Citation

Discussion Paper Details

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Title: Trade in Business Services in General Equilibrium

Author(s): James R. Markusen and Bridget Strand

Publication Date: February 2007

Keyword(s): business services, foreign investment in services, fragmentation, offshoring, outsourcing and trade in services

Programme Area(s): International Trade and Regional Economics

Abstract: Trade in business services has been attracting attention from academic researchers, policy makers, and business journalists. While there are many anecdotes, there has been little in the way of formal theory applied to this issue. In this paper, we adapt a general model of fragmentation of production activities to try to capture the specific features of business services. Following a general discussion, we calibrate a numerical general-equilibrium simulation model to a situation in which both trade and foreign investment in services are initially banned to technically infeasible. We then compute three counter-factual scenarios: one in which trade but not investment in services is feasible or allowed, one in which investment but not trade is allowed, and one in which both trade and investment in services are allowed.

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Bibliographic Reference

Markusen, J and Strand, B. 2007. 'Trade in Business Services in General Equilibrium'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=6080