The Determinants of Service Trade
Date Issued
2008
Date
2008
Author(s)
Jin, Jieh-Ni
Abstract
The rapid expanding of international production and the trade in services are two new and interesting phenomena in the last two decades. Global resources are used more efficiently by international production including outsourcing. Service, on the one hand, is a major element of production as inputs; on the other hand, is needed to make international production possible or to coordinate the international division of labor.n this thesis, we focus on mode 1 service trade, which refers to service trade in which buyers and providers stay at different locations, and the roles service trade plays in the production process: key inputs and coordination link. Then we explore the determinants of service trade and the similarity and differences between service trade and commodity tradepplying the gravity model, we analyze USA’s bilateral service trade data. Our empirical results show that service trade data are consistent with the theory in some aspects. GDP and FDI stock are significant and positive determinants of service trade, while relative wage is significantly and negatively related to service trade. Service trade differs from commodity trade in that geographical distance has insignificant influence on it. Commodity trade is strongly correlated with unaffiliated service trade, but not with affiliated service trade. Export similarity, openness to service trade, and telecommunication infrastructures do not seem to have a significant impact on bilateral service trade in our empirical work.
Subjects
Service trade
Producer service
Determinants of trade
Fragmented production
Heckscher-Ohlin model
Type
thesis
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