From Selling Goods to Selling Services: Firm Responses to Trade Liberalization

33 Pages Posted: 30 Sep 2014

See all articles by Holger Breinlich

Holger Breinlich

University of Surrey - School of Economics; Centre for Economic Policy Research (CEPR); London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP)

Anson Soderbery

Purdue University

Greg C Wright

University of California, Merced

Date Written: August 2014

Abstract

In the face of trade liberalization domestic firms are often forced out of the market, whereas others adapt and survive. In this paper we focus on a new channel of adaptation, namely the shift toward increased provision of services in lieu of goods production. We exploit variation in EU trade policy to show that lower manufacturing tariffs cause firms to shift into services provision and out of goods production. Additionally, we find that a successful transition is strongly associated with higher firm-level R&D stocks whereas higher physical capital stocks slow the shift into services provision.

Keywords: services trade, trade liberalization

JEL Classification: F12, F15, F23

Suggested Citation

Breinlich, Holger and Soderbery, Anson and Wright, Greg C, From Selling Goods to Selling Services: Firm Responses to Trade Liberalization (August 2014). CEPR Discussion Paper No. DP10116. Available at SSRN: https://ssrn.com/abstract=2501588

Holger Breinlich (Contact Author)

University of Surrey - School of Economics ( email )

Guildford, Surrey GU2 7XH
United Kingdom

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP) ( email )

Houghton Street
London WC2A 2AE
United Kingdom

Anson Soderbery

Purdue University ( email )

1310 Krannert Building
West Lafayette, IN 47907-1310
United States

Greg C Wright

University of California, Merced ( email )

P.O. Box 2039
Merced, CA 95344
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
0
Abstract Views
386
PlumX Metrics