Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/73570
Authors: 
Fillat-Castejon, Carmen
Francois, Joseph Francis
Woerz, Julia Maria
Year of Publication: 
2008
Series/Report no.: 
Working Paper, Department of Economics, Johannes Kepler University of Linz 0812
Abstract: 
Working with a panel dataset of of OECD countries over the decade 1994-2004, we examine linkages between cross-border trade and FDI in the service sectors. We first develop a consistent analytical framework for the application of the gravity model jointly to services trade and commercial presence (i.e. FDI), using a composite model of delivery that offers testable hypotheses about the roles of different modes of services supply as complements or substitutes. We further link our estimates to policy variables measuring market regulations that may act directly or implicitly as barriers to trade. We find robust evidence of complementary effects in the short-run, which is reinforced in the long run by an increased potential for cross-border imports based on previous FDI inflows. A detailed analysis by individual service sectors highlights business, communication and financial services as showing the largest potential for cross-border trade when market regulations are reduced and when commercial presence increases.
Subjects: 
FDI
imports
services
panel data
substitution and complementary effects.
JEL: 
F10
F14
F21
Document Type: 
Working Paper

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