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Determinants of Foreign Trade in Services Across Regions in the Philippines

Considering trade in services as an important driver of economic growth for many economies around the world, this research attempts to investigate the determinants of foreign trade in services with a focus on the 17 regions in the Philippines across Philippine regions. Using annual data, panel data regressions (random effects and fixed effects) are conducted for two datasets covering the periods 2008 to 2020 and 2015 to 2020 with exports, imports, and total trade in services as the dependent variables. The findings suggest that regional GDP, inflation, the availability of credit or bank loans, access to the internet of establishments in the region and e-commerce transactions of establishments appear to positively encourage trade in services of the regions. Over a shorter time period of 2015 to 2020, domestic investment (GCF) has a positive effect on trade in services while the size of the population appears to have a negative effect on trade in services. The preliminary findings suggest that the BSP has a crucial role in keeping inflation low and regulating the banking system to efficiently allocate funds as these positively contribute to trade in services. Moreover, improving access to the internet and encouraging e-commerce transactions may also contribute to increasing trade in services.


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