Determinants of Trade in Services

Abstract

This paper aims to analyse 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. The paper has been organized as follows –the first section gives a brief introduction about services and the objectives of the study, the second section is a discussion about the existing literature, section three gives the data and methodology used for this study, the fourth section provides the results and analysis, section five concludes the study, and the last section discusses some of the limitations of the study.

Keywords

• panel data
• gravity model
• foreign trade