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Quantifying Regulatory Barriers to Services Trade

Author

Listed:
  • Hildegunn Kyvik Nordås

    (OECD)

  • Henk Kox

    (OECD)

Abstract

This study analyses how domestic regulation affects trade in services through commercial presence and to what extent regulation, level and heterogeneity, has an impact on the choice of mode of servicing a foreign market for total services, financial services, transport, communication, computer, and other business services. Regulatory heterogeneity is found to have a relatively large impact on trade through commercial presence. If all countries in the sample harmonized or recognized each other’s regulation, total services trade through commercial presence could increase by between 13 and 30% depending on the country. The study also assesses what determines services suppliers’ choice of mode. Modes of supply are found to be complementary to various degrees. Commercial presence is more dominant the more similar a country pair is as far as regulation and business environment are concerned and countries sharing a common language are more likely to trade through commercial presence. For some sectors it is found that the disadvantage of remoteness is amplified by strict regulation. In most services sectors trade liberalisation generates meaningful market access only if commercial presence is allowed. Furthermore, absence of explicit barriers to trade and investment is not necessarily sufficient to attract foreign investors.

Suggested Citation

  • Hildegunn Kyvik Nordås & Henk Kox, 2009. "Quantifying Regulatory Barriers to Services Trade," OECD Trade Policy Papers 85, OECD Publishing.
    • Handle: RePEc:oec:traaab:85-en
    DOI: 10.1787/5kgkcjqsm6kd-en
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    Citations

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    Cited by:

    1. Kox, Henk L.M. & Leeuwen, George van & Wiel, Henry van der, 2010. "Competitive, but too small - productivity and entry-exit determinants in European business services," MPRA Paper 24389, University Library of Munich, Germany.
    2. Jan Stráský, 2016. "Priorities for completing the European Union's Single Market," OECD Economics Department Working Papers 1315, OECD Publishing.
    3. McDonald, Scott & Thierfelder, Karen, 2009. "SADC Integration and the EU’s Economic Partnership Agreements," Conference papers 331845, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    4. Markus Kelle & Jörn Kleinert & Horst Raff & Farid Toubal, 2013. "Cross-border and Foreign Affiliate Sales of Services: Evidence from German Microdata," The World Economy, Wiley Blackwell, vol. 36(11), pages 1373-1392, November.
    5. Fernando Mistura & Caroline Roulet, 2019. "The determinants of Foreign Direct Investment: Do statutory restrictions matter?," OECD Working Papers on International Investment 2019/01, OECD Publishing.
    6. Nazire Nergiz Dincer & Ayça Tekin‐Koru, 2020. "The effect of border barriers to services trade on goods trade," The World Economy, Wiley Blackwell, vol. 43(8), pages 2093-2118, August.
    7. Stephenson, Sherry M. & Ragoussis, Alexandros & Sotelo, Jimena, 2016. "Implications of the Trade in Services Agreement (TiSA) for developing countries," IDOS Discussion Papers 10/2016, German Institute of Development and Sustainability (IDOS).
    8. Bouvatier, Vincent, 2014. "Heterogeneous bank regulatory standards and the cross-border supply of financial services," Economic Modelling, Elsevier, vol. 40(C), pages 342-354.
    9. Jean-Marc Fournier, 2015. "The negative effect of regulatory divergence on foreign direct investment," OECD Economics Department Working Papers 1268, OECD Publishing.
    10. Henk Kox & George van Leeuwen, 2012. "Dynamic market selection in EU business services," CPB Discussion Paper 210, CPB Netherlands Bureau for Economic Policy Analysis.
    11. Alessio Lombini, 2021. "Regulatory heterogeneity and global value chain-related trade," IRENE Working Papers 21-08, IRENE Institute of Economic Research.
    12. Kox, Henk L.M. & Van Leeuwen, George & Van der Wiel, Henry, 2011. "Being numerous does not yield efficiency - Productivity and entry-exit determinants in European business services," MPRA Paper 106166, University Library of Munich, Germany, revised Sep 2011.
    13. Karingi, Stephen N. & Leyaro, Vincent, 2010. "Surmounting Africa's Trade Capacity Contraints: An Assessment of the Effectiveness of the Aid for Trade," Conference papers 331966, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    14. Henk Kox & George van Leeuwen & Henry van der Wiel, 2010. "Small firms captive in a box like lobsters," CPB Discussion Paper 158, CPB Netherlands Bureau for Economic Policy Analysis.
    15. Kox, Henk L.M. & van Leeuwen, George, 2013. "Market selection and scale inefficiency – A new methodology applied to EU business services," Structural Change and Economic Dynamics, Elsevier, vol. 25(C), pages 77-94.
    16. Kox, Henk L.M. & Leeuwen, George van, 2011. "Measuring dynamic market selection by persistent scale inefficiencies - new methodology applied to EU business services," MPRA Paper 34986, University Library of Munich, Germany.
    17. Paul Conway, 2016. "Achieving New Zealand's productivity potential," Working Papers 2016/01, New Zealand Productivity Commission.
    18. Kox, Henk L.M., 2021. "Two short essays on services markets and services regulation," EconStor Preprints 266496, ZBW - Leibniz Information Centre for Economics.
    19. Douch, Mustaph & Huw Edwards, T., 2021. "The Brexit policy shock: Were UK services exports affected, and when?," Journal of Economic Behavior & Organization, Elsevier, vol. 182(C), pages 248-263.
    20. World Bank, 2010. "Reform and Regional Integration of Professional Services in East Africa : Time for Action," World Bank Publications - Reports 2957, The World Bank Group.
    21. Cédric Duprez, 2011. "International trade in services. A growing contribution to Belgium’s current balance," Economic Review, National Bank of Belgium, issue iii, pages 53-68, December.

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