The measurement of barriers to services trade and its impact on Chinese services export

Jiang Bingbing and Lee Zhaohua

No 332002, Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project

Abstract: Into the 21st century, the growth rate of trade in services is more than trade in goods. There are urgent needs for reorganizing the concept of trade in services, the method of service barrier quantification, and estimation the impacts of barriers to trade. This paper studies the theory of trade in services, quantifying the seriousness of barriers faced by China’s export of transport, finance, telecommunication sectors, and tests the impacts of barriers on China’s export. The existing methods of measurement of barriers are mainly freedom index and ad valorem equivalents method. The paper expands intensity indexes of services barriers to calculate the restrictions against Chinese service export in financial, transport, telecommunications sectors. It includes the following four categories: restrictions on market access, ownership and control, operating, movement of people. Possible restrictions are classified into restriction 12 categories with weights, which based on the research of Kimura et.al (2003). The sum of weights for all categories is 1. Then a score with a range from 0(least restrictive) to 1(most restrictive) is assigned for each category, and intensity index calculated by summing up the multiplying the selected score by the weight. The study tests the application of gravity model for bilateral services trade in a sample of 55 countries. It finds that the standard gravity model explains services trade flows well. In this paper we employs gravity model using panel data to explore whether the barriers in services trade limit the export of China’s financial, transport, telecommunications services. The result shows that the questioned barriers of trade in services have no significant influence. One possible reason is that China's service trade only has weak international competitiveness and cannot meet the required level of service barriers restriction of trade partner.

Keywords: International Relations/Trade; International Development (search for similar items in EconPapers)
Pages: 20
Date: 2010
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