The Role of Goods‐Trade Networks for Services‐Trade Volume

Abstract

In this paper, we address the role of countries' goods trade networks for their services trade volume. The paper employs a large cross-section of bilateral trade data on aggregate cross-border goods and services sales and illustrates that the depth and overlap of two countries' services networks induce a positive direct impact on their services trade volume. The evidence takes into account that goods trade flows and networks are potentially endogenous so that the estimated direct effects support a causal interpretation. We find that the magnitude of the multilateral goods-trade network effect on the bilateral services-trade volume is much larger than that of bilateral goods-trade volume.

Modes of Supply for US Exports of Services

“…Including manufacturing FDI in our regressions, we find a positive effect of manufacturing FDI on affiliate activity for some service sectors in outward sales, in particular business services (last column of Table ). Such results support the findings on manufacturing and business services linkages previously found in the economic literature (Gage and Lesher, ; Francois and Woerz, ; Egger et al., ). Going one step further, we aim here at identifying whether patterns of affiliate intensity are similar between manufacturing and service sectors.…”

“…Technological changes as well as trade and investment liberalisation have helped foster this fragmentation process, which is characterised by increasing complexity and international orientation. Since services are increasingly used in manufacturing processes – as intermediate inputs but also as stand‐alone production components – the intertwined linkage between services trade and manufacturing is apparent (Egger et al., ). Including manufacturing FDI in our regressions, we find a positive effect of manufacturing FDI on affiliate activity for some service sectors in outward sales, in particular business services (last column of Table ).…”

Services and Innovation for the Competitiveness of the Ecuadorian Economy

“…However, these services are unobservable in trade statistics, because many are packaged with goods and thereby regarded as goods. According to Francois et al (2015), the gross value of cross-border services trade made up almost 50% of total world trade in 2011 when measuring transactions in terms of the activities embodied in final products for export. By comparison, when measured in the traditional manner (in terms of the gross value of exports by final category crossing borders), services made up only 18.6% of world trade.…”

“…Hummels et al (1998) and Hummels et al (2001) originally formulated this view, with more recent contributions by Koopman et al (2010) and Amador & Cabral (2014). The second dimension of I/O analysis aims at highlighting sectorial contributions to export value added, especially when they come from the services sector, as in Low (2013), and Egger et al (2015). The recent availability of more robust and homogenous datasets has also contributed to the popularity of the I/O methodology for measuring value added content in exports.…”

Services liberalization and global value chain participation: New evidence for heterogeneous effects by income level and provisions

“…It has been argued that a well‐functioning services sector facilitates fragmentation, leading to an international reallocation of production stages (Deardorff, ; Francois, 1990c; Jones & Kierzkowski, ). The popularization of the GVC concept has highlighted this connection, with many authors emphasizing how services are the glue that holds supply chains together and ensures that they function in a fluid manner (Egger, Francois, & Nelson, ; Francois, Manchin, & Tomberger, ; Low, ).…”