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Does Gravity Apply to Intangibles? Trade and FDI in Services

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  • Francois, Joseph
  • Hoekman, Bernard
  • Woerz, Julia

Abstract

We work with a panel dataset on trade and FDI across a number of detailed service sectors for 178 countries, based on combined data from the OECD, IMF, EUROSTAT, and the BEA. To estimate degrees of service sector openness, we develop a two-stage estimator suitable for available balance-of-payments based services trade data, which lacks bilateral detail. The result is a set of comparable, detailed trade and FDI restriction indexes that spans time, sector, and country dimensions. For a smaller set of countries – the OECD -- we then examine the relationship of these indexes to regulatory indicators. Our estimates of service sector openness and related trade cost equivalents are invariant to domestic regulatory structure in the OECD.

Suggested Citation

  • Francois, Joseph & Hoekman, Bernard & Woerz, Julia, 2007. "Does Gravity Apply to Intangibles? Trade and FDI in Services," Conference papers 331584, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:331584
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    References listed on IDEAS

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    1. Glenn W. Harrison & Thomas F. Rutherford & David G. Tarr & Angelo Gurgel, 2014. "Trade Policy and Poverty Reduction in Brazil," World Scientific Book Chapters, in: APPLIED TRADE POLICY MODELING IN 16 COUNTRIES Insights and Impacts from World Bank CGE Based Projects, chapter 10, pages 225-253, World Scientific Publishing Co. Pte. Ltd..
    2. Harris, John R & Todaro, Michael P, 1970. "Migration, Unemployment & Development: A Two-Sector Analysis," American Economic Review, American Economic Association, vol. 60(1), pages 126-142, March.
    3. Hertel, Thomas, 1997. "Global Trade Analysis: Modeling and applications," GTAP Books, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, number 7685, December.
    4. McKibbin, W.J. & Wilcoxen, J.P., 1992. "G-Cubec: A Dynamic Multi-Sector General Equilibrium Model of the Global economy (Quantifying the Cost of Curbing CO2 Emissions)," Papers 98, Brookings Institution - Working Papers.
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