Demand patterns and Canada’s trade in services

C. Wernerheim () and M. Waples

International Economics and Economic Policy, 2013, vol. 10, issue 2, 159-181

Abstract: Canada’s trade in commercial services appears inconsistent with what manufacturing-oriented Heckscher-Ohlin theory predicts. Canada’s services trade is overwhelmingly intra-industry, involving countries whose factor proportions and demand patterns are similar—findings consistent with the ‘new’ trade theory, and the Linder hypothesis: that there is a uni-directional causal relationship flowing from the similarity (convergence) in demand patterns amongst trading partners, to Canada’s exports to those partners. Support for this conjecture is found for the US, the UK, and Japan. We infer that liberalization of trade in commercial services is likely welfare enhancing, with gains greater within trade arrangements and entities such as the NAFTA, the EU, and the OECD. Copyright Springer-Verlag 2013

Keywords: Services; Trade; Intra-industry; Causality; Linder hypothesis; C32; F14; N70 (search for similar items in EconPapers)
Date: 2013
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DOI: 10.1007/s10368-011-0199-7

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