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The Interconnections Between Services and Goods Trade at the Firm-Level

Ariu, Andrea, Breinlich, Holger, Corcos, Gregory and Mion, Giordano (2019) The Interconnections Between Services and Goods Trade at the Firm-Level Journal of International Economics, 116. pp. 173-188.

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Abstract

In this paper we study how international trade in goods and services interact at the firm level. Using a rich dataset on Belgian firms for the period 1995-2005, we show that: i) firms are much more likely to source services and goods inputs from the same origin country rather than from different ones; ii) joint imports are associated with higher firm productivity; iii) increases in barriers to imports of goods reduce firm-level imports of services from the same market, and conversely. We build upon a discrete-choice model of goods and services input sourcing that can reproduce these facts to guide our econometric strategy. We use our results to quantify the impact of reductions in goods and services barriers between the US and the EU. Our findings have important implications for the design of trade policy. They suggest that a liberalization of services trade can have direct and sizable effects on goods trade, and vice versa. Moreover, liberalizing goods and services trade jointly brings substantial complementarities.

Item Type: Article
Divisions : Faculty of Arts and Social Sciences > Surrey Business School
Authors :
NameEmailORCID
Ariu, Andrea
Breinlich, Holgerh.breinlich@surrey.ac.uk
Corcos, Gregory
Mion, Giordano
Date : January 2019
Funders : European Union Seventh Framework Programme
DOI : 10.1016/j.jinteco.2018.10.005
Copyright Disclaimer : © 2019. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/
Uncontrolled Keywords : Trade in Services; Trade in Goods; Complementarity; Firm-level Analysis; Discrete Choice Models
Depositing User : Rebecca Cooper
Date Deposited : 08 Jan 2019 10:53
Last Modified : 26 Mar 2019 16:23
URI: http://epubs.surrey.ac.uk/id/eprint/850100

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