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Comparative Advantages in U. S. Bilateral Services Trade with China and India

Author

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  • Lirong Liu

    (Department of Economics, Sam Houston State University)

  • Hiranya K. Nath

    (Department of Economics and International Business, Sam Houston State University)

  • Kiril Tochkov

    (Department of Economics, Texas Christian University)

Abstract

Using bilateral trade data for 16 service categories, this paper examines the patterns, evolution, and determinants of comparative advantage (CA) in U.S. services trade with China and India from 1992 to 2010. The results indicate that the U.S. has a CA in most services, except in more traditional ones, such as travel and transportation. However, India, and more recently China, gained a CA in modern services, such as computer and information services during the period considered in this paper. An examination of the distributional dynamics indicates that the likelihood of U.S. gaining CA over an initial position of comparative disadvantage (CDA) in its trade of a particular service with India is higher than the probability of losing its initial dominance. In contrast, the U.S. CA or CDA vis-à-vis China exhibits high levels of persistence over time. The regression results suggest that relative abundance of sector-specific labor, human capital, and FDI inflows have been significant sources of CA for the U.S. over both China and India.

Suggested Citation

  • Lirong Liu & Hiranya K. Nath & Kiril Tochkov, 2015. "Comparative Advantages in U. S. Bilateral Services Trade with China and India," Working Papers 1501, Sam Houston State University, Department of Economics and International Business.
    • Handle: RePEc:shs:wpaper:1501
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    References listed on IDEAS

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    Cited by:

    1. Richa Khurana & D. K. Nauriyal, 2017. "Dynamics of Services Exports in India," Millennial Asia, , vol. 8(2), pages 178-193, October.
    2. Barman, Hemanta & Dutta, Mrinal Kanti & Nath, Hiranya K., 2018. "The telecommunications divide among Indian states," Telecommunications Policy, Elsevier, vol. 42(7), pages 530-551.
    3. Hiranya K. Nath & Binoy Goswami, 2018. "India’s comparative advantages in services trade," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 8(2), pages 323-342, August.
    4. Nuno Cunha & Rosa Forte, 2017. "The Comparative Advantages in the Services Sector of Developing Economies," Global Economy Journal (GEJ), World Scientific Publishing Co. Pte. Ltd., vol. 17(4), pages 1-24, December.
    5. Changya Di & Decai Tang & Yifan Xu, 2023. "Impact of Digital Economy on the High-Quality Development of China’s Service Trade," Sustainability, MDPI, vol. 15(15), pages 1-19, August.
    6. Binoy Goswami & Hiranya K. Nath, 2021. "India'S Revealed Comparative Advantages In Merchandise Trade With Country Groups At Different Levels Of Development," Contemporary Economic Policy, Western Economic Association International, vol. 39(2), pages 377-397, April.
    7. Hoang, V. V. & Tran, K. T. & Tu, B. V. & Nguyen, V. N. & Nguyen, A. Q., 2017. "Agricultural Competitiveness of Vietnam by the RCA and the NRCA Indices, and Consistency of Competitiveness Indices," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 9(4).
    8. Priyanka Dutta & Hemanta Barman, 2022. "Services sector growth and interstate income divergence in India," Asia-Pacific Journal of Regional Science, Springer, vol. 6(3), pages 995-1015, October.

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    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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