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Services Productivity, Trade Policy and Manufacturing Exports
Author(s) -
Hoekman Bernard,
Shepherd Ben
Publication year - 2017
Publication title -
the world economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.594
H-Index - 68
eISSN - 1467-9701
pISSN - 0378-5920
DOI - 10.1111/twec.12333
Subject(s) - restrictiveness , productivity , linkage (software) , distribution (mathematics) , economics , business , international economics , bilateral trade , international trade , foreign direct investment , channel (broadcasting) , macroeconomics , computer science , telecommunications , mathematical analysis , philosophy , linguistics , biochemistry , chemistry , mathematics , gene , political science , law , china
Abstract This paper analyses the linkage between services and manufacturing productivity performance, using firm‐level data for over 100 developing countries. We find strong evidence for such a linkage, although the effect is small: at the average rate of services input intensity, a 10 per cent improvement in services productivity is associated with an increase in manufacturing productivity of 0.3 per cent. Services trade restrictiveness indices are found to be a statistically significant determinant of manufactured exports performance, a finding that is robust to the inclusion of the overall level of trade restrictiveness that is applied against manufactured exports directly. The main channel through which services trade restrictions negatively affect manufactured exports is through FDI , a finding that is consistent with the stylised fact in the literature that FDI is a key channel for trade in services and an important vehicle through which services technology and know‐how is transferred across countries. At the sectoral level, restrictions on transport and retail distribution services have the largest negative impact on exports of manufactures.