Services trade contribution on global income generation (2000 - 2014)

Abstract

This paper investigates the contribution of services trade to the variation of global income generation for the period of 2000 to 2014, applying a structural decomposition analysis in a global multi-regional input-output framework. We disentangle impacts of determinants of this variation for 56 sectors (of which, 29 are services) on a global level and on seven world regions, considering primary inputs, technology, components of final demand (private consumption, government expenditures and investment), trade and trade structure of both intermediate inputs and final products as drivers. Empirical findings suggest that overall, intermediate trade of services contributed to 5,38% of global income generation while final trade of services to 4,56% for the 15 years-period analyzed. This significant contribution seems to be explained mainly through the increase of demand of services as the negative effect of the structure of trade suggests that per unit of services traded, the value–added generated decreased over this period. At the sectoral level, wholesale trade, the financial sector, administrative and support services, legal and accounting services along with land transport appear to be the most important contributors of the services sectors through trade. Despite having northern European countries along with the BRIIC countries and the northern American ones as the most important contributors through services trade, when looking at the share of contribution of services trade of different groups relative to only their own total contribution, the eastern European countries is the group that makes it to the top.