Trade In Services, New Forms Of International Division Of Labor And Global Imbalances

In the past twenty years, the global trade has experienced a tremendous development. However, the problem of Global Imbalance has become increasingly salient at the same time:the United States, which is the largest economy in the world, continue to run large current account deficit for a long period; on the other hand, China, the second largest economy in the world also persists with large current account surplus. The Global imbalance problem is not only the initiation of all kinds of trade disputes and trade friction, but also the origin of the financial crisis. Therefore, the investigation of the reasons behind the Global imbalance problem has significant realistic meaning. By using a two section model, this research paper illustrated the mechanism of "manufacture-service" international division of labor leading to global imbalance under the situation of restricted service trade, conducted a panel regression analysis of the data of29OECD countries during1995-2007by constructing revealed comparative advantage indicator of the manufacture-service, which is based on the differences of labor productivity rates, examined the impact of "manufacture-service" international division of labor on global imbalance, and distinguished the differences between the impact of tradable service industry and of untradeable service industry on current account. According to the research results, we found that the service trade barriers extensively exist, leading to the fact that the openness of service trade is significant less than that of the goods trade; under the situation of service trade restriction,"manufacture-service" international division of labor can trigger the Global Imbalance. This paper also found that the service industry with higher tradable degree tends to have greater impact on the current account. Thus the "manufacture-tradable service industry" international division of labor under the restricted service trade is the true origin of Global imbalance. Based on these research findings, this paper proposes policy recommendations on service trade liberalization, possessing significant meaning of relieving the current global imbalance.