Working Paper: CEPR ID: DP7837
Authors: Holger Breinlich; Chiara Criscuolo
Abstract: We provide a novel set of stylized facts on firms engaging in international trade in services, using unique data on firm-level exports and imports from the world's second largest services exporter, the United Kingdom (UK). We show that only a fraction of UK firms engage in international trade in services, that trade participation varies widely across industries and that services traders are different from non-traders in terms of size, productivity and other firm characteristics. We also provide detailed evidence on the trading patterns of services exporters and importers, such as the number of markets served, the value of exports and imports per market and the share of individual markets in overall sales. We interpret these facts in the light of existing theories of international trade in services and goods. Our results demonstrate that firm-level heterogeneity is a key feature of services trade. Also, we find many similarities between services and goods trade at the firm level and conclude that existing heterogeneous firm models for goods trade will be a good starting point for explaining trade in services as well.
Keywords: firm-level evidence; international trade; services
JEL Codes: F14; F19; F23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Industry type (L89) | Trade participation (F10) |
| Firm characteristics (size, productivity, capital intensity) (D21) | Trade status (exporters, importers, non-traders) (F10) |
| Firm characteristics (size, productivity, capital intensity) (D21) | Engagement in international trade (F10) |
| Exporters and importers (F10) | Non-traders (F19) |
| Firm characteristics (size, productivity, capital intensity) (D21) | Trading patterns (number of markets, values of exports and imports) (F10) |
| Heterogeneous firm models for goods trade (F12) | Understanding services trade (F19) |