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Services versus goods trade: a firm-level comparison

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A Correction to this article was published on 05 April 2019

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Using transaction data from Belgium, we provide a descriptive comparison of trade in goods and trade in services at the firm level. From a static perspective, we find that firms trading services are fewer and export and import smaller values than those trading goods. This is because they trade fewer products, with less countries, making fewer transactions and these gaps are only partially counterbalanced by larger transaction values. Instead, firms trading both services and goods are even rarer, but they account for a substantial share of total trade. In the time dimension, services traders experience higher entry and exit rates and a lower survival probability. However, the surviving firms grow more rapidly than those trading goods thanks to an increase in the number of transactions per product-market. Finally, we observe that firms that trade only services add also goods in their export and import basket and vice versa. This is a further important growth channel for firms in international markets.

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Change history

  • 05 April 2019

    In the original publication of the paper, the below lines were wrongly publishes on page 22 as: Over that period Belgian firms were obliged to declare to the NBB any service transaction above 12,500 euros (9000 euros from 1995 to 2001) in which the counterpart was a foreign entity, without any difference between intra-EU and extra-EU trade.

  • 05 April 2019

    In the original publication of the paper, the below lines were wrongly publishes on page 22 as: Over that period Belgian firms were obliged to declare to the NBB any service transaction above 12,500 euros (9000 euros from 1995 to 2001) in which the counterpart was a foreign entity, without any difference between intra-EU and extra-EU trade.


  1. Our computations based on the comparison between 1995 and 2010 using Belgostat data available at

  2. The same figures apply, for example, to Germany, Iceland and Sweden. For more details refer to Eurostat (2013).

  3. See Bernard et al. (2012) for a review.

  4. Breinlich and Criscuolo (2011) for the UK, Kelle and Kleinert (2010) for Germany, Walter and Dell’mour (2010) for Austria, Gaulier et al. (2011) for France and Federico and Tosti (2012) for Italy.

  5. Kelle and Kleinert (2010), Federico and Tosti (2012) do not have any information on trade in goods, Breinlich and Criscuolo (2011) has information on trade in goods only for 2 years and only for exports and Walter and Dell’mour (2010) Gaulier et al. (2011) have information on trade in goods, but they do not exploit it.

  6. In this way we also get rid of most of the re-exporting present in the dataset.

  7. For example the French dataset used in Eaton et al. (2011), Mayer et al. (2014) and Mayer and Ottaviano (2007) among other papers.

  8. For more details on this dataset see Muûls and Pisu (2009), Behrens et al. (2013), Mion and Zhu (2013) and Bernard et al. (2010).

  9. The GATS defines four modes of trade in services: mode 1 (Cross-Border) is when a service is produced in one country and consumed in the territory of another country. Mode 2 (Consumption Abroad) is when the service is consumed in the territory in which it has been produced by the resident of another country. Mode 3 (Presence Abroad) is when the service is provided by a supplier through the commercial presence in the country of the consumer. Mode 4 (Presence of Natural Person) is when a supplier provides the service in another country sending one or more employees to that country. For examples refer to Ariu and Mion (2012) and Breinlich and Criscuolo (2011).

  10. Using this rule, we count 90 goods products and 49 service products. Using the more disaggregate 4-digit CN classification results remain unchanged.

  11. The novelty of using transaction data raises the need for clarification on precisely what a transaction is in our datasets. In general, in this paper, a transaction is defined as the registration by the NBB of a credit (export) or a debt (import), above 12,500 euros, between a Belgian firm and a foreign firm, arising from the transfer of ownership of a good in the case of trade in goods and the provision of a service in the case of trade in services. More specifically, both for goods and services the collection system is declaration-based, and for trade in goods is represented by the declaration of an outgoing (export) or an incoming (import) shipment of products made to the Belgian Customs Authority (that passes on the information to the NBB). For trade in services, a transaction is defined by a declaration made to the NBB about the collection of a credit (export) or the solvency of a debt (import) related to the provision of a service. This can be direct, when the Belgian firm makes the declaration directly to the NBB, or indirect, when the declaration is made by the financial institution that is involved in the execution of the transaction. The NBB defines the list of companies that should declare directly, for the other firms not on the list, the financial institution involved in the transaction collects and sends the information to the NBB. The fact that the NBB is charged to decide the information to be put on both declarations and to the physical collection of the data guarantees the comparability of the transactions across goods and services. In the rest of the paper we will refer to the number of transactions or equivalently to the frequency of trade as the number of transactions performed by a firm over 1 year.

  12. While it is easy if both are close to the border, the cost of reaching one the other can become very high when the distance to the border increases.

  13. For example, the average transaction size is given by: \(p_{\textit{ft}} *c_{\textit{ft}} *d_{\textit{ft}}*\bar{x}_{\textit{ft}}\).

  14. Please note that using the averages for each category of exporters and importers entails that the product of all the components of the decomposition does not equal to the total exports or imports.

  15. Please note that the coefficients add up to one thanks to the linearity of OLS, so, each coefficient represents the share of total variation explained by the considered margin.

  16. Except for service Bi-Importers.

  17. This is because they analyze export participation at the firm-product-country dimension without entering into the debate involving the organization of exports and imports in terms of shipment size and frequency.

  18. Employment is in full-time equivalents, average wage is computed as total wage bill over the number of workers, capital intensity is computed as total physical assets over the number of workers, multinational and foreign ownership status are dummies indicating whether a firm has an affiliate abroad or more than 50 % of the company is in the hands of foreign investors.

  19. For example Melitz (2003) and Bernard et al. (2011).

  20. Taking into account re-entries (firms that stop exporting/importing for 1 year and then restart trading the year after) as well as firms that bounce around the cut-off threshold slightly lowers entry and exit shares in Table 7 while not changing the magnitude of the difference between goods and services trade.

  21. In this way, we avoid the exported (imported) values for the first cohort being averaged with those of the later cohorts for which we do not have any meaningful way to correct for inflation.

  22. We refer to the average total firm exports and imports in Table 4.

  23. This is especially true for service exporters and importers.


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This work was carried out while I was a Ph.D. at IRES, Univeristé catholique de Louvain and an intern at the National Bank of Belgium, I thank for the hospitality and the support provided. All views expressed in this paper, as well as the errors, are my own solely and do not necessarily reflect the views of the National Bank of Belgium. I thank Chiara Farronato, Kalina Manova, Giordano Mion and Florian Mayneris for their helpful comments, as well as the editor, Harmen Lehment and two anonymous referees.

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Correspondence to Andrea Ariu.

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Financial help under the Globalisation Investment and Trade in Services (GIST) project, funded by the EU 7th Framework Programme (ITN-2008-211429), is gratefully acknowledged.

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Ariu, A. Services versus goods trade: a firm-level comparison. Rev World Econ 152, 19–41 (2016).

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