NCAER organized a seminar on “Colonial legacy, services trade and LDCs” by Dr Anirudh Shingal, Senior Research Fellow at the World Trade Institute, University of Bern.
Services trade constitutes an important part of global trade. WTO data suggest that commercial services trade on average accounted for 21% of total international trade in 2014. In more than half the countries with data on global merchandise and services trade, this share was much higher. If trade in value added (“servicification”) is accounted for, the share of services trade goes up to nearly 50%. Nearly two-thirds of all WTO-notified PTAs since 2000 include services trade provisions, compared to less than 10% earlier.
Yet, existing work examining the trade effects of the British and French colonial legacy does not consider services trade or the specific impact on LDCs. Shingal’s work bridges this gap by providing evidence from the Commonwealth and Francophonie countries using a large, recent panel dataset of 241 countries over 1995-2010. Commonwealth membership is found to increase services exports by more than 56% in the baseline estimates, and a Francophonie country is associated with four times more trade. Both effects are significantly larger than the corresponding effects for goods trade. Descriptive statistics reveal the growing reliance of small, low-income former colonies on their respective colonial groups. Corroborating this, the paper finds much larger than average services trade effects for ex-colonies that are LDCs, possibly emphasizing the importance of colonial relationships for countries with still weak institutional capacity. These findings illustrate that market access goes beyond standard trade barriers: the informal networks represented by colonial linkages, as opposed to institutionalized trade agreements or investment treaties, continue to generate positive effects on trade more than half a century after independence.
These results are robust to the rise of China during the period under study, both as an export competitor and a market, and to the potential impact of Brexit, when the UK will no longer be able to serve as a strategic destination for Commonwealth exports to the EU.
Anirudh Shingal is Senior Research Fellow at the World Trade Institute, University of Bern, where he also teaches undergraduate and graduate economics. His research interests are in international trade and regional economics. He has consulted for the Swiss government, the World Bank, IFC, and ADB, the UK Foreign Office, and ITC/UNDP. He was a consultant at the World Bank during 2002-05, a Research Associate and Associate Tutor at the University of Sussex during 2005-09, and a consultant at NCAER during 1999-2000. Shingal has a PhD in Economics from Sussex, masters in International Law and Economics from the University of Bern and in Economics from the Delhi School of Economics, and a BA in Economics from St Stephen’s College, Delhi.