The Determinants Of Information And Communications Technology Services Export In Central And Eastern European Countries

During the past few decades, there has been a rapid growth in technology sector around the whole world. Therefore, consumer’s demand increased for ICT products and services. As a result, ICT service exports have become a very important part of international trade. This trend is supported by recent World Trade Organization data (World Trade Report, 2019). Services sector is now indicated as the most dynamic component of international trade, with its significance continually growing. The services sector currently represents approximately 50% of global GDP on average, while developed economies leaning even more heavily on services (at around 75% of GDP). Developing economies are also witnessing a swift increase in the services share of GDP. Since 2005, there is reported that trade in services growth average rate of 5.4% annually, outpacing the trade in merchandise growth rate at 4.6% annually. Over the past decade, trade in ICT and R&D services has grown particularly swiftly. The WTO forecasts that trade in services could constitute 50% of total trade, by 2040, due to digitalization, reduced restrictions, and decreasing trade costs. This research aims to investigate the determinants of ICT service exports in Central and Eastern European (CEE) countries, with focus on two research hypotheses. The first hypothesis examines the effect of government expenditures on education and R&D expenditures on ICT services exports, while exploring whether this effect is stronger for EU member countries compared to non-EU member countries in the CEE region. The second hypothesis investigates the mediating role of skilled labor (enrolled students) and internet availability in the relationship between foreign direct investment (FDI) and ICT services exports.