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Effect of multilateral trade liberalization on services export diversification

Sena Kimm Gnangnon (Development Division, World Trade Organization (WTO), Geneva, Switzerland)

Journal of Economic Studies

ISSN: 0144-3585

Article publication date: 22 September 2021

53

Abstract

Purpose

This study investigates the effect of multilateral trade liberalization on services export diversification with a view to complementing the recently published work on the effect of multilateral trade liberalization on export product diversification.

Design/methodology/approach

The empirical exercise been performed using a panel dataset of 133 countries over the period 1995–2014.

Findings

The findings show that multilateral trade liberalization is associated with greater services export diversification in both developed and developing countries alike. This is particularly the case in countries with a high reliance on manufactured goods exports or those that enjoy greater export product diversification. Interestingly, multilateral trade liberalization enhances services export diversification in countries that experience higher foreign direct investment inflows.

Research limitations/implications

These findings highlight the importance of multilateral trade liberalization for services export diversification. The study has considered explicitly supply-side factors that could affect services export diversification. This is because the indicator of multilateral trade liberalization is highly correlated with some demand-side factors, such as the world demand for services exports. Therefore, another avenue for future research could involve looking at the demand side factors that could influence services export diversification, and whether the degree of multilateral trade liberalization matters for the influence of these demand factors on services export diversification.

Practical implications

The current study through its positive effect on both export product diversification and services export diversification, greater cooperation among World Trade Organization (WTO) Members on trade matters could help revive economic growth, particularly in the current COVID-19 pandemic that has significantly plummeted it.

Originality/value

To the best of our knowledge, this is first study that has investigated this issue.

Keywords

Acknowledgements

This article represents the personal opinions of individual staff members of the WTO and is not meant to represent the position or opinions of the WTO or its Members, nor the official position of any staff members. The author expressed his full gratitude to the anonymous Reviewers and the Editor for their constructive comments on the previous versions of the paper. Any errors or omissions are the fault of the author.

Citation

Gnangnon, S.K. (2021), "Effect of multilateral trade liberalization on services export diversification", Journal of Economic Studies, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JES-01-2021-0057

Publisher

:

Emerald Publishing Limited

Copyright © 2021, Emerald Publishing Limited

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