How Low Income Countries Can Develop Service Exports to the U.S. Evidence from Panel Data Analysis and Graphical Modeling

In this study, we analyze the growth trajectory of service exports from developing countries to the U.S. based on the network theory. We first conducted a panel data analysis covering 31 countries from 1999 to 2008, the decade right before the 2008 global financial crisis. The study uses data for each country’s service exports to the U.S., number of H-1B visa holders, GNI per-capita, network readiness index, and English proficiency factors. We then use graphical modeling analysis to illustrate the trajectory and interaction among these factors. The analyses yield two observations. First, per-capita income and H-1B visa holders have the most direct effect on service exports to the U.S. Second, the lower a country’s income level is, the more intensively cross-border personal
networks are fabricated through H-1B visas. The results of this study suggest that international human resource networks were a catalyst for low-income economies such as India to expand service exports to the U.S., although service trade is traditionally the domain of high-income countries.