Park, Innwon and Park, Soonchan (2010): Regional Liberalization of Trade in Services.
Download (219Kb) | Preview
As the impact of trade in services on the current global financial crisis appears to overtake that of trade in goods, we propose to examine liberalization of trade in services through regional trade agreements (RTAs). The regional liberalization of trade in services is expected to generate significant welfare gains both in the services and goods sectors. However, the quantitative effect of RTAs under GATS (General Agreement on Trade in Services) Article V has not been sufficiently investigated. We attempt to fill this gap by applying a gravity regression analysis to four major services sectors—financial services, business services, communication services, and transportation services—while controlling for both country-specific and time-varying importer and exporter fixed effects. We find that (i) the RTAs under GATS Article V create services trade among members and do not divert services trade from nonmembers, but the trade-enhancing effect is sector-specific; (ii) the sector-specific trade-enhancing effect ranges from the highest in business services sector to the lowest in transportation services; (iii) the trade effect on aggregate services trade is weaker when we control for the time-varying multilateral trade resistance factor with the time-varying exporter and importer fixed effect, however, the sectoral effects show a reverse pattern; (iv) there is no anticipatory effect expected from services RTA negotiations, unlike the case of trade in goods; (v) there is a complementary relationship between goods and services imports; and (vi) the trade-enhancing effect of RTAs is stronger between developed members compared to the effect between developed and developing countries.
|Item Type:||MPRA Paper|
|Original Title:||Regional Liberalization of Trade in Services|
|Keywords:||trade in services, regional trade agreements, gravity, GATS|
|Subjects:||F - International Economics > F1 - Trade > F15 - Economic Integration
F - International Economics > F1 - Trade > F13 - Trade Policy; International Trade Organizations
C - Mathematical and Quantitative Methods > C2 - Single Equation Models; Single Variables > C23 - Models with Panel Data; Longitudinal Data; Spatial Time Series
|Depositing User:||Innwon Park|
|Date Deposited:||05. Jan 2010 17:05|
|Last Modified:||14. Feb 2013 11:25|
Anderson, James E., and Eric van Wincoop. 2003. “Gravity with Gravitas: A Solution to the Border Puzzle.” American Economic Review 93: 170–192.
Baldwin, Richard, and Daria Taglioni. 2006. “Gravity for Dummies and Dummies for Gravity Equations.” NBER Working Paper No. 12516. National Bureau of Economic Research, Cambridge, MA, USA.
Baier, Scott L., and Jeffrey H. Bergstrand. 2007. “Do Free Trade Agreements Actually Increase Members’ International Trade?” Journal of International Economics 71: 72-95.
Blyde, Juan, and Natalia Sinyavskaya. 2007. “The Impact of Liberalizing Trade in Services on Trade in Goods: An Empirical Investigation.” Review of Development Economics 11(3): 566-583.
Borchert, Ingo, and Aaditya Mattoo. 2009. “The Crisis-Resilience of Services Trade.” Policy Research Working Paper 4917. Washington, DC: The World Bank.
Central Intelligence Agency (CIA), World Factbook, Washington DC, USA.
Chisari, Omar O., Javier Maquieyra, and Carlos A. Romero. 2009. “Liberalization of Trade in Services: A CGE Analysis for Argentina, Brazil and Uruguay.” MPRA Paper No. 15336, Munich: Munich Personal RePEc Archive.
Copeland, Brian, and Aaditya Mattoo. 2004. “The Basic Economics of Services Trade.” Mimeo.
Francois, J., O. Pindyuk, and J. Wörz. 2008. “Trade Effects of Services Trade Liberalization in the EU.” FIW Research Report No 004. Forschungsschwerpunkt Internationale Wirtschaft, Vienna, Austria.
Fritz, O., and G. Streicher. 2008. “Trade Effects of Service Liberalization in the EU-Simulation of Regional Macroeconomic Effects for Austria.” FIW Research Report No 005. Forschungsschwerpunkt Internationale Wirtschaft, Vienna, Austria.
Fung, K. C., and Alan Siu. 2008. “Political Economy of Service Trade Liberalization and the Doha Round.” Pacific Economic Review 13(1): 124-133.
Gootiiz, Batshur, and Aaditya Mattoo. 2009. “Services in Doha: What’s on the Table?” Policy Research Working Paper 4903. Washington, DC: The World Bank.
Hoekman, Bernard, and Aaditya Mattoo. 2008. “Services Trade and Growth.” Policy Research Working Paper 4461. Washington, DC: The World Bank.
Kimura, Fukunari, and Hyun-Hoon Lee. 2006. “The Gravity Equation in International Trade in Services,” Review of World Economics 142(1): 92-121.
Konan, Denis Eby, and Keith E. Maskus. 2006. “Quantifying the Impact of Services Liberalization in a Developing Country.” Journal of Development Economics 81: 142-162.
Lennon, Carolina. 2006. “Trade in Services and Trade in Goods: Differences and Complementarities.” Working Paper No. 2008-52. Paris: Paris-Jourdan Sciences Economiques.
Magee, Christopher S. 2008. “New Measures of Trade Creation and Trade Diversion.” Journal of International Economics 75: 340-362.
Mattoo, Aaditya, and Carsten Fink. 2002. “Regional Agreements and Trade in Services: Policy Issues.” Policy Research Working Paper 2852. Washington, DC: The World Bank.
Park, Soonchan. 2002. “Measuring Tariff Equivalents in Cross-Border Trade in Services.” KIEP Working Paper 02-15. Seoul: Korea Institute for International Economic Policy.
Roy, Martin, Juan Marchetti, and Hoe Lim. 2006. “Services Liberalization in the New Generation of Preferential Trade Agreements (PTAs): How Much Further than the GATS?” Staff Working Paper ERSD-2006-07. Geneva: World Trade Organization.
Stephenson, Sherry M. 2002. “Regional versus Multilateral Liberalization of Services,” World Trade Review 1(2): 187-209.
The World Bank, World Development Indicators, Washington DC, USA.
United Nations (UN), United Nations Service Trade Statistics Database. New York, USA.
United Nations Conference on Trade and Development (UNCTAD), http://www.unctad.org/Templates/StartPage.asp?intItemID=2068, Geneva, Switzerland.
Walsh, Keith. 2006. “Trade in Services: Does Gravity Hold? A Gravity Model Approach to Estimating Barriers to Services Trade.” IIIS Discussion Paper No. 183. Dublin: Institute for International Integration Studies (IIIS).
Whalley, John. 2004. “Assessing the Benefits to Developing Countries of Liberalisation in Services Trade.” The World Economy 27(8): 1223-1253.