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Trade in services and trade in goods: differences and complementarities

Author

Listed:
  • Carolina Lennon

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, UP1 - Université Paris 1 Panthéon-Sorbonne, PJSE - Paris-Jourdan Sciences Economiques - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique)

Abstract
The purpose of this paper is double. First, we empirically explore to what extent the determinants of trade in services differs from those of trade in goods and, second, by the use of instrumental variables, we explore for potential complementarities between bilateral trade in goods and bilateral trade in services. By the use of gravity equations, the main results show that "bilateral trust and contract enforcement environment", "networks", "labor markets" and "technology and technology of communication" have higher impact on service trade than on trade in goods; finally, after instrumenting for endogeneity, we found that bilateral trade in goods explains bilateral trade in services: the resulting estimated elasticity is close to 1. Reciprocally, though to a lesser extent, bilateral trade in services affects positively bilateral trade in goods: a 10% increase in trade in services raises traded goods by 4.6%.

Suggested Citation

  • Carolina Lennon, 2008. "Trade in services and trade in goods: differences and complementarities," PSE Working Papers halshs-00586223, HAL.
    • Handle: RePEc:hal:psewpa:halshs-00586223
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00586223
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    References listed on IDEAS

    as
    1. Carolina Lennon & Daniel Mirza & Giuseppe Nicoletti, 2009. "Complementarity of Inputs across Countries in Services Trade," Annals of Economics and Statistics, GENES, issue 93-94, pages 161-182.
    2. repec:adr:anecst:y:2009:i:93-94:p:08 is not listed on IDEAS
    3. James E. Rauch, 2001. "Business and Social Networks in International Trade," Journal of Economic Literature, American Economic Association, vol. 39(4), pages 1177-1203, December.
    4. Mary Amiti & Shang-Jin Wei, 2005. "Fear of service outsourcing: is it justified? [‘Location of vertically linked industries: agglomeration versus comparative advantage’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 20(42), pages 308-347.
    5. repec:bla:econom:v:63:y:1996:i:252:p:611-31 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    international trade in services; trade in goods; gravity equations; commerce international des services; commerce des biens; équations de gravité;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F15 - International Economics - - Trade - - - Economic Integration
    • L8 - Industrial Organization - - Industry Studies: Services

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