Trade in Business Services in General Equilibrium

James R. Markusen () and Bridget Strand

No 6080, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Trade in business services has been attracting attention from academic researchers, policy makers, and business journalists. While there are many anecdotes, there has been little in the way of formal theory applied to this issue. In this paper, we adapt a general model of fragmentation of production activities to try to capture the specific features of business services. Following a general discussion, we calibrate a numerical general-equilibrium simulation model to a situation in which both trade and foreign investment in services are initially banned to technically infeasible. We then compute three counter-factual scenarios: one in which trade but not investment in services is feasible or allowed, one in which investment but not trade is allowed, and one in which both trade and investment in services are allowed.

Keywords: business services; foreign investment in services; fragmentation; offshoring; outsourcing; trade in services (search for similar items in EconPapers)
JEL-codes: F0 F23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cmp and nep-int
Date: Written
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Related works:
Working Paper: Trade in Business Services in General Equilibrium (2007)
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