Regional Liberalisation of Trade in Services

16 Pages Posted: 31 May 2011

See all articles by Innwon Park

Innwon Park

Korea University

Soonchan Park

Kongju National University

Date Written: May 2011

Abstract

This paper investigates quantitatively the trade‐enhancing effect of regional trade agreements (RTAs) under the General Agreement on Trade in Services Article V (services RTAs) by applying a gravity regression analysis to four major services sectors – financial, business, communication and transportation services – while controlling for both country‐specific and time‐varying importer and exporter fixed effects. The regression analysis covers bilateral imports in services consisting of 20,986 country‐pairs in total over six years (2000–05). Our results indicate that sector‐specific trade‐creating effects of services RTAs are significantly positive without incurring trade‐diverting effects, excluding transportation services. Moreover, we find that there is a significant cumulative effect of services RTAs, excluding communication services and a complementary relationship between goods and services imports. In addition, the trade‐creating effect of services RTAs is stronger between developed members compared with between developed and developing countries.

Suggested Citation

Park, Innwon and Park, Soonchan, Regional Liberalisation of Trade in Services (May 2011). The World Economy, Vol. 34, Issue 5, pp. 725-740, 2011. Available at SSRN: https://ssrn.com/abstract=1854148 or http://dx.doi.org/10.1111/j.1467-9701.2011.01350.x

Innwon Park (Contact Author)

Korea University ( email )

Soonchan Park

Kongju National University ( email )

527 Yesan
340-800 Choongnam
Korea

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