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    Sources of Comparative Advantage in Services: Institution vs. Social Capital

    Choi, Nakgyoon; Park, Soonchan | December 2018
    Abstract
    Previous studies that have identified the impacts of institutions or cultural traits on comparative advantage focused on goods trade, but not services trade. In contrast to the rapid increase in trade in services, empirical examination on sources of comparative advantage in services trade remains limited. This paper attempts to fill this gap by investigating empirically the impacts of institution as well as social capital on comparative advantage in services trade. Services are exposed to relatively more pre-choice risks than goods, because it is difficult to obtain information on the quality of services before the consumer decides to purchase. In addition, trade in services involved in global value chains possibly takes on the risks of contract breach by other firms along the same value chains. As a result, the transaction risks for trade in services are higher than for trade in goods. Using the World Input Output Database, we estimate the importance of social capital for comparative advantage in services. We find that countries with more social capital tend to specialize in the production of contract-intensive services. We also find that social capital rather than institution matters for comparative advantage in services.
    Citation
    Choi, Nakgyoon; Park, Soonchan. 2018. Sources of Comparative Advantage in Services: Institution vs. Social Capital. © Korea Institute for International Economic Policy. http://hdl.handle.net/11540/9411.
    Print ISBN
    978-89-322-4280-4
    Keywords
    Free Trade
    Trade Facilitation
    Trade
    Economic integration
    Regional Economic Integration
    Intraregional Trade
    Macroeconomic
    Macroeconomic Analysis
    Macroeconomic Framework
    Macroeconomic Models
    Macroeconomic Performance
    Macroeconomic Planning
    Macroeconomic Policies
    Macroeconomic Reform
    Macroeconomic Stabilization
    Economic planning
    Economic structure
    Growth policy
    Trade relations
    Trade policy
    Trade policy
    Economic development
    Economies in transition
    International economy
    Border integration
    Economic integration
    Gross domestic product
    Trade policy
    Trade Regulations
    Exchange Rate
    Regional economics
    Economic forecasting
    Economic development projects
    Success in business
    Business
    Free trade
    Services Trade
    Business
    Economics
    Communication in economic development
    Restraint of trade
    International economic integration
    Trade blocs
    East-West
    Show allCollapse
    Citable URI
    http://hdl.handle.net/11540/9411
    Metadata
    Show full item record
    Thumbnail
    WP18-06.pdf (4.259Mb)
    Author
    Choi, Nakgyoon
    Park, Soonchan
    Theme
    Trade
    Economics
     
    Copyright 2016-2021 Asian Development Bank Institute, except as explicitly marked otherwise
    Copyright 2016-2021 Asian Development Bank Institute, except as explicitly marked otherwise