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 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.

Bibliographic Details

Main Author:	Ahmed, S. Amer
Language:	English en_US
Published:	World Bank, Washington, DC 2009-12
Subjects:	ACCOUNTING, ACCOUNTING STANDARDS, AGRICULTURE, BALANCE OF PAYMENTS, BARRIERS TO TRADE, BASE YEAR, BENCHMARK, BUSINESS SERVICES, CAPITAL OWNERS, CAPITAL STOCKS, COMMODITIES, COMMODITY, COMMODITY PRICES, COMMUNICATION TECHNOLOGY, COMPARATIVE ADVANTAGE, CONSTANT RETURNS TO SCALE, CONSULTING SERVICES, CONSUMER PRICE INDEX, CONSUMERS, COST STRUCTURE, DEVELOPED COUNTRIES, DEVELOPING COUNTRIES, DEVELOPMENT ECONOMICS, DEVELOPMENT POLICIES, DISTRIBUTION OF INCOME, ECONOMIC BENEFITS, ECONOMIC DEVELOPMENT, ECONOMIC EQUILIBRIUM, ECONOMIC GROWTH, ECONOMIC OUTLOOK, EGOVERNMENT, ELASTICITY, ELASTICITY OF SUBSTITUTION, EMPLOYMENT, EQUILIBRIUM, EXCHANGE RATE, EXPORT DEMAND, EXPORT GROWTH, EXPORT VOLUME, EXPORTS, FACTORS OF PRODUCTION, FINANCIAL SERVICES, FOREIGN DIRECT INVESTMENT, GDP, GDP PER CAPITA, GENERAL EQUILIBRIUM, GENERAL EQUILIBRIUM MODEL, GLOBAL ECONOMY, GLOBAL OUTPUT, GLOBAL TRADE, GLOBALIZATION, GROSS DOMESTIC PRODUCT, GROSS DOMESTIC PRODUCT PER CAPITA, GROWTH RATES, GROWTH THEORIES, HUMAN CAPITAL, IMPORT COST, IMPORTS, INCOME LEVELS, INCOMES, INEQUALITY, INFLATION RATE, INFORMATION TECHNOLOGY, INSURANCE, INTERNATIONAL CAPITAL, INTERNATIONAL CAPITAL FLOWS, INTERNATIONAL ECONOMICS, INTERNATIONAL ECONOMY, INTERNATIONAL MARKET, LABOR COSTS, LABOR FORCE, LABOR MARKET, LIBERALIZATION, MANPOWER, MANUFACTURING INDUSTRIES, MARGINAL COST, MARGINAL COST OF PRODUCTION, MARGINAL REVENUE, NATIONAL INCOME, NONTARIFF TRADE BARRIERS, OCCUPATIONS, OUTPUTS, OUTSOURCING, PRODUCT DIFFERENTIATION, PRODUCTION FUNCTIONS, PRODUCTION PROCESS, PRODUCTION STRUCTURE, PRODUCTION STRUCTURES, PRODUCTIVITY, RAPID ECONOMIC GROWTH, REAL ESTATE, REAL GDP, REPUTATION, SAVINGS, SKILLED LABOR, SKILLED WORKER, SKILLED WORKERS, SOFTWARE DEVELOPMENT, STATISTICAL ANALYSES, SUSTAINABLE DEVELOPMENT, TECHNOLOGICAL ADVANCES, TECHNOLOGICAL INNOVATIONS, TELECOMMUNICATIONS, TOTAL OUTPUT, TRADE BARRIERS, TRADE DATA, TRADE FORUM, TRADE IN SERVICES, TRADE MODELS, TRADE PROTECTION, TRADE SURPLUS, TRADES, TRANSACTIONS COSTS, UNSKILLED LABOR, UNSKILLED WORKERS, VALUE ADDED, WAGE INCREASES, WAGES, WORLD ECONOMY,
Online Access:	http://documents.worldbank.org/curated/en/2009/12/11508556/impact-trade-services-factor-incomes-results-global-simulation-model https://hdl.handle.net/10986/19958
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