The Impact of Liberalizing Trade in Services on Trade in Goods: An Empirical Investigation

Abstract

AbstractIn this paper we use a large dataset to explore whether the liberalization of trade in services is beneficial for the international trade in goods. We find empirical evidence supporting this notion. We investigate which types of trade in services are more important for the international trade in goods and find that trade in transportation and communication services generate the largest impacts on trade in goods. We also investigate which types of trade in goods are likely to benefit from the liberalization of trade in services and find that, under the 2‐digit ISTC classification, all the categories are likely to exhibit a positive impact.