International Provision of Trade Services, Trade, and Fragmentation

Alan Deardorff

Working Papers from Research Seminar in International Economics, University of Michigan

Abstract: This paper examines the special role that trade liberalization in service industries can play in stimulating not only trade in services itself, but also in stimulating trade in goods. International trade in goods requires inputs from several services industries - what I call trade services, such as transportation, insurance, and finance - in order to complete and facilitate international transactions. Restriction on the ability of national service providers to provide these services across borders and within foreign countries create additional costs and barriers to international trade above those that would arise in otherwise comparable intra-national exchange. As a result, trade liberalization in services can yield benefits, by facilitating trade in goods, that are larger than one might expect from analysis of the services trade alone. This paper explores this idea using simple theoretical models to specify the relationships between services trade and goods trade. The paper also, to make the point more forcefully, notes the role of services trade in a model of international industrial fragmentation, where production processes can be separated across locations but at some cost in terms of additional service inputs.

Keywords: INTERNATIONAL TRADE; SERVICE INDUSTRY (search for similar items in EconPapers)
JEL-codes: F10 F13 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2000
References: Add references at CitEc
Citations: View citations in EconPapers (11)

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Related works:
Journal Article: International Provision of Trade Services, Trade, and Fragmentation (2001)
Working Paper: International provision of trade services, trade, and fragmentation (2001)
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Persistent link: https://EconPapers.repec.org/RePEc:mie:wpaper:463

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