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Are trade costs higher for services than for manufactures? Evidence from firm-level data

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  • Minondo, Asier

Abstract

Using a unique database, I estimate the costs of trading with European Union countries, relative to the costs of trading with the domestic market, for services and manufacturing firms located in the Basque Country region of Spain. I find that, despite the dramatic improvement in information and communication technologies, international trade costs for services are still much larger than for manufactures. Based on standard elasticities of substitution used in the literature, our results suggest that the tariff equivalent of international trade costs is between 50% and 60% larger for services than for manufactures.

Suggested Citation

  • Minondo, Asier, 2012. "Are trade costs higher for services than for manufactures? Evidence from firm-level data," MPRA Paper 36185, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:36185
    as

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    References listed on IDEAS

    as
    1. Martina Lawless, 2010. "Deconstructing gravity: trade costs and extensive and intensive margins," Canadian Journal of Economics, Canadian Economics Association, vol. 43(4), pages 1149-1172, November.
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    3. James E. Anderson & Catherine A. Milot & Yoto V. Yotov, 2011. "The Incidence of Geography on Canada's Services Trade," NBER Working Papers 17630, National Bureau of Economic Research, Inc.
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    6. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    trade costs; exports; services; manufactures; firm-level evidence; Basque-Country;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F19 - International Economics - - Trade - - - Other

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