Barriers to Trade in Services, Economic Growth and International Cooperation

In the framework of dynamic spatial econometrics, this paper empirically testes the third party effect of the reduction of barriers to trade in services on economic growth of developed and developing economies and different industries. The empirical results show that reduction of barriers to trade in services can significantly and systematically affect economic growth. The barriers to trade in services inhibit the economic growth, particularly in tertiary industry, of developing economies more seriously than that of developed ones. The international cooperation in service trade regarded as a "coordinated development" strategy to promote service trade openness and reduce the barriers to trade in services is obviously more important for the economic growth of developing countries than that of developed ones with a nonlinear inverted u-shaped relationship. Our empirical testing result has developed the theory of the international service trade and provided information basis for China to develop policies for service trade openness and achieve balanced development of different industries.