Trade in services in the Baltic States: evolution and future prospects
Abstract
Trade in services in the Baltic States has traditionally been overlooked. The main objective of this article is to assess the current situation and the future prospects of trade in those services used as intermediate inputs using data from the World Input-Output Database. Unlike previous works we do not only analyze direct trade but also indirect trade, that is, the trade in intermediate services contained in goods. The results show that although traditional services reported major shares in the total volume of intermediate services exports in the Baltic States, other categories of more knowledge-intensive services are gaining importance.
First published online: 08 Jun 2017
Keyword : direct trade, indirect trade, intermediate services, Baltic States, input-output tables
How to Cite
Rodríguez, M., Melikhova, Y., & Camacho, J. A. (2018). Trade in services in the Baltic States: evolution and future prospects. Technological and Economic Development of Economy, 24(2), 585–599. https://doi.org/10.3846/20294913.2016.1213203
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
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Backer, K. D.; Miroudot, S. 2013. Mapping Global Value Chains. OECD Trade Policy Paper 159. Paris: OECD. https://doi.org/10.1787/5k3v1trgnbr4-en
Balassa, B. 1965. Trade liberalisation and “revealed” comparative advantage, Manchester School 33(2): 99–123. https://doi.org/10.1111/j.1467-9957.1965.tb00050.x
Bazaras, D.; Palšaitis, R. 2012. Lithuanian transport service providers’ position in the Baltic Sea region transport market, Transport and Telecommunication 13(4): 271–274.
Bernatonyte, D. 2012. Changes of Lithuanian intra-industry trade in light of the economic crisis, Eco¬nomics and Management 17(1): 110–116. https://doi.org/10.5755/j01.em.17.1.2258
Bernatonyte, D.; Normantiene, A. 2007. Estimation of Importance of intra-industry trade, Inzinerine Ekonomika-Engineering Economics 53(3): 25–34.
Bernatonyte, D.; Normantiene, A. 2009. Estimation of trade specialization: the case of the Baltic States, Inzinerine Ekonomika-Engineering Economics 62(2): 7–17.
Bruneckiene, J.; Paltanaviciene, D. 2012. Measurement of export competitiveness of the Baltic States by composite index, Inzinerine Ekonomika-Engineering Economics 23(1): 50–62. https://doi.org/10.5755/j01.ee.23.1.1218
Camacho, J. A.; Melikhova, Y.; Rodríguez, M. 2013. Russia’s WTO accession and trade in services: an examination into Russia-EU relationships, Eurasian Geography and Economics 54(3): 322–341.
Cattaneo, O.; Engman, M.; Sáez, S.; Stern, R. M. 2010. Assessing the potential of trade in developing countries: an overview, Chapter 1 in O. Cattaneo, M. Engman, S. Sáez, R. M. Stern (Eds.). International trade in services: new trends and opportunities for developing countries. Washington, DC: World Bank. https://doi.org/10.1596/978-0-8213-8353-7
de Benedictis, L.; Tamberi, M. 2001. A note of the Balassa index of revealed comparative advantage. Quaderni di ricerca 158. Ancona: Department of Economics, University of Ancona.
EBRD. 2012. Transition Report 2012. London: EBRD.
Ethier, W. J. 1982. National and international returns to scale in the modern theory of international trade, American Economic Review 72(3): 389–405.
Fainštein, G.; Netšunajev, A. 2011. Intra-industry trade development in the Baltic States, Emerging Markets Finance and Trade 47(3): 95–110. https://doi.org/10.2753/REE1540-496X4704S306
Francois, J.; Hoekman, B. 2010. Services trade and policy, Journal of Economic Literature 48(3): 642–692. https://doi.org/10.1257/jel.48.3.642
Francois, J.; Woerz, J. 2008. Producer services, manufacturing linkages, and trade, Journal of Industry, Competition and Trade 8(3–4): 199–229. https://doi.org/10.1007/s10842-008-0043-0
Goswami, A. G.; Gupta, P.; Mattoo, A.; Sáez, S. 2011. Services Exports. Are the drivers different for developing countries?, Chapter 2 in A. G. Goswami, A. Mattoo, S. Sáez (Eds.). Exporting services. a developing country perspective. Washington, DC: World Bank. https://doi.org/10.1596/9780821388167_CH02
Grossman, G. M.; Helpman, E. 1991. Trade, knowledge spillovers, and growth, European Economic Review 35(2–3): 517–526. https://doi.org/10.1016/0014-2921(91)90153-A
Hacker, R. S.; Einarsson, H. 2003. The pattern, pull, and potential of Baltic Sea trade, The Annals of Regional Science 37(1): 15–29. https://doi.org/10.1007/s001680200105
Javorcik, B. S. 2004. Does foreign direct investment increase the productivity of domestic firms? In Search of Spillovers through Backward Linkages, American Economic Review 94(3): 605–627. https://doi.org/10.1257/0002828041464605
Jensen, J. B.; Rutherford, T. F.; Tarr, D. G. 2007. The impact of liberalizing barriers to foreign direct investment in services: the case of Russian accession to the World Trade Organization, Review of Development Economics 11(3): 482–506. https://doi.org/10.1111/j.1467-9361.2007.00362.x
Karo, E. 2011. The evolution of innovation policy governance systems and policy capacities in the Baltic States, Journal of Baltic Studies 42(4): 511–536
Kiyota, K. 2005. Services content of Japanese trade, Japan and the World Economy 17(3): 261–292. https://doi.org/10.1016/j.japwor.2004.01.002
Knobel, A. 2012. The influence of services trade liberalization on service flows and industry productivity in CIS countries and Russia. Economic Education and Research Consortium Working Paper E12/05E. Moscow: Gaidar Institute for Economic Policy.
Langviniene, N.; Sekliuckiene, J. 2012. Latecomer countries’ international trade in services: the case of Lithuania, Economics and Management 17(2): 534–540. https://doi.org/10.5755/j01.em.17.2.2178
Lanz, R.; Maurer, A. 2015. Services and global value chains: Servicification of manufacturing and services networks, Journal of International Commerce, Economics and Policy 6(3). https://doi.org/10.1142/S1793993315500143
Laursen, K. 2015. Revealed comparative advantage and the alternatives as measures of international specialization, Eurasian Business Review 5(1): 99–115. https://doi.org/10.1007/s40821-015-0017-1
Markusen, J. R. 1989. Trade in producer services and in other specialized intermediate inputs, American Economic Review 79(1): 85–95.
Masso, J.; Vahter, P. 2012. The link between innovation and productivity in Estonia´s services sector, Service Industries Journal 32(16): 2527–2541. https://doi.org/10.1080/02642069.2011.600444
Melnikas, B. 2008. The knowledge based economy in the European Union: innovations, networking and transformation strategies, Transformations in Business and Economics 7(15): 170–192.
Moenius, J. 2006. Measuring comparative advantage: a Ricardian approach. Redlands: University of Redlands.
OECD 2004. Promoting trade in services: experience of the Baltic States. Paris: OECD.
Pekarskiene, I.; Susniene, R. 2011. An assessment of the level of globalization in the Baltic States, Inzinerine Ekonomika-Engineering Economics 22(1): 58–68.
Proudman, J.; Redding, S. 2000. Evolving patterns of international trade, Review of International Economics 8(3): 373–396. https://doi.org/10.1111/1467-9396.00229
Rutherford, T. F.; Tarr, D. G. 2008. Poverty effects of Russia’s WTO accession: modelling real households with endogenous productivity effects, Journal of International Economics 75(1): 131–150. https://doi.org/10.1016/j.jinteco.2007.09.004
Rutherford, T. F.; Tarr, D. G. 2010. Regional impacts of liberalization of barriers against foreign direct investment in services: the case of Russia’s accession to the WTO, Review of International Economics 18(1): 30–46. https://doi.org/10.1111/j.1467-9396.2009.00879.x
Saboniene, A. 2009. Lithuanian export competitiveness: comparison with other Baltic States, Inzinerine Ekonomika-Engineering Economics 62(2): 49–57.
Vilpišauskas, R. 2005. The political economy of the Baltic States’ accession into the EU: the impact of the role of the state. Jean Monnet/Robert Schuman Paper Series 16(21). Miami: University of Miami.
Vollrath, T. L. 1991. A theoretical evaluation of alternative trade intensity measures of revealed comparative advantage, Weltwirtschaftliches Archiv 127(2): 265–280. https://doi.org/10.1007/BF02707986
World Input-Output Database. n.d. [online], [cited 29 January 2016]. Available from Internet: http://www.wiod.org/home
WTO. 2016. Trade in value-added and global value chains [online], [cited 29 January 2016]. Available from Internet: https://www.wto.org/english/res_e/statis_e/miwi_e/countryprofiles_e.htm
Yu, R.; Cai, J.; Leung, P. 2009. The normalized revealed comparative advantage index, The Annals of Regional Science 43(1): 267–282. https://doi.org/10.1007/s00168-008-0213-3
Antràs, P.; Helpman, E. 2004. Global sourcing, Journal of Political Economy 112(3): 552–580. https://doi.org/10.1086/383099
Arkell, J. 2010. Market structure, liberalization, and trade: the case of distribution services, Chapter 5 in O. Cattaneo, M. Engman, S. Sáez, R. M. Stern (Eds.). International trade in services: new trends and opportunities for developing countries. Washington, DC: World Bank.
Arnold, J. M.; Javorcik, B. S.; Mattoo, A. 2011. Does services liberalization benefit manufacturing firms? Evidence from the Czech Republic, Journal of International Economics 85(1): 136–146. https://doi.org/10.1016/j.jinteco.2011.05.002
Backer, K. D.; Miroudot, S. 2013. Mapping Global Value Chains. OECD Trade Policy Paper 159. Paris: OECD. https://doi.org/10.1787/5k3v1trgnbr4-en
Balassa, B. 1965. Trade liberalisation and “revealed” comparative advantage, Manchester School 33(2): 99–123. https://doi.org/10.1111/j.1467-9957.1965.tb00050.x
Bazaras, D.; Palšaitis, R. 2012. Lithuanian transport service providers’ position in the Baltic Sea region transport market, Transport and Telecommunication 13(4): 271–274.
Bernatonyte, D. 2012. Changes of Lithuanian intra-industry trade in light of the economic crisis, Eco¬nomics and Management 17(1): 110–116. https://doi.org/10.5755/j01.em.17.1.2258
Bernatonyte, D.; Normantiene, A. 2007. Estimation of Importance of intra-industry trade, Inzinerine Ekonomika-Engineering Economics 53(3): 25–34.
Bernatonyte, D.; Normantiene, A. 2009. Estimation of trade specialization: the case of the Baltic States, Inzinerine Ekonomika-Engineering Economics 62(2): 7–17.
Bruneckiene, J.; Paltanaviciene, D. 2012. Measurement of export competitiveness of the Baltic States by composite index, Inzinerine Ekonomika-Engineering Economics 23(1): 50–62. https://doi.org/10.5755/j01.ee.23.1.1218
Camacho, J. A.; Melikhova, Y.; Rodríguez, M. 2013. Russia’s WTO accession and trade in services: an examination into Russia-EU relationships, Eurasian Geography and Economics 54(3): 322–341.
Cattaneo, O.; Engman, M.; Sáez, S.; Stern, R. M. 2010. Assessing the potential of trade in developing countries: an overview, Chapter 1 in O. Cattaneo, M. Engman, S. Sáez, R. M. Stern (Eds.). International trade in services: new trends and opportunities for developing countries. Washington, DC: World Bank. https://doi.org/10.1596/978-0-8213-8353-7
de Benedictis, L.; Tamberi, M. 2001. A note of the Balassa index of revealed comparative advantage. Quaderni di ricerca 158. Ancona: Department of Economics, University of Ancona.
EBRD. 2012. Transition Report 2012. London: EBRD.
Ethier, W. J. 1982. National and international returns to scale in the modern theory of international trade, American Economic Review 72(3): 389–405.
Fainštein, G.; Netšunajev, A. 2011. Intra-industry trade development in the Baltic States, Emerging Markets Finance and Trade 47(3): 95–110. https://doi.org/10.2753/REE1540-496X4704S306
Francois, J.; Hoekman, B. 2010. Services trade and policy, Journal of Economic Literature 48(3): 642–692. https://doi.org/10.1257/jel.48.3.642
Francois, J.; Woerz, J. 2008. Producer services, manufacturing linkages, and trade, Journal of Industry, Competition and Trade 8(3–4): 199–229. https://doi.org/10.1007/s10842-008-0043-0
Goswami, A. G.; Gupta, P.; Mattoo, A.; Sáez, S. 2011. Services Exports. Are the drivers different for developing countries?, Chapter 2 in A. G. Goswami, A. Mattoo, S. Sáez (Eds.). Exporting services. a developing country perspective. Washington, DC: World Bank. https://doi.org/10.1596/9780821388167_CH02
Grossman, G. M.; Helpman, E. 1991. Trade, knowledge spillovers, and growth, European Economic Review 35(2–3): 517–526. https://doi.org/10.1016/0014-2921(91)90153-A
Hacker, R. S.; Einarsson, H. 2003. The pattern, pull, and potential of Baltic Sea trade, The Annals of Regional Science 37(1): 15–29. https://doi.org/10.1007/s001680200105
Javorcik, B. S. 2004. Does foreign direct investment increase the productivity of domestic firms? In Search of Spillovers through Backward Linkages, American Economic Review 94(3): 605–627. https://doi.org/10.1257/0002828041464605
Jensen, J. B.; Rutherford, T. F.; Tarr, D. G. 2007. The impact of liberalizing barriers to foreign direct investment in services: the case of Russian accession to the World Trade Organization, Review of Development Economics 11(3): 482–506. https://doi.org/10.1111/j.1467-9361.2007.00362.x
Karo, E. 2011. The evolution of innovation policy governance systems and policy capacities in the Baltic States, Journal of Baltic Studies 42(4): 511–536
Kiyota, K. 2005. Services content of Japanese trade, Japan and the World Economy 17(3): 261–292. https://doi.org/10.1016/j.japwor.2004.01.002
Knobel, A. 2012. The influence of services trade liberalization on service flows and industry productivity in CIS countries and Russia. Economic Education and Research Consortium Working Paper E12/05E. Moscow: Gaidar Institute for Economic Policy.
Langviniene, N.; Sekliuckiene, J. 2012. Latecomer countries’ international trade in services: the case of Lithuania, Economics and Management 17(2): 534–540. https://doi.org/10.5755/j01.em.17.2.2178
Lanz, R.; Maurer, A. 2015. Services and global value chains: Servicification of manufacturing and services networks, Journal of International Commerce, Economics and Policy 6(3). https://doi.org/10.1142/S1793993315500143
Laursen, K. 2015. Revealed comparative advantage and the alternatives as measures of international specialization, Eurasian Business Review 5(1): 99–115. https://doi.org/10.1007/s40821-015-0017-1
Markusen, J. R. 1989. Trade in producer services and in other specialized intermediate inputs, American Economic Review 79(1): 85–95.
Masso, J.; Vahter, P. 2012. The link between innovation and productivity in Estonia´s services sector, Service Industries Journal 32(16): 2527–2541. https://doi.org/10.1080/02642069.2011.600444
Melnikas, B. 2008. The knowledge based economy in the European Union: innovations, networking and transformation strategies, Transformations in Business and Economics 7(15): 170–192.
Moenius, J. 2006. Measuring comparative advantage: a Ricardian approach. Redlands: University of Redlands.
OECD 2004. Promoting trade in services: experience of the Baltic States. Paris: OECD.
Pekarskiene, I.; Susniene, R. 2011. An assessment of the level of globalization in the Baltic States, Inzinerine Ekonomika-Engineering Economics 22(1): 58–68.
Proudman, J.; Redding, S. 2000. Evolving patterns of international trade, Review of International Economics 8(3): 373–396. https://doi.org/10.1111/1467-9396.00229
Rutherford, T. F.; Tarr, D. G. 2008. Poverty effects of Russia’s WTO accession: modelling real households with endogenous productivity effects, Journal of International Economics 75(1): 131–150. https://doi.org/10.1016/j.jinteco.2007.09.004
Rutherford, T. F.; Tarr, D. G. 2010. Regional impacts of liberalization of barriers against foreign direct investment in services: the case of Russia’s accession to the WTO, Review of International Economics 18(1): 30–46. https://doi.org/10.1111/j.1467-9396.2009.00879.x
Saboniene, A. 2009. Lithuanian export competitiveness: comparison with other Baltic States, Inzinerine Ekonomika-Engineering Economics 62(2): 49–57.
Vilpišauskas, R. 2005. The political economy of the Baltic States’ accession into the EU: the impact of the role of the state. Jean Monnet/Robert Schuman Paper Series 16(21). Miami: University of Miami.
Vollrath, T. L. 1991. A theoretical evaluation of alternative trade intensity measures of revealed comparative advantage, Weltwirtschaftliches Archiv 127(2): 265–280. https://doi.org/10.1007/BF02707986
World Input-Output Database. n.d. [online], [cited 29 January 2016]. Available from Internet: http://www.wiod.org/home
WTO. 2016. Trade in value-added and global value chains [online], [cited 29 January 2016]. Available from Internet: https://www.wto.org/english/res_e/statis_e/miwi_e/countryprofiles_e.htm
Yu, R.; Cai, J.; Leung, P. 2009. The normalized revealed comparative advantage index, The Annals of Regional Science 43(1): 267–282. https://doi.org/10.1007/s00168-008-0213-3