Services Development and Comparative Advantage in Manufacturing

Read this working paper in the Policy Research Working Papers series put out by the World Bank. The authors argue that services have to compete for resources alongside manufacturing, with implications for export industries.

Figures and Tables

Table 1

Table 1: Descriptive statistics of key variables (for WIOD countries over 1995-2007)

Variables	Variable Description	Obs	Mean	S.D.	Min	Max
RCA	RCA based on manufacturing domestic value added (DVA) in gross exports	6,734	1.112	1.037	0.000	12.507
SII_f (U.S.)	ratio of U.S. embodied domestic financial (f) services to U.S. manuf. total value added (totva)	6,734	0.036	0.024	0.004	0.100
SII_b (U.S.)	ratio of U.S. embodied domestic business (b) services to U.S. manufacturing totva	6,734	0.109	0.074	0.011	0.309
SII_fb (U.S.)	ratio of U.S. embodied domestic financial & business (fb) services to U.S. manuf. totva	6,734	0.145	0.098	0.014	0.406
SII_f (U.S. avg.)	average U.S. SII_f over 1995-2007	6,734	0.035	0.023	0.005	0.080
SII_b (U.S. avg.)	average U.S. SII_b over 1995-2007	6,734	0.107	0.068	0.013	0.215
SII_fb (U.S. avg.)	average U.S. SII_fb over 1995-2007	6,734	0.142	0.089	0.018	0.294
SII_f	country's own SII_f, time-varying	6,704	0.026	0.031	0.000	0.530
SII_b	country's own SII_b, time-varying	6,704	0.044	0.044	0.000	0.352
SII_fb	country's own SII_fb, time-varying	6,704	0.070	0.062	0.000	0.559
forsh_f	share of embodied foreign financial services in total embodied domestic & foreign F services	6,674	0.416	0.192	0.036	0.999
forsh_b	share of embodied foreign business services in total embodied domestic & foreign B services	6,674	0.496	0.207	0.076	1.000
forsh_fb	share of embodied foreign F&B services in total embodied domestic & foreign F&B services	6,674	0.450	0.188	0.066	0.999
D_f (VA/GDP)	share of financial services totva among a country's GDP	6,734	0.056	0.035	0.012	0.289
D_b (VA/GDP)	share of business services totva among a country's GDP	6,734	0.069	0.031	0.011	0.154
D_fb (VA/GDP)	share of financial & business services totva among a country's GDP (= D_f + D_b)	6,734	0.125	0.050	0.036	0.391
D_f (VA/worker)	services value added per worker for financial services sector (in thousand USD)	6,720	4.053	0.807	1.607	5.882
D_b (VA/worker)	services value added per worker for business services sector (in thousand USD)	6,720	3.407	0.828	0.871	5.091
D_fb (VA/worker)	services value added per worker for financial & business services sectors (in thousand USD)	6,720	3.649	0.776	1.244	5.352
D_f1	Alternative measure 1 for D_f = ratio of bank private credit to GDP	6,300	0.693	0.457	0.072	2.010
D_f2	Alternative measure 2 for D_f = (Bank Private Credit + Stock market capitalization)/GDP	6,202	1.216	0.767	0.086	4.072
log(GDP/capita)	log(GDP/capita)	6,734	9.788	0.714	7.357	11.363
TFP	manufacture TFP estimated by the dual approach	5,686	-0.001	0.446	-4.282	4.656
log(emp)	log(manufacture employment)	6,704	4.070	2.026	-5.717	9.749
SKratio	Skill ratio = payment to high skill workers / payment to all workers (in manufacturing sectors)	6,734	0.200	0.091	0.028	0.631
K/L	capital/labor ratio in manufacture	6,697	0.932	1.917	-0.876	62.323
rwage	Relative wage = average wage per worker in a country / world average wage per worker	6,704	0.964	4.671	0.000	75.502
GVA Participation	GVC participation index based on forward linkage	6,704	0.304	0.196	0.000	3.870

Notes: This table is based on all of the available data for 14 manufacturing sectors of 37 WIOD countries over 1995-2007 (# of observations can be up to 14*37*13=6734). Three WIOD countries are not covered: U.S. is dropped as the benchmark country to define services input intensity; China and Romania are also dropped due to lack of wage and employment data. The statistics for the samples used in regressions are very similar.