International trade in financial services

Abstract

The issue of trade in services is the subject of increasing interest. Evidence of this is its inclusion in the Uruguay Round of GATT negotiations. As a contribution to the analysis of the issue, this paper analyzes the influence of a country's resource endowments on its net trade in financial services. A modified version of the Heckscher-Ohlin model is developed, which allows for technological differences across countries. The paper reaches the conclusion that skilled labour is a source of comparative advantage in financial services. Future research should focus on the implications of restricting trade in financial services. If financial services are considered as inputs in the provision of goods and services, might barriers to trade in financial services result in inefficient allocation of productive resources, distorted consumption patterns, and significant welfare losses?Economic Theory&Research,Banks&Banking Reform,ICT Policy and Strategies,Health Economics&Finance,Environmental Economics&Policies