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Business services outsourcing and economic growth: Evidence from a dynamic panel data approach

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  • Bianka Dettmer

    (Friedrich Schiller University Jena, Chair of Economic Policy)

Abstract

Innovations in information- and telecommunication technology render the proximity requirement between business partners obsolete and make business service outsourcing via cross-border trade more feasible. Although the (service-led) growth prospects have been widely discussed, evidence at the country level is scarce. In this paper, we evaluate the effect of openness to trade commercial- and specialized business services on long-run growth by applying a dynamic panel data approach to account for unobserved country specific effects and endogenous growth determinants. The system GMM estimates validate that a long-run growth effect for countries taking part in the outsourcing process of producer services exists. The growth effect is significantly stronger in a sample of Non-OECD countries and suggests a kind of catching-up process. Evidence from two stage least square indicate that the impact of professional service regulation on long-run growth work rather indirectly through trade flows.

Suggested Citation

  • Bianka Dettmer, 2012. "Business services outsourcing and economic growth: Evidence from a dynamic panel data approach," Jena Economics Research Papers 2012-049, Friedrich-Schiller-University Jena.
    • Handle: RePEc:jrp:jrpwrp:2012-049
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    Keywords

    international trade; business services; growth; system GMM;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F15 - International Economics - - Trade - - - Economic Integration
    • L84 - Industrial Organization - - Industry Studies: Services - - - Personal, Professional, and Business Services
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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