This study uses the Panel Gravity Model to analyze the effects of free trade agreement on the pattern of international trade in services and draw out some implications. A summary of the conclusions of the analysis can be given as follows; First, compa...
This study uses the Panel Gravity Model to analyze the effects of free trade agreement on the pattern of international trade in services and draw out some implications. A summary of the conclusions of the analysis can be given as follows; First, compared with trade in goods, trade creation effect of FTA is apparently relatively larger. Although trade diversion effect does not show reduction in volume of trade in services between member state and non-member state under service trade agreements, the trade diversion effect shows up under trade in goods agreement. Second, although trade patterns show that developing countries get interests of free trade agreements under trade in goods, developed countries get the interests of free trade agreements under trade in services. The conclusion is that international service trade obviously shows differences in the level of economic development between trading partners and trade in service industries. Therefore, when establishing policies for the development of international service trade we must consider the characteristics in trade in services and the level of economic development gap between the trading partners.