Servicification in Global Value Chains and Services Trade Restrictions: The Case of Asian Economies

Taguchi, Hiroyuki and Lar, Ni (2026): Servicification in Global Value Chains and Services Trade Restrictions: The Case of Asian Economies.

Abstract

This study aims to quantify the contribution of services trade restrictions to underdevelopment of servicification in global value chains (GVCs) in Asian economies, while this topic was rarely explored in previous research. For the methodology and data, the study applies the “structural” gravity trade model and uses the panel data based on the database of Trade in Value Added (TiVA) 2023 edition and Services Trade Restrictiveness Index (STRI) developed by the Organization for Economic Cooperation and Development (OECD). The services sectors cover five categories: trade, transport, information and communication (I & C), finance, and professional. The main findings are: first, servicification in GVCs is less progressed in most of emerging and developing Asian economies and in most of services categories; second, services trade restrictions have negative impacts on servicification in GVCs; and third, the negative contributions of services trade restrictions on underdevelopments of servicification in GVCs account approximately for 30-50% except for the I & C category. The policy implication of the estimation results is that there should be much room to extend GVC servicification in emerging and developing economies Asian economies through removing the restrictions.

• Item Type: MPRA Paper
• Language: English
• Keywords: servicification; global value chains; services trade restrictions; Asian economies
• Subjects: F - International Economics > F1 - Trade > F14 - Empirical Studies of Trade; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q53 - Air Pollution ; Water Pollution ; Noise ; Hazardous Waste ; Solid Waste ; Recycling

References

Alvarez, J.B., Baris, K.V., Crisostomo, M.C.R., 2021. Recent trends in global value chains. In: Asian Development Bank (ed). Global Value Chain Development Report 2021: Beyond Production. ADB, The Research Institute for Global Value Chains at the University of International Business and Economics, The World Trade Organization, The Institute of Developing Economies – Japan External Trade Organization, and The China Development Research Foundation.

Baldwin, R., Forslid, R., Ito, T. 2015. Unveiling the evolving sources of value added in exports. IDE–JETRO Joint Research Program Series, No. 161.

Beverelli, C., Fiorini, M., and Hoekman, B. 2017. Services trade policy and manufacturing productivity: The role of institutions. Journal of International Economics, 104(C): 166–182.

Cheng, D., and Xiao, Z. 2021. Producer services and productivity: A global value chain perspective. Review of Income and Wealth, 67(2): 418–444.

Choi, I, 2001. Unit root tests for panel data. Journal of International Money and Finance, 20(2): 249–272.

Díaz‑Mora, C., Gandoy, R., and González‑Díaz, B. 2018. Looking into global value chains: Influence of foreign services on export performance. Review of World Economics, 154:785–814.

Findlay, C., and Roelfsema, H. 2023. Services trade in the ASEAN region and participation in GVCs. Journal of the Asia Pacific Economy, 28(3): 986–1006.

Francois, J., and Hoekman, B. 2010. Services trade and policy. Journal of Economic Literature, 48(3): 642–692.

Gereffi, G. 2018. Global Value Chains and Development: Redefining the Contours of 21st Century Capitalism. Cambridge University Press: Cambridge.

Gervais, A. 2018. Estimating the impact of country‐level policy restrictions on services trade. Review of International Economics, 26(4): 743–767.

Head, K., and Mayer, T. 2014. Gravity Equations: Workhorse, Toolkit, and Cookbook. In Handbook of International Economics, edited by Gopinath, G., Helpman, E., and Rogoff, K.S. Oxford: Elsevier Ltd.

Heuser, C., and Mattoo, A. 2017. Services trade and global value chains. In: World Bank, Institute of Developing Economies – Japan External Trade Organization, Organization for Economic Cooperation and Development, University of International Business and Economics, and World Trade Organization (eds) Global value chain development report 2017: Measuring and analyzing the impact of GVCs on economic development. World Bank Group: Washington DC.

Hummels, D., Ishii, J., and Yi, K.M. 2001. The nature and growth of vertical specialization in world trade. Journal of International Economics, 54(1): 75-96.

Im, K.S., Pesaran, M.H., and Shin, Y. 2003. Testing for unit roots in heterogeneous panels. Journal of Econometrics, 115(1): 53–74.

Johnson, R.C., and Noguera, G. 2017. A portrait of trade in value added over four decades. The Review of Economics and Statistics, 99(5): 896–911.

Jones, R.W., and Kierzkowski, H. 1990. The Role of Services in Production and International Trade: A Theoretical Framework. In The Political Economy of International Trade: Essays in Honor of Robert E. Baldwin, edited by R. W. Jones and A. Krueger. Oxford: Blackwell.

Jones, R.W., and Kierzkowski, H. 2005. International Trade and Agglomeration: An Alternative Framework. Journal of Economics, 10: 1–16.

Jungmittag, A. 2019. Service trade restrictiveness and internationalisation of retail trade. International Economics and Economic Policy, 16(2): 293–333.

Jungmittag, A., and Marschinski, R. 2023. Service trade restrictiveness and foreign direct investment—Evidence from greenfield FDI in business services. The World Economy, 46(6): 1711–1758.

Kimura, F. 2006. International production and distribution networks in East Asia: eighteen facts, mechanics, and policy implications. Asian Economic Policy Review, 1: 326–344.

Koopman, R., Powers, W., Wang, Z., and Wei, S.J. 2010. Give credit where credit is due: Tracing value added in global production chains. NBER Working Paper, No. 16426.

Koopman, R., Wang, Z., and Wei, S. 2014. Tracing value-added and double counting in gross exports. American Economic Review, 104(2): 459–494.

Levin, A,, Lin, C.F., and Chu, C.S.J. 2002. Unit root tests in panel data: Asymptotic and finite-sample properties. Journal of Econometrics, 108(1): 1–24.

Maddala, G.S., and Wu, S. 1999. A comparative study of unit root tests with panel data and a new simple test. Oxford Bulletin of Economics and Statistics, 61(S1): 631–652.

Nano, E., and Stolzenburg, V. 2021. The role of global services value chains for services-led development. In: Asian Development Bank (ed) Global value chain development report 2021: Beyond production. ADB, The Research Institute for Global Value Chains at the University of International Business and Economics, the World Trade Organization, the Institute of Developing Economies – Japan External Trade Organization, and the China Development Research Foundation.

Nordas, H.K., and Rouzet, D. 2017. The Impact of Services Trade Restrictiveness on Trade Flows. The World Economy, 40(6): 1155–1183.

OECD (Organization for Economic Cooperation and Development), WTO (World Trade Organization), World Bank Group. 2014. Global value chains: Challenges, opportunities, and implications for policy. G20 Trade Ministers Meeting, Sydney, Australia, 2014.

Pant, S., and Chakraborty, D. 2024. Can Servicification Benefit Manufacturing Exports? Empirical Results for India. South Asia Economic Journal, 25(2): 126–157.

Pattnayak, S.S., and Chadha, A. 2022. Servicification and manufacturing exports: Evidence from India. Economic Modelling, 108: 105756.

Piermartini, R., and Yotov, Y.V. 2016. Estimating trade policy effects with structural gravity. WTO Staff Working Papers, ERSD- 2016-10.

Shepherd, B. 2019. Services policies and manufacturing exports. In: Helble, M., and Shepherd, B. (eds) Leveraging services for development: Prospects and policies. Asian Development Bank Institute, Tokyo.

Su, X., Anwar, S., Zhou, Y., and Tang, X. 2020. Services trade restrictiveness and manufacturing export sophistication. The North American Journal of Economics and Finance, 51: 101058.

Taguchi, H., Thet, M.S. 2021. Quantitative linkage between global value chains’ backward participation and logistics performance in the host country: A structural gravity model analysis of emerging ASEAN economies. Asia-Pacific Journal of Regional Science, 5: 453–475.

Thangavelu, S.M., Wang, W., and Oum, S. 2018. Servicification in global value chains: Comparative analysis of selected Asian countries with OECD. The World Economy, 41(11): 3045–3070.

UNCTAD 2013. World investment report—global value chains: investment and trade for development. The United Nations: New York and Geneva.

World Bank. 2016. Making Global Value Chains: Work for Development. World Bank: Washington DC.

World Bank 2020. World Development Report - Trading for Development in the Age of Global Value Chains. World Bank: Washington DC.

Zongo, A. 2021. The impact of services trade restrictiveness on food trade. International Economics, 166: 71–94.