Sources of Comparative Advantage in Services: Institution vs. Social Capital = Sources of Comparative Advantage in Services: Institution vs. Social Capital

다국어 초록 (Multilingual Abstract)

Services are exposed to relatively more pre-choice risks than goods. In addition, trade in services involved in global value chains possibly takes on the risks of contract breach by other firms along the same value chains. As a result, the transaction risks for trade in services are higher than for trade in goods. Using the World Input Output Database, we estimate the importance of social capital for comparative advantage in services. We find that countries with more social capital tend to specialize in the production of contract-intensive services. We also find that social capital rather than institution matters for comparative advantage in services.