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GTAP Resources: Resource Display

GTAP Resource #1095

"Trade and Direct Investment in Producer Services and the Domestic Market for Expertise "
by Markusen, James, Thomas Rutherford and David G. Tarr

Foreign producer services such as managerial and engineering consulting can provide substantial benefits of specialized knowledge that would be costly in terms of both time and money for domestic firms to develop on their own. This has important implications for public policy since policies that impact on trade and direct investment in services are often quite different from those that impact on trade in goods. We build on earlier monopolistic-competition models of intermediate producer services in this paper. Results show that: (1) while foreign services are partial-equilibrium substitutes for domestic skilled labor, they may be general-equilibrium complements, (2) service trade can provide crucial missing inputs that reverse comparative advantage in final goods, (3) the "optimal" tax on imported services may be a subsidy, and (4) in our dynamic formulation, there are disruptions along a transition path that suggest potentially important equity consequences of reform.

Resource Details (Export Citation) GTAP Keywords
Category: 2002 Conference Paper
Status: Published
By/In: Presented at the 5th Annual Conference on Global Economic Analysis, Taipei, Taiwan
Date: 2002
Version: 02/02
Created: Rutherford, T. (5/11/2002)
Updated: Bacou, M. (7/2/2002)
Visits: 2,275
- Trade in services
- Labor market issues

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