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Services liberalization and global value chain participation: New evidence for heterogeneous effects by income level and provisions
Author(s) -
Lee Woori
Publication year - 2019
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/roie.12402
Subject(s) - industrialisation , liberalization , international economics , free trade , global value chain , economics , value (mathematics) , trade in services , international trade , goods and services , developing country , business , comparative advantage , economic growth , market economy , machine learning , computer science
Participation in global value chains (GVCs) is a key element in the industrialization strategies of many developing nations. This paper investigates the role of services liberalization in promoting participation in GVCs. Using the gravity framework, I examine the impact of services trade agreements on gross trade and GVC trade (backward and forward participation) in goods. I find that services trade agreements promote both, but especially GVC trade, although the effects are heterogeneous: the impact is bigger for developing nation exporters. Moreover, services agreements that allow the export of services without local presence (nonestablishment rights) are particularly important in fostering GVC participation.