Determinants of Trade in Services

  • Nikita Joshi Symbiosis School of Economics, Senapati Bapat Rd, Pune, Maharashtra 411004, India
  • Assist. Prof. Dr. Ishita Ghosh Symbiosis School of Economics, Senapati Bapat RoaSymbiosis School of Economics, Senapati Bapat Rd, Pune, Maharashtra 411004, Indiad, Pune – 411004, Maharashtra, India
Keywords: panel data, gravity model, foreign trade


This paper aims to analyze the determinants affecting the trading of services and examine the causality between the trading of services and the factors affecting the trade. For the study, the fixed effects panel data regression has been used. The results indicate that as the income of a country increases, its trade in services also increases. The use of the internet and mobile phones are also important indicators of trade in services and an increase in their use reduces the cost of trading services.  Free trade agreements play an important role in developing countries like Brazil and China for trading services.


Anderson, J., Borchert, I., Mattoo, A. (2018). Dark Costs, Missing Data: Shedding Some Light on Services Trade. European Economic Review, Vol. 105, (pp. 193-214).
Kimura, Fukunari & Lee, Hyun-Hoon. (2006). The Gravity Equation in International Trade in Services. Review of World Economics (Weltwirtschaftliches Archiv). 142. 92-121. 10.1007/s10290-006-0058-8
Lennon, C. (2009). Trade in Services and Trade in Goods: Differences and Complementarities. wiiw Working Paper, No. 53, The Vienna Institute for International Economic Studies (wiiw), Vienna.
Loungani, P., Mishra, S., Papageorgiou, C., Wang, K. (2017). World Trade in Services: Evidence from a New Dataset. IMF Working Paper WP/17/77.
Walsh, K. (2006). Trade in Services: Does Gravity Hold? A Gravity Model Approach to Estimating Barriers to Services Trade. Institute for International Integration Studies Discussion Paper 183.
WTO (2019), World Trade Report 2019: The future of services trade, WTO, Geneva.
Balchin, N., Hoekman, B., Martin, H., Mendez-parra, M., Papadavid, P., Primack, D., Velde, D. (2016). Trade in Services and Economic Transformation. Supporting Economic Transformation.
Benz, S. (2017). Services trade costs: Tariff equivalents of services trade restrictions using gravity estimation. OECD Trade Policy Papers, No. 200, OECD Publishing Paris.
Cheng, I.H. & Wall, Howard. (2005). Controlling for Heterogeneity in Gravity Models of Trade and Integration. Review. 7. 49-63. 10.20955/r.87.49-64.
Roodman, D. (2009). How to do xtabond2: AN introduction to difference and system GMM in STATA. The Stata Journal, 9, Number 1, (pp. 86-136).
Starck, S. (2012). The Theoretical foundation of Gravity Modeling: What are the developments that have brought gravity modelling into mainstream economics? Copenhagen Business School.
How to Cite
Joshi, N., & Ghosh, I. (2021). Determinants of Trade in Services. Mednarodno Inovativno Poslovanje = Journal of Innovative Business and Management, 13(1), 72-78.
Original article