31 Mar 2017, Wiley

The Role of Goods Trade Networks for Services Trade Volume

Journal article by P. Egger, J. Francois, and D. Nelson in The World Economy, Volume 40, Issue 3, March 2017, pp. 532–543

Abstract: In this paper, we address the role of countries’ goods-trade networks for their services-trade volume. The paper employs a large cross section of bilateral trade data on aggregate cross-border goods and services sales and illustrates that the depth and overlap of two countries’ services networks induce a positive direct impact on their services-trade volume. The evidence takes into account that goods trade flows and networks are potentially endogenous so that the estimated direct effects support a causal interpretation. We find that the magnitude of the multilateral goods-trade network effect on the bilateral services-trade volume is much larger than that of bilateral goods-trade volume.

related links