Service Export Sophistication And Economic Growth

Can increasing sophistication of service exports lead to economic growth?Technology has changed the nature of service activities and made them more productive,tradable and fragmented in the global supply chain.The growing share of services in global output,employment and international transactions has brought to the forefront the issue of the role played by services in the growth process of developing countries.This paper investigates the hypothesis of service export sophistication and economic growth in the case of China.We construct an index of"service export sophistication" to document this phenomenon using a panel data,covering Chinese services for the period between 2000 and 2018.We run some regressions like OLS,fixed-effects and system-GMM to do the test.This paper examines whether service exports with higher sophistication help to increase rates of economic growth.The empirical results reveal a positive relationship between export sophistication and growth in China.Importance of service export sophistication for growth became strong in the late nineties,and it remains a robust predictor of growth in low and middle income countries.