Service Trade and Productivity (Japanese)

Studies on the globalization of firm activities have been progressing rapidly, but empirical studies on service trade using firm level data have been scarce. This paper, using panel data for Japanese firms, analyzes the relationship between service trade and firm characteristics such as productivity. 1) The number of firms engaged in service trade is far fewer than those in goods trade, and the ratio of service trade value to total sales is also very small. 2) The share of service trade with overseas affiliate firms is larger than that of goods trade. 3) Productivity and wage level of service trading firms are higher than that of domestic firms and goods trading firms. 4) Productivity of firms exporting services beyond the boundary of their firm groups is higher than those exporting services only to their affiliate firms. Collectively, the results suggest that fixed costs to start service trade are larger than those for goods exports, indicating the important role of policies to liberalize and facilitate service trade.