Services trade in the ASEAN region and participation in GVCs

Abstract

This paper documents the importance of trade in services for global value chain participation in the ASEAN region. Using newly created data on GVCs as well as a new database on the services trade restrictiveness index to connect international trade policies in services to participation in GVCs, we show that restrictions on trade in services are detrimental for backward participation in GVCs and that such restrictions are harmful to ASEAN members when compared to other countries in the data set. Also, we show that services trade restrictions are especially detrimental to ASEAN countries when such backward integration is connected to forward participation, hence, central positions in GVCs. Restrictions on trade in services slow down the upgrading of value chain positions, which calls for policy actions to follow up trade liberalization in industrial products with a new round of lower restrictions on services trade.