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 5B

Table 5B: Effects of embodied foreign services on manufacturing export RCA, for LESS services intensive manufacturing sectors

	(1)	(2)	(3)	(4)	(5)	(6)
D_f	0.359 (4.761)
forsh_f	-0.233			-1.231
	(0.560)			(1.549)
*D_fforsh_f**	-2.248			15.603
	(9.165)			(25.722)
D_b		9.509** (4.404)
forsh_b		-0.525			-0.390
		(0.589)			(0.984)
*D_bforsh_b**		-13.422*			-17.385
		(7.452)			(14.001)
D_fb			4.016 (3.735)
forsh_fb			-0.120			0.334
			(0.786)			(1.844)
*D_fbforsh_fb**			-6.610			-10.217
			(5.555)			(15.852)
log(GDP/capita)	0.371	0.284	0.325
	(0.273)	(0.250)	(0.260)
TFP	0.058**	0.056**	0.057**	0.067*	0.057	0.064*
	(0.028)	(0.028)	(0.028)	(0.038)	(0.035)	(0.036)
log(emp)	0.959***	0.931***	0.940***	0.966***	0.944***	0.963***
	(0.155)	(0.162)	(0.158)	(0.169)	(0.183)	(0.177)
SKratio	0.196	0.226	0.187	0.147	0.152	0.153
	(0.653)	(0.666)	(0.667)	(0.831)	(0.871)	(0.862)
K/L	0.068***	0.073***	0.071***	0.070***	0.076***	0.073***
	(0.023)	(0.025)	(0.024)	(0.022)	(0.025)	(0.024)
rwage	0.018**	0.019**	0.018**	0.022*	0.022*	0.021*
	(0.009)	(0.009)	(0.009)	(0.012)	(0.012)	(0.012)
GVC Participation	3.972***	4.098***	4.056***	4.254***	4.373***	4.306***
	(0.706)	(0.696)	(0.708)	(0.847)	(0.838)	(0.844)
Country FEs	Yes	Yes	Yes
Sector FEs	Yes	Yes	Yes
Year FEs	Yes	Yes	Yes
Country*Year FEs				Yes	Yes	Yes
Sector*Year FEs				Yes	Yes	Yes
Observations	2,931	2,931	2,931	2,931	2,931	2,931
R-squared	0.637	0.644	0.640	0.665	0.669	0.666

Notes: Dependent variable is manufacturing export RCA. We keep only the first seven sectors with high financial and business service input intensity, as listed in Appendix 4. Robust standard errors in parentheses, clustered by country*sector. *** p<0.01, ** p<0.05, * p<0.1.