Revealed Comparative Advantages in the Services Trade of the United States, the European Union and Japan: What Do They Tell Us?

This article argues that measurements of revealed comparative advantages (Rcas) in international trade in services cannot be straightforwardly compared to Rcas in trade in goods. The essential difference is that services are internationally exchanged not only by cross-border trade, mainly subject to relative resource endowment, but also by factor movements (primarily foreign direct investment). The latter modes of supply are determined by characteristics of services such as the need for close producer-consumer proximity. In addition, the policy influence in Rcas for trade in services is not dominated by border measures but by a variety of domestic regulations. The article presents measurements of Rcas for U.S., EU and Japanese services trade and shows strengths on the U.S. side and weaknesses on the Japanese side, with the EU in-between. Finally, measuring Rcas for U.S. services trade in two different modes of delivery (cross-border trade and commercial presence) yields similar results in some services sectors but not in all.

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