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Producer Services, Manufacturing Linkages, and Trade

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Author Info
Joseph Francois () (Erasmus Universiteit Rotterdam, Joh. Kepler University (Linz), and CEPR (London))
Julia Woerz () (The Vienna Institute for International Economic Studies (WIIW))

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Abstract

Working with a mix of panel data on goods and services trade for the OECD for 1994-2004, combined with social accounts data (i.e. data on intermediate linkages) for 78 countries benchmarked to the panel midpoint, we examine the role of services as inputs in manufacturing, with a particular focus on indirect exports of services through merchandise exports, and also on the related interaction between service sector openness and the overall pattern of manufacturing exports. From the cross-section, we also develop a set of stylized facts linking services to level of development and the density of intermediate linkages. We find significant and strong positive effects from increased business service openness (i.e. greater levels of imports) on industries like machinery, motor vehicles, chemicals and electric equipment, supporting the notion that off-shoring of business services may promote the competitiveness of the most skill and technology intensive industries in the OECD. Conversely, we find evidence of negative general equilibrium effects for sectors that are less service intensive.

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Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 07-045/2.

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Date of creation: 11 Jun 2007
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Handle: RePEc:dgr:uvatin:20070045

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Related research
Keywords: producer services; linkages; manufacturing exports; service imports; multiplier effects;

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Find related papers by JEL classification:
F14 - International Economics - - Trade - - - Country and Industry Studies of Trade
L8 - Industrial Organization - - Industry Studies: Services
O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    Other versions:
  2. James Markusen, 2005. "Modeling the Offshoring of White-Collar Services: From Comparative Advantage to the New Theories of Trade and FDI," NBER Working Papers 11827, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  3. Park, Se-Hark & Chan, Kenneth S., 1989. "A cross-country input-output analysis of intersectoral relationships between manufacturing and services and their employment implications," World Development, Elsevier, vol. 17(2), pages 199-212, February. [Downloadable!] (restricted)
  4. Stephen Ross Yeaple, 2006. "Offshoring, Foreign Direct Investment, and the Structure of U.S. Trade," Journal of the European Economic Association, MIT Press, vol. 4(2-3), pages 602-611, 04-05. [Downloadable!] (restricted)
  5. Bruce A. Blonigen, 2005. "A Review of the Empirical Literature on FDI Determinants," NBER Working Papers 11299, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  6. Francois, Joseph F, 1990. "Producer Services, Scale, and the Division of Labor," Oxford Economic Papers, Oxford University Press, vol. 42(4), pages 715-29, October. [Downloadable!] (restricted)
  7. Aaditya Mattoo, 2000. "Developing Countries in the New Round of GATS Negotiations: Towards a Pro-Active Role," The World Economy, Blackwell Publishing, vol. 23(04), pages 471-489, 04. [Downloadable!] (restricted)
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  12. Robert C. Feenstra & Gordon H. Hanson, 1996. "Globalization, Outsourcing, and Wage Inequality," NBER Working Papers 5424, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  13. Markusen, James R, 1989. "Trade in Producer Services and in Other Specialized Intermediate Inputs," American Economic Review, American Economic Association, vol. 79(1), pages 85-95, March. [Downloadable!] (restricted)
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    Other versions:
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  20. Francois, Joseph & Reinert, Kenneth A, 1995. "The Role of Services in the Structure of Production and Trade: Stylized Facts from a Cross-Country Analysis," CEPR Discussion Papers 1228, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  21. van Marrewijk, Charles & Stibora, Joachim & de Vaal, Albert & Viaene, Jean-Marie, 1997. "Producer services, comparative advantage, and international trade patterns," Journal of International Economics, Elsevier, vol. 42(1-2), pages 195-220, February. [Downloadable!] (restricted)
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  24. Beata Smarzynska Javorcik, 2004. "Does Foreign Direct Investment Increase the Productivity of Domestic Firms? In Search of Spillovers Through Backward Linkages," American Economic Review, American Economic Association, vol. 94(3), pages 605-627, June. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Fernandes, Ana M. & Paunov, Caroline, 2008. "Foreign direct investment in services and manufacturing productivity growth: evidence for Chile," Policy Research Working Paper Series 4730, The World Bank. [Downloadable!]
  2. Joseph Francois & Ian Wooton, 2008. "Market Structure and Market Access," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
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