Research Handbook on Trade in Services
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Research Handbook on Trade in Services

Edited by Pierre Sauvé and Martin Roy

This Research Handbook explores the latest frontiers in services trade by drawing on insights from empirical economics, law and global political economy. The world’s foremost experts take stock of the learning done to date in services trade, explore policy questions bedevilling analysts and direct attention to a host of issues, old and new, confronting those interested in the service economy and its rising salience in cross-border exchange. The Handbook’s 22 chapters shed informed analytical light on a subject matter whose substantive remit continues to be shaped by rapid evolutions in technology, data gathering, market structures, consumer preferences, approaches to regulation and by ongoing shifts in the frontier between the market and the state.
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Chapter 4: Ricardo does services: Service sector regulation and comparative advantage in goods

Erik van der Marel


Some countries export services more successfully than others. One important reason for this outcome is that certain countries have developed various underlying economic factors that enable them to become more productive in exporting certain goods (or services) more than others. Over the years, the empirical trade literature has uncovered several of these country-wide economic factors that explain why countries specialize, for example relatively good human capital, a larger pool of ICT capital or strong domestic institutions. This chapter assesses whether factors related to services have any bearing on specialization patterns of countries with respect to trade in goods. In particular, it investigates the relationship between the quality of the regulatory institutions in an economy and liberalization of services markets, which in turn should have an effect on the export of goods that use services as inputs. Indeed, this chapter shows that if the liberalization of services takes place under qualitatively good regulatory institutions, countries in which goods industries source relatively more services from these sectors will see a specialization in these services-dependent goods industries. This amounts to a regulatory comparative advantage.

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