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Competitiveness and the Kaldor Paradox: The case of Spanish Service Sector

Listed author(s):
  • Andrés Maroto Sanchez
  • Luis Rubalcaba Bermejo

In the current wave of service globalisation, a new dynamic explaining international trade in services emerges. Some services are following similar trends to the ones initiated by manufacturing industries some decades ago. In this context, costs factors, the ones leading the major part of the current global sourcing in services, could gain importance in global services competition. Services could behave more similarly to goods and the Kaldor paradox may potentially be less remarkable that some years ago, in a context where the achievement of the EMU perform in the opposite way. As a particular empirical case study, empirical analysis of trade market shares in relation to effective real exchange rate is carried out for the Spanish case. Results shows that the Kaldor paradox continues having a strong importance in Spanish trade, although not all the service sectors have the same price/costs sensibility. Recent trends also present uneven results depending on the service sector, but in general there are not signs of decreasing the role of non-price/cost factors in international trade (in particular business services), although many services continue to be slightly more sensitive to relative prices than other industries.

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Paper provided by Instituto Universitario de Análisis Económico y Social in its series Working Papers with number 06/06.

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Length: 30 pages
Date of creation: Jun 2006
Handle: RePEc:uae:wpaper:0606
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  1. Uhlig, H.F.H.V.S. & Ravn, M., 1997. "On Adjusting the H-P Filter for the Frequency of Observations," Discussion Paper 1997-50, Tilburg University, Center for Economic Research.
  2. L. Rubalcaba & D. Gago, 2001. "Relationships between Services and Competitiveness: The Case of Spanish Trade," The Service Industries Journal, Taylor & Francis Journals, vol. 21(1), pages 35-62, January.
  3. Fagerberg, Jan, 1996. "Technology and Competitiveness," Oxford Review of Economic Policy, Oxford University Press, vol. 12(3), pages 39-51, Autumn.
  4. William Milberg & Ellen Houston, 2005. "The high road and the low road to international competitiveness: Extending the neo-Schumpeterian trade model beyond technology," International Review of Applied Economics, Taylor & Francis Journals, vol. 19(2), pages 137-162.
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