Services Trade Barriers Research Articles

The Effects of Digital Services Trade Barriers on ICT Services Exports

The trade subjects of digital services have constructed and strictly implemented a more targeted system of trade barriers. Information Communications Technology (ICT) services, as an important trade subject in the digital services field, are more prominently affected by the digital services trade barriers. To investigate the trade effects of digital services trade barriers on ICT services exports, this paper conducts a series of empirical tests using trade panel data of 18 exporting countries and 38 importing countries during the period of 2014–2020. Our results in the benchmark regression show that digital services trade barriers significantly inhibit the expansion of ICT services exports. By the industry and country heterogeneity analysis, we first find computer services are most significantly affected by the negative effect of the digital services trade barriers; then it reveals that the degree of trade inhibition of high ICT countries exporting to low ICT countries is extremely significant, followed by low ICT inter-country exports.

Research on the Impact of Digital Service Trade Barriers on Domestic Manufacturing Productivity

This article selects the data of 210 listed companies in Shanghai and Shenzhen A-shares from 2014 to 2019, measures the digital service trade barriers and productivity growth of electronic information manufacturing enterprises, and uses a two-way fixed effect model to analyze the impact of digital service trade barriers on electronic information manufacturing enterprises. Its impact on productivity and mechanisms, and provide policy recommendations. The research results show that: (1) Digital service trade barriers for electronic information manufacturing enterprises are generally on an upward trend. (2) Digital service trade barriers for electronic information manufacturing enterprises have a significant inhibitory effect on their productivity.

디지털 서비스 무역 장벽이 서비스 수출의 복잡성에 미치는 영향에 관한 연구 - 중국발 경험적 증거

디지털 서비스 무역 장벽이 서비스 수출의 복잡성에 미치는 영향에 관한 연구 - 중국발 경험적 증거

The Impact of the Second Phase of China-South Korea FTA Negotiation on China's Service Trade -- Simulation Analysis Based on GTAP Model

The second phase of China-South Korea FTA negotiation is underway, its main negotiation content is focused on the service trade and investment field, this is the first time for China to carry out the negative list mode of related negotiations, and has made substantial progress at this stage, is expected to sign the agreement in the past two years. However, from the perspective of the second stage negotiations between China and South Korea, there are relatively few studies to analyze the possible impact of the signing on China, especially on various industries of service trade. Therefore, this paper takes the negotiation as the background, takes the service trade as the research object, and on the basis of fully analyzing the development status of the service trade between China and South Korea, uses the GTAP model to empirically analyze the impact of the reduction of service trade barriers in three different scenarios on the macro-economy and service trade of China and South Korea, and draws a conclusion: The conclusion of this negotiation will bring a very obvious positive effect to China and South Korea, and the positive effect will increase with the degree of service trade opening between the two countries, and on this basis, corresponding policy suggestions are given.

Impact of Digital Service Trade Barriers and Cross-Border Digital Service Inputs on Economic Growth

In this digital era, digital service trade has brought significant benefits to the global economy. However, this trade also poses considerable challenges to international trade regulations. This study aims to analyze the impact of cross-border digital service trade on the economic growth of importing countries while determining how digital trade barriers moderate this effect. We established a theoretical model that meticulously delineates various restrictive regulatory measures that can hinder digital service inputs. We further developed a comprehensive and detailed trade barrier index based on these measures. A three-dimensional fixed effects panel regression model was used to analyze data from six types of digital services in 48 economies from 2005 to 2021. The findings indicated that cross-border digital service inputs enhance importing countries’ economic growth, highlighting the substantial economic value of these inputs. However, trade barriers in digital services were also found to diminish this positive effect. Specifically, an increase in the digital service trade barriers in importing countries constricts the range and quality of selectable digital services, which might adversely impact national economic growth. The inhibitory effect is stronger for countries with a “Limited Model” for personal data transfers and processing.

Dispersion or Agglomeration

The paper analyzes the agglomeration of China's OFDI across 35 industries in 43 countries from 2014 to 2019 to provide a characterization of China's international production system and its dynamic changes. It examines how digital service trade barriers and regulatory heterogeneity impact China's OFDI agglomeration. The paper finds that China's OFDI distribution shows a trend of agglomerating at the host country-industry level year by year, especially in capital-intensive and technology-intensive industries. Empirical results indicate that digital services trade barriers significantly hinder the agglomeration of China's OFDI. Digital service trade barriers negatively affect OFDI agglomeration in technology-intensive industries and positively affect it in labor-intensive industries. Deconstructing digital service trade barriers in different policy areas, the paper finds that the negative impact of infrastructure and connectivity and intellectual property rights is greater than that in electronic transactions, while the impact of barriers in the payment system is not significant.

Digital Service Trade and Labor Income Share—Empirical Research on 48 Countries

Fast-paced digitization is affecting all aspects of life, including the way we trade. This study empirically analyzes the influence and mechanism of digital service trade on labor income share using 48 countries’ panel data from 2005 to 2019. The research results show that digital service trade has a positive effect on labor income share. Specifically, the impact of digital service trade on labor income share includes productivity effect, structural effect, and distribution effect. The results also show that the export of digital service trade is more conducive to increasing domestic labor income share than the import. The positive impact of digital service trade on labor income share in OECD countries is more significant than in non-OECD countries. At the same time, the digital service trade’s income distribution effect has heterogeneity due to differentiated national digital service trade barriers’ level. This paper discusses theoretically and empirically the impact of digital service trade on the share of labor income for the first time, and puts forward policy suggestions on formulating more open and win-win digital service trade policies, improving labor income, and promoting social equity and inclusive global trade.

The Significance of Services and Data in Global Value Chains

Global value chains (GVC) are undergoing a transformation as business focus on building resilience. Services and data are already adding value to GVC, particularly manufacturing GVC. Global data flows and digital technologies such as cloud computing and AI enable growth in digitally enabled service exports and further opportunities to add value to manufacturing GVC. Moreover, services-only GVC are evolving as businesses use digital services and technologies sourced globally. • All countries have some comparative advantage in services and as GVC become increasingly services driven and rely on data, new opportunities for GVC participation by developing country and small and medium sized enterprises (SMEs), are emerging. As manufacturing GVC mature, served used are increasingly being sourced globally as business seek best-in-class inputs to maintain overall competitiveness. Yet, services trade barriers remain high – higher than for goods. In addition, countries are increasingly restricting global data flows and requiring data localization. There is also the risk that divergent standards in areas such as 5G, a technology which will underpin new digital services and GVC, will create additional barriers. Trade policy has an important role to play in supporting growth in services and data in GVC. Trade policy should also priorities addressing barrier to services trade and data flows. The failure of the WTO in further liberalizing services trade has had the perverse effect that for many countries services restrictions are becoming the key barriers to growing trade in manufactured goods. Services trade restrictions are also higher in developing countries, placing them at a disadvantage when it comes to participating in GVC.

Services export diversification and services export revenue stability: does trade openness matter?

PurposeThe international trade literature has established that export product diversification lowers export product revenue instability. The current analysis investigates whether this finding carries over services exports.Design/methodology/approachThe empirical analysis covers a sample of 152 countries over the period 1980–2014 and employs the two-step system generalized method of moments (GMM) approach.FindingsThe empirical findings indicate that services export diversification reduces services export revenue instability both over the full sample as well as over sub-samples of high-income countries (HICs), least developed countries (LDCs) as well as developing countries (i.e. non-HICs) that are not LDCs. HICs appear to experience a higher positive effect of services export diversification on services export revenue instability than in developing countries. The analysis also shows that countries that further open-up to international trade enjoy a greater reducing effect of services export diversification on the instability of services export revenue.Research limitations/implicationsThis analysis, therefore, adds to the existing studies on the relationship between export product diversification and the instability of revenue derived from goods exports by focusing on the services export side. An important message from the analysis is that countries that diversify their services export basket enjoy lower services export revenue instability when they further integrate into the world trade market.Practical implicationsThis study highlights the importance of services export diversification, including for stabilizing services export revenue to services traders. Diversifying services export items, including across traditional and modern services sectors involves the implementation of a wide range of policies and measures, of which the liberalization of the services sectors through reduction and eventually the elimination of services trade barriers; the improvement of the business environment and the development of domestic financial markets (see for example, Hoekman, 2017). It could be interesting that another study consider policies and measures that could promote services export diversification.Originality/valueTo the best of the authors’ knowledge, this is the first time this topic is being addressed, including empirically.

Effect of Poverty on Services Export Concentration in Developing Countries

This paper investigates the effect of poverty on services export concentration in developing countries. The analysis has used an unbalanced panel dataset of 95 developing countries over the period 1995–2014. Findings suggest that higher poverty rates induce greater services export concentration, and this effect translates through three channels, namely, human capital, trade openness, and export product concentration. Thus, if they were to diversify services export items, policymakers should implement policies (such as reducing services trade barriers and improving the business environment) that directly promote services export diversification, but also measures that directly target poor segments of the population.

Firm heterogeneity in services trade: Micro‐level evidence from eight OECD countries

AbstractThis paper shows that smaller and less productive firms, as well as first‐time exporters, are overproportionally affected by services trade barriers using micro‐data from Belgium, Finland, Germany, Italy, Japan, Sweden, the United Kingdom and the United States. For these firms, both the propensity to export and export volumes to less restrictive destinations are significantly higher than to more restrictive destinations. In contrast, policy barriers measured by the OECD Services Trade Restrictiveness Index (STRI) do not affect export decisions of the largest, most productive and experience services firms. The pattern holds for two major modes of supply, cross‐border services exports and foreign affiliate sales of services firms. The findings are consistent with firm sorting mechanisms in trade models with heterogeneous firms and hysteresis of export participation in the presence of sunk export costs.

The effect of border barriers to services trade on goods trade

AbstractThis paper has two objectives (a) to introduce border policy‐induced barriers (PIBs) to services trade and (b) analyse the impact of border PIBs in services sectors on goods trade. The World Input‐Output Database covering 43 countries is used over the period 2000–14. A three‐stage analysis is employed. The measures of bilateral services trade barriers calculated in each services sector in the first stage are decomposed into its cultural/geographic and policy‐induced parts in the second stage. Border PIBs to services trade are used in the structural gravity estimations of bilateral goods trade in the final stage. The results demonstrate significant and robust adverse effects of barriers to services trade on goods trade. When the level of development is taken into consideration, there are marked differences in the impact of these barriers on goods trade.

Services development and comparative advantage in manufacturing

Most manufacturing activities use inputs from the financial and business services sectors. But these services sectors also compete for resources with manufacturing activities, provoking concerns about deindustrialization attributable to financial services in developed countries like the United States and United Kingdom, and business services in developing countries like India and the Philippines. This paper examines the implications of services development for the export performance of manufacturing sectors. We develop a methodology to quantify the indirect role of services in international trade in goods and construct new measures of revealed comparative advantage based on value-added exports. We show that the development of financial and business services enhances the revealed comparative advantage of manufacturing sectors that use these services intensively but not of other manufacturing sectors. We also find that a country can partially overcome the handicap of an underdeveloped domestic services sector by relying more on imported services inputs. Thus, lower services trade barriers in developing countries can help to promote their manufacturing exports.

The Effect of Binding Commitments on Services Trade

AbstractIt has long been established in theory that uncertainty impacts on firm behaviour. However, the empirical basis for quantifying the uncertainty-reducing effects of trade agreements has not been firmly established. In this paper, we develop estimates of the effect of reducing uncertainty regarding regulation of foreign services markets by making commitments that are bound under a trade agreement. Specifically, we identify the effect on services trade of services trade restrictions, as measured by the OECD's Services Trade Restrictiveness Index (STRI), and the separate effect of ‘water’ in binding commitments, as assessed by the difference between countries’ commitments under the General Agreement on Trade in Services (GATS) or free trade agreements (FTAs) and applied levels of market access, as captured by STRI scores. Using a gravity model, we find that services trade responds positively but inelastically to reductions in services trade barriers, as measured by the STRI and, in our preferred regression, the response to actual restrictions is more than twice – specifically 2.4 times – as strong as the response to comparable reductions in uncertainty, as measured by water. Moving from GATS commitments to FTA commitments leads to a 4.7% increase in services trade because of the reduction in uncertainty.

Quantifying the EU-Japan Economic Partnership Agreement

This paper provides a quantitative analysis of the new EU-Japan Economic Partnership Agreement (EPA), the biggest bilateral deal that both the EU and Japan have concluded so far. It employs a generalized variant of the Eaton–Kortum (2002) model, featuring multiple sectors, input-output linkages, services trade, and non-tariff barriers (NTBs). It uses the results of an econometric ex post analysis of a related existing FTA, the one between the EU and Korea, to approximate the expected reductions in the costs of NTBs. This approach yields long-run welfare effects for Japan of about 18 bn USD per year (0.31% of GDP) and of about 15 bn USD (0.10%) for the EU. On average, the agreement does not appear to harm third countries. 14% of the welfare gains inside the EPA stem from tariffs, the remaining 86% from NTB reform, and the services sector account for more than half. In the EU, value added in the agri-food sector goes up most, while in Japan the manufacturing and services sectors gain.

Foreign trade barriers and jobs in global supply chains

This paper studies the impact of foreign barriers to goods and services trade on domestic jobs that are directly or indirectly related to trade flows. Using the ILO’s recently published estimates of the number of jobs in global supply chains, the empirical analysis in this paper largely confirms predictions derived from a theoretical model closely calibrated to actual data from international input-output tables. First, it identifies a sizeable cross-border impact of barriers to manufacturing trade not only on manufacturing jobs, but also on services jobs. Second, service trade barriers affect the number of jobs in both services and manufacturing. Third, spill-over effects of trade policy in one sector to jobs in other sectors have become more important over time. Based on this evidence, the paper shows the labour market consequences of the increased interconnectedness of countries and sectors through global supply chains, suggesting that trade policy can have significant external effects on foreign labour markets

A Legal Study on China`s Services Trade Barriers for Improving Efficiency of the Korea-China FTA

A Legal Study on China`s Services Trade Barriers for Improving Efficiency of the Korea-China FTA

Quantifying the EU-Japan Economic Partnership Agreement

This paper provides a quantitative analysis of the new EU-Japan free trade agreement (FTA), the biggest bilateral deal that both the EU and Japan have concluded so far. It employs a generalized variant of the Eaton-Kortum (2002) model, featuring multiple sectors, input-output linkages, services trade, and non-tariff barriers (NTBs). It uses the results of an econometric ex-post analysis of a related FTA, the one between the EU and Korea, in force since 2011, to approximate the expected reductions in the costs of NTBs. This approach yields long-run welfare effects for Japan of about 18 bn. USD per year (0.31% of GDP) and of about 15 bn. USD (0.10%) for the EU. On average, the agreement does not appear to harm third countries, but the Americas, Africa and MENA countries slightly lose. 14% of the welfare gains inside the FTA stem from tariffs, the remaining 86% from NTB reform, and the services sector accounts for more than half. In the EU, value added in the agri-food sector goes up most, while in Japan the manufacturing and services sectors gain.

PELUANG EKONOMI SYARIAH PADA ERA MASYARAKAT EKONOMI ASEAN

This paper discusses the opportunities of Islamic economy in the era of AEC, especially in Indonesia. As understood, AEC is ASEAN’s cooperation and integration development that aims to easily the liberalization process in Southeast Asia by eliminating trade barriers in goods and services, capital, investment and labor. In this regard, it is important to study how the opportunities of Islamic economy as an Islamic-based economic perspective and practice, which is diametrically different from the perspective and practice of liberal economy in the AEC. This paper arguments are, first, Indonesia provides opportunities for Islamic economy development. Because, the number of Indonesian Muslim population is majority and Indonesia is ranked sixth in 2016 as a country that has the potential and conducive in the Islamic finance industries development. Second, Indonesian Islamic banking can become a state power in line with its existence and development from year to year, both in quantities and amount of assets. Third, the opening of the Jakarta Islamic Index proves that Islamic economy has its own market share and has a very strategic prospect amid the competition of AEC.

The Role of Provide Survice Small Town in Rural–Urban Linkages for Sustainable Development: A case of rural-urban linkage of Malda district, West Bengal, India

Rural–urban linkages play a fundamental role in the generation of service, development, health treatment and wealth. Yet, for various reasons the importance of such linkages is not recognized and thus unnoticed in rural economic and trade policies. The present paper investigates infrastructure problem, institutional constraints and dependency rural area on near rural service trade barriers that tend to discourage linkages between rural and urban areas and thus prevent a process of rural empowerment and economic development. The findings of our review indicate that clustering rural and urban areas into regional planning units may create the necessary enabling environment for extensive trade networks and knowledge switch over between the city and the neighbor rural-side. As such, stronger rural–urban linkages could also play a crucial role in fulfill rural areas demand in developing countries.