Purpose This study aims to examine South Asia’s revealed comparative advantage (RCA) in services trade from 2010 to 2023, analysing both static and dynamic patterns. It maps sectoral specialisation across eight economies and identifies structural and policy factors driving competitiveness. By distinguishing persistent advantages from emerging opportunities, the study addresses gaps in understanding the region’s evolving role in global services trade. Design/methodology/approach Using OECD-WTO BaTIS data, the RCA and Dynamic RCA indices are calculated for 12 service sectors grouped into three categories. A differenced panel two-way GMM framework evaluates determinants, such as capital formation, education, human capital, digital readiness, institutional quality and governance, controlling for country-specific heterogeneity and time dynamics. Findings Results reveal structural diversity and uneven competitiveness: India dominates ICT and business services despite declining RCA intensity, while Sri Lanka diversifies and Afghanistan and Bangladesh lose earlier advantages. Determinants vary by service category, physical infrastructure drives traditional services, digital innovation sustains knowledge-intensive sectors and institutional quality anchors government-related services. Persistent RCA indicates cumulative capabilities, with structural rather than price factors shaping competitiveness. Originality/value The study integrates static and dynamic RCA analysis with econometric evidence, providing a nuanced understanding of South Asia’s service trade competitiveness. It highlights sector-specific drivers, resilience of established ecosystems and shifts towards new service specialisations, offering policy-relevant insights for fostering sustainable growth beyond traditional comparative advantages.
Paul et al. (Tue,) studied this question.