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. ISSN 0022-1996

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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
Schools and Departments: University of Sussex Business School > Economics
Subjects: H Social Sciences > HF Commerce > HF1021 Commercial geography. Economic geography
Depositing User: Giordano Mion
Date Deposited: 01 Nov 2018 14:03
Last Modified: 03 Jun 2020 01:00
URI: http://sro.sussex.ac.uk/id/eprint/79837

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