Bilateral political ties and the stability of services exports

Abstract

This study examines the effect of bilateral political ties on the stability of service exports. The results show that the deterioration of political ties can decrease the stability of service exports by strengthening non-tariff barriers and weakening immigration networks. A decrease in voting similarity among trading partners in the United Nations General Assembly corresponds to heightened instability in service exports. In particular, political ties have a more pronounced impact on the stability of tourism service exports than on other services. Developing countries, in contrast to developed countries, should pay particular attention to the impact of political ties on the stability of service exports. Moreover, improvements in technological advantages and Internet openness in exporting countries can weaken the impact of political ties.