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The interconnections between services and goods trade at the firm-level

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posted on 2023-06-09, 15:41 authored by Andrea Ariu, Holger Breinlich, Gregory Corcos, Giordano Mion
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.

History

Publication status

  • Published

File Version

  • Accepted version

Journal

Journal of International Economics

ISSN

0022-1996

Publisher

Elsevier

Volume

116

Page range

173-188

Department affiliated with

  • Economics Publications

Full text available

  • Yes

Peer reviewed?

  • Yes

Legacy Posted Date

2018-11-01

First Open Access (FOA) Date

2020-06-03

First Compliant Deposit (FCD) Date

2018-10-31

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