From Trade Deficit in Goods to Trade Surplus in Services : An Eclectic and Extended Gravity Model Approach to Analyzing the Determinants of Service Trade of the United States

This paper employs an eclectic and extended gravity model of trade to assess the most important determinants of trade in services of the US. The dataset covers the US and its 33 trading partners over the period 1999 to 2013. The estimation method takes into account certain unobservable characteristics of trading partners. The results recommend that distance adversely affects the US real export of services, but has no influence on real import. Also, the higher the volume of trade in goods, the greater outward foreign direct investment, and the bigger trading partners' market size, the more the exports of services of the US