The Impact of Trade in Services on Factor Incomes : Results from a Global Simulation Model
Indian gross domestic product per capita increased rapidly between 2001 and 2006 in a climate of increasing services trade, with the export-oriented services sector responsible for rising shares of growth in gross domestic product. Due to its contr...
| Main Author: | |
|---|---|
| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2009/12/11508556/impact-trade-services-factor-incomes-results-global-simulation-model http://hdl.handle.net/10986/19958 |
| Summary: | Indian gross domestic product per capita
increased rapidly between 2001 and 2006 in a climate of
increasing services trade, with the export-oriented services
sector responsible for rising shares of growth in gross
domestic product. Due to its contribution to aggregate
economic growth, there is a great need for empirical
examination of the distributional consequences of this
growth, especially in light of the challenges in obtaining
theoretical solutions that can be generalized. This paper
fills this gap in the literature by using a global
simulation model to examine how sensitive factor incomes
across different industries may have been to the historical
changes in India's services exports and imports, and
provides insight on the distribution of the national income
growth attributable to the expansion of the services
industry. Rent on capital in the service sector and wages of
all workers would have increased as a result of greater
services trade in this period, while income from capital
specific to agriculture and manufacturing would have
declined. The factors involved with the urban-based services
sector may thus benefit from the services trade growth,
while the total factor income involved in rural agriculture
may decline. |
|---|