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Services liberalization and GVC participation: New evidence for heterogeneous effects by income level and provisions

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Abstract
Participation in global value chains (GVCs) is a key element in the industrialization strategies of many developing nations. Many studies look at the determinants of GVC participation but most focus on domestic regulatory environments, the cost of doing business, and trade policy. This paper investigates the possibility that services also matter by empirically testing for a link between higher GVC participation and services liberalization. Using the gravity framework, I examine the impact of services trade agreements on gross trade and GVC-trade (backward and forward participation). I find that services trade agreements promote both, but especially GVC-trade, although the effects are heterogeneous: the impact is bigger for developing nation exporters. Moreover, I find that services agreements that allow the export of services without local presence (non-establishment rights) are particularly important in fostering GVC participation.

Suggested Citation

  • Woori Lee, 2017. "Services liberalization and GVC participation: New evidence for heterogeneous effects by income level and provisions," CTEI Working Papers series 08-2017, Centre for Trade and Economic Integration, The Graduate Institute.
    • Handle: RePEc:gii:cteiwp:ctei-2017-08
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    4. Sineenat Sermcheep, 2019. "Services Export and Economic Growth in ASEAN Countries," Journal of Asian Economic Integration, , vol. 1(2), pages 163-182, September.
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    6. Carmen Díaz-Mora & Rosario Gandoy & Belén González-Díaz, 2018. "Looking into global value chains: influence of foreign services on export performance," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 154(4), pages 785-814, November.

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    More about this item

    Keywords

    Services liberalization; Global value chains; Regional trade agreements; Gravity equation; Non-establishment rights;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development

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