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The impact of liberalizing barriers to foreign direct investment in services - the case of Russian accession to the World Trade Organization

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Author Info
Jensen, Jesper
Rutherford, Thomas
Tarr, David

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Abstract

The authors use a computable general equilibrium model of the Russian economy to assess the impact of accession to the World Trade Organization (WTO), which encompasses improved market access, tariff reduction, and reduction of barriers against multinational service providers. They assume that foreign direct investment in business services is necessary for multinationals to compete well with Russian business service providers, but cross-border service provision is also present. The model incorporates productivity effects in both goods and services markets endogenously through a Dixit-Stiglitz framework. As a result, the estimated gains from WTO accession are much larger than would be obtained from a typical model with perfect competition. The ad valorem equivalent of barriers to foreign direct investment have been estimated based on detailed questionnaires completed by specialized research institutes in Russia. The authors estimate that Russia will gain about 7.2 percent of the value of Russian consumption in the medium run from WTO accession and up to 24 percent in the long run. They estimate that the largest gains to Russia will derive from liberalization of barriers againstmultinational service providers. Piecemeal and systematic sensitivity analysis shows that their results are robust.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3391.

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Date of creation: 01 Sep 2004
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Handle: RePEc:wbk:wbrwps:3391

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Keywords: Environmental Economics&Policies; International Terrorism&Counterterrorism; Decentralization; Economic Theory&Research; Banks&Banking Reform; Environmental Economics&Policies; Economic Theory&Research; TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT; Banks&Banking Reform; ICT Policy and Strategies;

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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Rutherford, Thomas & Tarr, David, 2006. "Regional impacts of Russia's accession to the World Trade Organization," Policy Research Working Paper Series 4015, The World Bank. [Downloadable!]
  2. Tarr, David, 2007. "Russian WTO accession : what has been accomplished, what can be expected," Policy Research Working Paper Series 4428, The World Bank. [Downloadable!]
  3. Pekka Sulamaa & Mika Widgrén, 2005. "Economic Effects of Free Trade between the EU and Russia," Economics Working Papers 036, European Network of Economic Policy Research Institutes. [Downloadable!]
    Other versions:
  4. Rutherford, Thomas & Tarr, David & Shepotylo, Oleksandr, 2005. "Poverty effects of Russia's WTO accession : modeling"real"households and endogenous productivity effects," Policy Research Working Paper Series 3473, The World Bank. [Downloadable!]
  5. Martin, Will & Anderson, Kym, 2006. "The Doha Agenda and Agricultural Trade Reform: The Role of Economic Analysis," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25628, International Association of Agricultural Economists. [Downloadable!]
    Other versions:
  6. Rutherford, Thomas & Tarr, David & Shepotylo, Oleksandr, 2005. "The impact on Russia of WTO accession and the Doha agenda : the importance of liberalization of barriers against foreign direct investment in services for growth and poverty reduction," Policy Research Working Paper Series 3725, The World Bank. [Downloadable!]
  7. Denise Eby Konan & Ari Van Assche, 2006. "Regulation, Market Structure and Service Trade Liberalization," CIRANO Working Papers 2006s-18, CIRANO. [Downloadable!]
    Other versions:
  8. Fernandes, Ana M. & Paunov, Caroline, 2008. "Foreign direct investment in services and manufacturing productivity growth: evidence for Chile," Policy Research Working Paper Series 4730, The World Bank. [Downloadable!]
  9. Roland de Bruijn & Henk Kox & Arjan Lejour, 2006. "The trade-induced effects of the Services Directive and the country of origin principle," CPB Documents 108, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
  10. Joseph Francois & Ian Wooton, 2008. "Market Structure and Market Access," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  11. Arjan Lejour & Hugo Rojas-Romagosa, 2006. "Foreign Direct Investment in Applied General Equilibrium Models," CPB Memoranda 169, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
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