Crisis-proof services: Why trade in services did not suffer during the 2008–2009 collapse

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The paper is released in order to make the research of CompNet generally available, in preliminary form, to encourage comments and suggestions prior to final publication. The views expressed in the paper are the ones of the author(s) and do not necessarily reflect those of the ECB, the ESCB, and of other organisations associated with the Network. Terms of use: Documents in EconStor may AcknowledgementsFinancial help under the Globalisation Investment and Trade in Services (GIST) project, funded by the EU 7th Framework Programme (ITN-2008-211429), is gratefully acknowledged. This work was carried out while I was an intern at the National Bank of Belgium, I thank for the hospitality and the support provided. All views expressed in this paper, as well as the errors, are my own solely and do not necessarily reflect the views of the National Bank of Belgium. This paper has greatly benefited from the suggestions of Michel Beine, Holger Breinlich, Anca Cristea, Frederic Docquier, Chiara Farronato, Martina Lawless, Kalina Manova, Florian Mayneris, Giordano Mion, Mathieu Parenti, Alberto Russo, Ilke Van Beveren and the participants of the many conferences and seminars I have been. Andrea AriuUniversité catholique de Louvain, Belgium; e-mail: andrea.ariu@uclouvain.be AbstractDuring the 2008-2009 crisis trade in goods experienced the deepest decline ever recorded. Surprisingly, trade in services came through the crisis unscathed and some service categories carelessly stuck to their growth paths. Using firm-productdestination exports for Belgium, we show that the particular resilience of services is explained by a significantly lower elasticity to demand in export markets. More specifically, services exports tend to decline on average 5% less than exports of goods following a 1% decrease in GDP growth in destination countries. Most of this effect is accounted for by business services, it is more pronounced with respect to durables than to consumable products and it is stronger for OECD exports than for non-OECD. In terms of economic magnitude, if goods had the same elasticity to GDP growth of services, they would have decreased of about half. Conversely, if services had the same elasticity of goods, their fall would have been more than thrice as much. Moreover, it is a widespread phenomenon, since all OECD countries experienced the same patterns. Therefore, understanding the causes of this peculiar resilience of service represents a very important research and policy...

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