Intra-regional trade in services in South America: An input-output approach

Abstract

purpose: The growing importance of the services sector is not only a fact in developed countries but is also visible in the South American subcontinent, in terms of Gross Domestic Product share, employment and foreign trade. Taking a closer look at the role of services, the present article analyzes the main linkages in trade in services in the two largest South American economies, namely, Brazil and Argentina. originality/Value: The recently available South American input-output table provided by United Nations Economic Commission for Latin America and the Caribbean (UN ECLAC). It is a ten-region open model that is used to study two important aspects of trade in services for the two selected economies: first, testing whether the participation of services in total trade increases when the calculation is specified in terms of value added; and second, assessing the role of services in promoting the countries' exports. Design/methodology/approach: The present research helps to better understand the position of the region as provider and demander of intra-regional services. However, the scarcity of statistics related to trade in services is a limitation that must be solved. The data was obtained from the South American input-output table. A single-regional input-output model was generated for Argentina and Brazil for 2005. Findings: The main findings of the article include that 1. in both economies, the participation of services in foreign trade is higher in terms of value added than under conventional gross trade data, and 2. Argentina is more integrated with the region than Brazil in terms of intra-regional imported services in its exports.