Institutional Study On Service Trade

In the context of globalization and with rapid development of information and communication technology,service trade especially the modern service trade is becoming a major propulsion for economic growth.However,China's service trade deficit has been enlarged all the time recently,and the share of modern service trade is below the average of the level of the world.In the context of 'new normal economy',It is of great significance to probe how to improve the service export and propel the upgrading of the structure of service trade for economic revival.While the importance of service trade is now much of a consensus,the institutional determinants of service trade have rarely been studied.Using data of 99 economies over the years 2003-2012,this paper analyzes the effect of social institution level on the scale of service export.Since measurement data on different aspects of social institution level are highly collinear,we define their first principal component as the institution variable.To address endogenous issues,we instrument the Institution variable with its five-year-prior counterpart.Our cross-section and panel regression results show that social institution level significantly promotes the development of service trade as a whole.While this finding also applies to the modern service sector,we find no evidence that social institution level has any significant impact on the traditional service sector.This conclusion undoubtedly provide the economic meaning for the china which is propelling the construction of institution.That is,institution construction is beneficial to the upgrading of structure of service trade,infusing new impetus to the present economic situation.