in some service subsectors, comparable to that in manufacturing. Our findings suggest that oversimplifying the relationship between patterns of specialization and subsequent economic transformation and growth patterns misses important elements of reality.

Suggested Citation

  • Ben Shepherd, 2019. "Productivity and Trade Growth in Services: How Services Helped Power Factory Asia," ADBI Working Papers 914, Asian Development Bank Institute.
    • Handle: RePEc:ris:adbiwp:0914
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    References listed on IDEAS

    as
    1. van der Marel, Erik & Shepherd, Ben, 2013. "International tradability indices for services," Policy Research Working Paper Series 6712, The World Bank.
    2. Elsa Leromain & Gianluca Orefice, 2014. "New revealed comparative advantage index: Dataset and empirical distribution," International Economics, CEPII research center, issue 139, pages 48-70.
    3. Arnaud Costinot & Dave Donaldson & Ivana Komunjer, 2012. "What Goods Do Countries Trade? A Quantitative Exploration of Ricardo's Ideas," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 79(2), pages 581-608.
    4. van der Marel, Erik, 2011. "Determinants of comparative advantage in services," LSE Research Online Documents on Economics 38993, London School of Economics and Political Science, LSE Library.
    5. Chor, Davin, 2010. "Unpacking sources of comparative advantage: A quantitative approach," Journal of International Economics, Elsevier, vol. 82(2), pages 152-167, November.
    6. Dani Rodrik, 2016. "Premature deindustrialization," Journal of Economic Growth, Springer, vol. 21(1), pages 1-33, March.
    Full references (including those not matched with items on IDEAS)

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    Keywords

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    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • L80 - Industrial Organization - - Industry Studies: Services - - - General

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