results go through.<sup>16</sup> One of the orthodoxy in service led growth is that it is an India specific story. Therefore, in column 5-6 of Table 4, we drop India, and as the results holds we can confirm that there are other sophisticated service exporters driving the results. Moreover, after controlling for initial income per capita, skills, financial development, polity, time invariant factors, export sophistication in services is a good indicator of growth performance globally.

In order to further exploit the time varying effect of sophistication in service exports and growth, we repeat the earlier exercise for the time period 1999-2007. Results are shown in Table 5. The coefficient on _sEXPY_ is significant under all specifications and the size of the coefficient is by in large bigger.<sup>17</sup> The fixed effect panel estimation controls for time-invariant country specific characteristics and influence out the impact of _Service EXPY_ within countries. The coefficient on _Service EXPY_ in the first panel is positive and statistically significant, implying that higher dynamic export sophistication is associated with higher growth in GDP per capita. Adding growth determinants (in Panel I and Panel II) does not take away the explanatory power of _Service EXPY_ , and it remains positively related to GDP per capita growth.<sup>18</sup> We are in particular interested in whether service exports sophistication can provide an additional route to high economic growth in low-income countries. Therefore, in Table 6 we conduct sensitivity test by restricting our sample of countries to low and middle income countries (with income per capita in PPP terms below $10,000). The results are presented in Table 6. As previously, we use the above progression of adding growth determinants and robustness check controls. The results from fixed effect and System GMM show that _sEXPY_ remains positively associated with growth. Again, controlling for initial _Goods EXPY_ and the size of domestic service sector does not change the results. The regression results confirm the dynamism in export quality of services, and provide a statistical indication of the positive relation between service quality of exports and growth.

> 16 The System GMM but not our fixed effect in our specification predicts goods EXPY to be non-significant.Tthis result has also been documented in other studies (see Weiss, 2010 ). In our case, this could also exist due to the high multicollinearity between service sophistication and goods sophistication.

> 17 We further try unconventional growth regression using annual panel data estimations to have a bigger sample and understand the evolution of service EXPY and growth. We conduct sensitivity tests by restricting the sample to period after 1998, 1999 and so on. As the period gets restricted to more and more recent years, the coefficient on Service EXPY becomes bigger (Results not shown in the paper).

> 18 Since the trade statistics in services do not capture the inputs and processes under services, at best our estimation is on the lower side. If these were included we believe that the growth elasticity of service export sophistication could be substantially higher.

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