Impact of business services on quality specialization

Abstract This study demonstrates the effects of business service inputs on the export share of high-quality products. It uses data covering 12 manufacturing sectors in 31 countries during 2000–2014 and constructed using the subsystem approach. The main finding is that the effect is positive and large, and reduces gradually as product quality declines. By manufacturing sector, the effect is higher on low-tech sectors than on high-tech sectors. Business services can potentially contribute to the dynamic transformation of comparative advantages.