Services trade within Canada and the European Union. What do they have in common?Arjan Lejour () and J.W. de Paiva Verheijden CPB Discussion Papers from CPB Netherlands Bureau for Economic Policy Analysis Abstract: This paper explains bilateral services trade using a gravity equation and compares the results with trade in goods. We analyse bilateral trade between the provinces of Canada and between the member states of the European Union. We conclude that the gravity equation explains the variability in services trade very well: market size of the exporting and importing regions and distance are the most important explanatory variables. On average, distance is a less hindrance for services trade than for goods trade. Differences in languages and the regulation of product markets hamper services and goods trade in Europe significantly. Trade in services is also hampered by regulation in the importing country, but this is not true for goods. Services trade within Canada is twice as high as within Europe measured as share of GDP. Tentative estimates suggest that intra-EU services trade could be much higher if the internal market would function like the Canadian services market. Keywords: trade in services; gravity equations; internal market EU; regulation (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: http://EconPapers.repec.org/RePEc:cpb:discus:42 Access Statistics for this paper More papers in CPB Discussion Papers from CPB Netherlands Bureau for Economic Policy Analysis |
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