Technology and international competitiveness: The interdependence between manufacturing and producer services

This paper investigates how countries become specialised in exporting specific producer services, particularly financial, communication and business services. We find that a country's ability to develop a competitive service economy depends on the structure of its manufacturing sector as some manufacturing industries are more intensive users of these services. Moreover, we find a virtuous cycle as the same service producers are also intensive users of these producer services. Finally we find that information and communication technologies have a significant impact on trade performance of these producer services.