Exploring The Boundaries Of Services Trade

The level of international trade in services is relatively low. This can be the consequence of policy barriers and regulations or it may be due to the nature of products produced in the services sector. To understand the relative importance of both factors, this article uses data for Scottish bilateral services exports and imports to the UK to estimate theory-based trade costs for a wide range of sectors for two economic regions that are almost perfectly integrated. The results of this analysis provide important insights for future trade policy by identifying those narrowly defined industries which are more tradable by nature and have the potential to expand internationally.