Economics at your fingertips  

International Service Transactions: Is Time a Trade Barrier in a Connected World?

Bianka Dettmer ()

International Economic Journal, 2014, vol. 28, issue 2, 225-254

Abstract: Firms' international fragmentation of production has recently widened its focus from outsourcing of intermediates to off-shoring of business services such as software program development and international call center networks. Although many services are intangible and non-storable, gravity model estimates show that geographical distance between business partners matters less for commercial service transactions. Rather, time zones can be a driving force of international service trade by allowing for continuous operation over a 24 hours business day (continuity effect) when a proper division of labor is feasible and countries are connected to electronic communications infrastructure (ICT). But even when ICT provides alternatives for face-to-face interaction, time zones can act as a barrier when coordination problems with sleeping business partners occur (synchronization effect). In this paper, we find empirical evidence for the continuity effect in trade of business services, which is robust to measurement and sample size. Even more important is that the effect of time zones on service trade depends on access to ICT. An improvement of ICT infrastructure will affect business service trade at long time zone distances significantly more than trade at short time zone distances.

Date: 2014
References: View complete reference list from CitEc
Citations: View citations in EconPapers (17) Track citations by RSS feed

Downloads: (external link) (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: International service transactions: Is time a trade barrier in a connected world? (2011) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from

DOI: 10.1080/10168737.2013.825305

Access Statistics for this article

International Economic Journal is currently edited by Jaymin Lee Editor

More articles in International Economic Journal from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().

Page updated 2023-11-30
Handle: RePEc:taf:intecj:v:28:y:2013:i:2:p:225-254