Here's the final presentation I've made for my thesis in the International Business Master. The Comparative Advantages in the services sector of the developing economies.

1. The Comparative Advantages in the services
sector of the developing economies
Master in International Business
Nuno Montenegro | Supervised by Professor Rosa Forte | September 2016

2. Presentation Structure
2
Background and Motivation
Research question and Goals
Literature Review:
- Defining Services
- Determinants of Comparative Advantages
- Measuring Comparative Advantages
- Empirical Studies in comparative advantages in developing economies
Methodology Consideration
Some empirical results
Conclusions
Limitations and Further contributions

3. Background and motivation
- Growing presence of the Developing Economies in Global trade (both
merchandise and services)
- Strong service trade growth since last century; more resilience to the
2007 financial turmoil
- Tertiarization process of the developed economies → expected
behavior of the developing economies
- A well-established service sector provides competitiveness of the
economies
3

4. Research question and goals
4
Identify a set of economies
representative of the developing
world
Identify a proper indicator for
measuring comparative
advantages in services
Explore their
Services Export
Structure
Understand the
evolution of
such Structure
“How have the comparative advantages in the services
categories evolved in the developing countries?”

5. Empirical Studies
regarding these
topics
Literature review
5
Definition of
services
Determinants of
Comparative
Advantages
Measuring
Comparative
Advantages

6. Defining services
6
Services have unique characteristics that affect their tradability.
Typical characteristics include:
1) Intangibility - so that international transactions in services are
often difficult to monitor, measure and tax;
2) Non-storability - so that production and consumption often must
occur at the same place and time;
3) Differentiation - services are often tailored to the needs of
customers;
4) Joint production - with customers having to participate in the
production process.
Hoekmand and Matto (2008, p.6)

7. Determinants of comparative advantages
7
The model developed by Chor (2010) studies the importance of three
different sources of comparative advantage:
Technological
differences
David Ricardo
(1817)
Relative factor
endowments
Heckscher-Olhin
(1919)
Institutional
Environment
Anderson and
Marcuiller (2002);
Nathan Nunn (2007)
It concludes that each of these sources share a similar degree of
importance in explaining a comparative advantage

8. Measuring Comparative Advantages
8
Balassa Index Normalized RCA
Requires several corrective
measures, such as the SRCA
and the ARCA
A new measure that corrects
several problems of the BI;
does not require corrective
measures

9. Empirical studies of Comparative
Advantages in the developing economies
9
Some paths found within the 25 studies retrieved:
- Regions studied: Eastern Europe or South-East Asia;
- Balassa index is the most commonly used index;
- Data from the end of the 20th
century to the beginning of the 21st
century;
- The Merchandise sector is the norm of the analysis;
- Extensive use of the United Nations Databases

10. Methodology Considerations
10
Quantitative analysis:
- Secondary data retrieved from the UNCTAD statistics
Database
- Top 10 developing economies service exporters
- 2000 to 2013 (14 years of analysis)
- 10 categories of services
- Normalized Revealed Comparative Advantage Index
(NRCA) and Trade Balance Index (TBI)

11. Empirical results: Computer and information services
11

12. Empirical results: Financial services
12

13. The trade balance Index
13
Symmetrical index;
Reveals if a country is a net importer or net exporter;
Purpose: Examine if a comparative advantage is
reflected in a superavit situation.
Normalized
Revealed
Comparative
Advantage
NRCA > 0
Area 2: Comparative
advantage and net
importer
Area1: Comparative
advantage and net
exporter
NRCA < 0
Area 3: Comparative
disadvantage and net
importer
Area 4: Comparative
disadvantage and net
exporter
Trade Balance Index TBI < 0 TBI > 0

14. Empirical results: Computer and information services
14

15. Empirical results: Financial services
15

16. Conclusions
16
- Countries present an export specialization (NRCA > 0
and TBI > 0);
- Strong comparative advantage in one service;
- Similar conclusions with other studies, even though the
index used was different;
- Presence of the three sources of comparative
advantage.

17. Limitations and further contributions
17
- Lack of data for some countries in some categories;
- Change in the services statistics’ methodology;
- The need to complement the analysis with more
information and indexes;

18. 18
Thank You!