How Far Away is an Intangible? Services FDI and Distance

Foreign direct investment (FDI) in services has grown significantly in recent years. Evidence of spatial relationships in FDI decisions have been provided for goods manufacturing by utilizing physical distance-based measures of trade costs. This paper investigates spatial interactions for services FDI using several distance measures, including physical distance, genetic distance, and transport time. Across different measures of distance, the traditional determinants of outbound FDI activity remain valid for services. We also find spatial interdependence for services FDI that is generally supportiveof complex vertical motivations.Foreign direct investment, Services, Spatial econometric techniques

The Determinants of Trade Agreements in Services vs. Goods

Since Baier and Bergstrand (2004) there has been a focus on empirically testing the economic determinants of signing a free trade agreement (FTA). However, FTAs do not imply an agreement on services; a separate economic integration (EIA) is needed. As trade in services is one of the fastest growing sectors of the global economy, it is important to pay special attention to these agreements. We use the methodology of Baier and Bergstrand (2004) to investigate di¤erences in the determinants of signing an agreement on goods trade and services trade. In addition to the standard economic variables, we include variables for skilled/unskilled labor, and political stability. We nd in general, qualitative similarities (though di¤erent magnitudes) and some robust speci c di¤erences. JEL classi\u85cation: F14, F15

Does the depth of trade agreements matter for trade in services?

International audienceAbstract In recent years, deep trade agreements have spread around the world and gone beyond tariff reductions. We aim to test whether the depth of agreements fosters trade in services. To do so, we use a structural gravity‐type model and build new indicators of the depth of agreements based on the number of articles that are legally enforceable and that are related to trade in services. We show that, while only the deepest trade agreements raise trade in services, the quality of institution determines how deep agreements affect both the intensive (measured by the quantity of trade) and extensive margins of trade (measured by the number of service products exported and the share of the most exported service product in total services exports). This result is more pronounced for some service provisions and is robust after we control for the endogeneity of deep trade agreements. Finally, our results also hold for the Middle East and North Africa countries that we examine as an example of an emerging region that has a comparative advantage in services but whose most of the trade agreements are rather shallow

Grey zones in global finance: The distorted geography of cross-border investments

Complex cross-border financial structures inflate measured international investment stocks in tax havens. Using a standard gravity framework, we estimate that about 40% of global assets (FDI, portfolio equity and debt) are ‘abnormal’ – unexplained – and operated through tax havens. Abnormal stocks are increasing over time and concentrated in a limited number of jurisdictions. Six jurisdictions including three European countries are the largest contributors: Cayman, Bermuda, Luxembourg, Hong Kong, Ireland and the Netherlands. Interestingly, the Luxleaks in 2014 do not appear to have diverted cross-border investments away