Exploring the sophistication in services exports
Keywords:decomposition, exports, sophistication, trade in services
The paper aims at providing empirical evidence of increasing sophistication in services exported by the developing countries.The last two decades have witnessedÂ a phenomenal rise not only in the share of services traded by both developed and developing countries , but also, a structural shift in favour of trade in modern services as against dominance ofÂ traditional services. Spanning over a period of 10 years i.e. from 2000 to 2010 we examine and compare the changing composition and sophistication in services exported by 38 countries comprising: Brazil, Russian Federation, India and China (BRICs), European Union (EU)-15 countries, 12-EU New Member States (EU-NMS), 5-EU Accession countries (EU- ACC), USA and Japan. We use the methodology developed by Hausmann et al (2007) which measures the level of sophistication associated with countryâ€™s export basket of goods. But in this paper we have applied this methodology to study sophistication in the export of services instead of goods.Â We find that there is a big divide in the values of the sophistication index between EU-15 and EU-ACC, the latter exhibiting considerable lower values of the index.Â But the gap in the value of the sophistication index between EU-15 and India, Russia, and some of the EU-NMS has narrowed.Â
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