Herman, Lior
(2010)
International trade in services and services co-production: An investigation into the nature of services and their political economy consequences on international trade.
PhD thesis, London School of Economics and Political Science.
Abstract
Goods and services are bundled together in economic analysis, which largely considers them to be similar despite contrary empirical evidence. Services have been largely absent from international political economy literature, so current explanations of international trade in services liberalisation and integration leave a lot to be desired. Using the WTO framework of the four modes of service supply, this thesis provides a comprehensive analysis of international trade in both healthcare and accountancy services. This empirical investigation sheds light on services' patterns of internationalisation and the relationships between different modes of trade. It finds that services differing from each other in many aspects are nevertheless intemationahsing following similar patterns and particularly through commercial presence. The empirical findings of this study are supported by an enquiry into the nature of services. They form the basis of the development of the theory of services coproduction, whereby the services output is jointly created by producers and consumers and/ or goods under their control. Co-production creates an inherent proximity constraint between producers and consumers, which is explained through the Services Production Trap (SPT). Co-production and the SPT have significant consequences for international political economy. Examination of firms' response to the SPT shows that accountancy firms developed a particular organisational model based on a network of partnerships that has been highly successful for internationalisation. In addition, this model furthered accountancy firms' economic and political influence in shaping and leading the exceptional case of an international private governance regime in financial and reporting standards. Further political economy implications which are considered in this study include international trade in services liberalisation and protection, multilateralism and preferential trade, as well as European integration.
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