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GTAP Resource #3792

"On the Determinants of Trade in Services: Evidence from the MENA Region "
by Zaki, Chahir and Fida Karam

Trade in services is receiving increasing interest in the trade literature and in the negotiations under the GATS due to the importance of services in the global economy. Services currently account for approximately two thirds of world GDP and over half of total employment in industrialized countries (WTO, 2010). Given these figures, one may be surprised to see that the share of services in total trade falls behind, reaching 21% of global trade flows in 2009 (WTO, 2010). If trade in services is underestimated due to the intangible nature of services and the interdependence of services and foreign direct investment flows that makes the measurement of services trade difficult, this low figure is also due to the important restrictions on trade in services.
In 2010, the major exporters of commercial services remained the European Union, the United States, Japan, China and India, which together represented around two-thirds of world exports (WTO, 2011). Although Middle East and North Africa (MENA) countries have lately made progress in this field, MENA’s share in total service trade has stagnated at around 4.8% in 2010 (author’s calculations from WTO (2011)). Moreover, service trade only represented 19% of the region’s GDP in 2009 although service value added accounted for more than 40% of GDP (author’s calculations from the World Development Indicators database). These outcomes do not only reveal serious competitiveness issues but are a consequence of the limited commitments for services liberalization.

This paper investigates the determinants of service trade in MENA countries. Since we are interested in each country’s trade performance in services instead of bilateral service trade flows, we use an adapted version of the gravity model, taking into account unilateral variants of those variables that have been found to influence bilateral trade. We also introduce a new determinant of trade performance: the number of commitments undertaken by sector in the WT...

Resource Details (Export Citation) GTAP Keywords
Category: 2012 Conference Paper
Status: Published
By/In: Presented at the 15th Annual Conference on Global Economic Analysis, Geneva, Switzerland
Date: 2012
Version: Draft
Created: Zaki, C. (4/18/2012)
Updated: Zaki, C. (4/18/2012)
Visits: 1,684
- Trade in services
- Economic development
- Middle East

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