Colonial legacy, services trade and LDCs

Abstract

Existing work examining the trade effect of colonial legacy does not consider services trade or the impact on LDCs. We bridge this gap by providing evidence from the Commonwealth and Francophonie countries assembling a larger, more recent panel (241 countries, over 1995-2010). Commonwealth membership is found to increase services exports by 56.2% in our baseline estimates while being a Francophonie country is associated with four times more trade; both effects are significantly larger than the corresponding goods trade effects. Descriptive statistics reveal the growing reliance of small, low-income former colonies on the respective ﾓcolonial groupsﾔ. Corroborating this, we find much larger (than average) services trade effects for ex-colonies characterized as LDCs, a significant finding given the links between market access and development. Our results are robust to accounting for China and to Brexit (for the Commonwealth).