International Trade Costs in Services: An Empirical Analysis Through Gravity Framework

Abstract

With the aim to boost job creation, the Government of India eyes in making the nation an influential export hub. India's export in services have increased from US$ 145.08 billion in 1999 to US$ 214.8 billion in 2019. The export-to-GDP ratio has risen quite rapidly in India since the 1990s, and the performance of the services sector has been stellar. Having said that, India does face some restrictions in services trade. These regulations on services can take a toll on the manufacturing costs and thus on its export performance. They are the key inputs in the manufacturing sector and support active participation in value chains. Hence, the study focuses on the factors that affect India's trade in services, thereby increasing the trade costs in their sector. The study has used a gravity model approach and estimated using the Poisson regression tool. Further the study recommended some policies for the betterment of services trade in India, corresponding to the observations obtained.