Andrea Ariu, Florian Mayneris, Mathieu Parenti, 06 February 2020

Many large and successful firms sell both goods and services; yet economists and policymakers continue to consider the two as distinct sectors subject to their own market adjustments and specific policies. Based on Belgian data, this column argues that the most successful manufacturing firms thrive through selling services that are associated with their goods. Services increase the appeal of a firm’s products, thus allowing it to sell more and at higher prices in international markets. Considering goods and services separately in trade agreement negotiations is likely to miss part of the business and welfare gains and losses. 

Masayuki Morikawa, 22 May 2015

World trade in services is increasing rapidly but micro evidence remains scarce. This column employs firm data from Japan to argue that service-exporting firms are more productive than non-exporting firms and goods-exporting firms. Information asymmetry, transportation costs, differences in institutions, cultures, and languages increase the fixed costs of service trade. Therefore, highly productive firms are more likely to self-select into service trade.   

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