Abstract: The imbalance between service trade and goods trade and the explanation have always been one focus of controversy in the field of international trade. By using a join outsourcing model of technological innovation efficiency, the paper analyzes how technological innovation capacity determines division of labor in manufacturing and service sectors in the value chain system, which acts as a source of comparative advantage of service department, and the mechanism leading to reverse development of service trade and goods trade. Empirical results show, the technological innovation ability has a significantly positive effect on the international competitiveness of producer services for all economies with different status in the value chain and different income. But the relationship between producer service trade and goods trade development is affected by income level and the status of the value chain, high income economy trade in goods trade and producer services usually have reverse relationships, while in low and middle income and economy at the downstream of the value chain, the reverse relationship is not so significant. Generally speaking, higher participation in global value chain will further boost economies in producer service industry′s comparative advantage, but for headquarters economy, along with the rise in participation in the field of trade in services, the advantage may be weakened. At the same time, the study also gives a reasonable explanation for the relative lag of China′s service trade development from the perspective of technological innovation efficiency.

Key words: technological innovation ability, service trade, goods trade, global value chain