Services trade, goods trade and productivity growth: evidence from a population of private sector firms

In this paper, the authors analyze and compare the role of international trade for productivity growth within the service and the manufacturing sector. They distinguish between trade in goods and trade in services within both sectors, and between exports and imports. At the firm level, they find that firms that start to export or import goods experience significant increases in productivity and size. The effects of services trade are typically smaller, confined to exports and vary across sectors. At the sector level, they find that international trade plays a potentially larger role for the productivity development within the service sector than within the manufacturing sector, but it is trade in goods not trade in services that matters most. This suggests that trade intermediaries play an important role for productivity growth in the economy. Copyright Kiel Institute 2015