Trade and direct investment in producer services and the domestic market for expertise

James Markusen, Thomas F. Rutherford and David Tarr

Chapter 19 in Trade Policies for Development and Transition, 2017, pp 439-458 from World Scientific Publishing Co. Pte. Ltd.

Abstract: Foreign producer services can provide substantial benefits for domestic firms. We build on earlier monopolistic-competition models of intermediate producer services in this paper. Results show that: (1) while foreign services are partial-equilibrium substitutes for domestic skilled labour, they may he general-equilibrium complements, (2) service trade can provide crucial missing inputs that reverse comparative advantage in final goods, (3) the ‘optimal’ tax on imported services may be a subsidy, and (4) in our dynamic formulation, there may be earnings losses for immobile workers along a transition path that suggest potentially important equity consequences of reform.

Keywords: International Trade Policy; Developing Countries; Transition Countries; Growth; Poverty; Environment; Multilateral; Adjustment Costs; Autos and Steel (search for similar items in EconPapers)
JEL-codes: F13 (search for similar items in EconPapers)
Date: 2017
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Related works:
Journal Article: Trade and direct investment in producer services and the domestic market for expertise (2005)
Journal Article: Trade and direct investment in producer services and the domestic market for expertise (2005)
Working Paper: Trade and Direct Investment in Producer Services and the Domestic Market for Expertise (2002)
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