Shedding light on the drivers of services tradability over two decades
Services have become significantly more tradable in the first two decades of the 21st
century. This paper documents that trade costs for financial services, communication
services and business services fell by between 30% and 60% between 2000 and 2019.
Information and communication technology and growth of air traffic have acted as key
drivers of this development. While there is some variation across sectors, the analysis
suggests that these two determinants jointly account for a quarter to half of the
aggregate decline in trade costs for services during this 20-year period. Furthermore,
services provisions in regional trade agreements (RTAs) can explain between 3% and
14% of the reduction in trade costs for communications services and financial and
insurance services. These findings demonstrate the importance of whole-of-government
strategies to promote services trade competitiveness, inter alia market access, regulatory
reform, as well as investment in physical and digital infrastructure and adoption
of new technologies.
Published on October 20, 2022
In series:OECD Trade Policy Papersview more titles