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Policy barriers to international trade in services : evidence from a new database

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  • Borchert, Ingo
  • Gootiiz, Batshur
  • Mattoo, Aaditya

Abstract

Surprisingly little is known about policies that affect international trade in services. Previous analyses have focused on policy commitments made by countries in international agreements but these commitments do not in many cases reflect actual policy. This paper describes a new initiative to collect comparable information on services trade policies for 103 countries, across a range of service sectors and the relevant modes of service delivery. The resultant database reveals interesting patterns in policy. Across regions, some of the fastest growing countries in Asia and the oil-rich Gulf states have the most restrictive policies in services, whereas some of the poorest countries are remarkably open. Across sectors, professional and transportation services are among the most protected in both industrial and developing countries, while retail, telecommunications and even finance tend to be more open. An illustrative set of results suggests that trade policies matter for investment flows and access to services. In particular, restrictions on foreign acquisitions, discrimination in licensing, restrictions on the repatriation of earnings and lack of legal recourse all have a significant and sizable negative effect, reducing the expected value of sectoral foreign investment by $2.2 billion over a 7-year period, compared with"open"policy regimes. In terms of access to services, credit as a share of gross domestic product is on average 3.3 percentage points lower in countries with major restrictions on the establishment of foreign banks as compared with those that only impose operational restrictions.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 6109.

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Date of creation: 01 Jun 2012
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Handle: RePEc:wbk:wbrwps:6109

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Keywords: Transport Economics Policy&Planning; Public Sector Corruption&Anticorruption Measures; Banks&Banking Reform; Emerging Markets; Trade and Services;

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References

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  1. Fink, Carsten & Mattoo, Aaditya & Rathindran, Randeep, 2001. "Liberalizing basic telecommunications : the Asian experience," Policy Research Working Paper Series 2718, The World Bank.
  2. Henk Kox & Hildegunn Kyvik Nordås, 2007. "Services Trade and Domestic Regulation," OECD Trade Policy Papers 49, OECD Publishing.
  3. David Hummels & Volodymyr Lugovskyy & Alexandre Skiba, 2007. "The Trade Reducing Effects of Market Power in International Shipping," NBER Working Papers 12914, National Bureau of Economic Research, Inc.
  4. Paul Conway & Giuseppe Nicoletti, 2006. "Product Market Regulation in the Non-Manufacturing Sectors of OECD Countries: Measurement and Highlights," OECD Economics Department Working Papers 530, OECD Publishing.
  5. Czubala, Witold & Shepherd, Ben & Wilson, John S., 2007. "Help or hindrance ? the impact of harmonized standards on african exports," Policy Research Working Paper Series 4400, The World Bank.
  6. Borchert, Ingo & Gootiiz, Batshur & Grover, Arti & Mattoo, Aaditya, 2012. "Landlocked or policy locked ? how services trade protection deepens economic isolation," Policy Research Working Paper Series 5942, The World Bank.
  7. Fink, Carsten & Mattoo, Aaditya & Neagu, Ileana Cristina, 2001. "Trade in international maritime services : how much does policy matter?," Policy Research Working Paper Series 2522, The World Bank.
  8. Darren Lubotsky & Martin Wittenberg, 2006. "Interpretation of Regressions with Multiple Proxies," The Review of Economics and Statistics, MIT Press, vol. 88(3), pages 549-562, August.
  9. Borchert, Ingo & Gootiiz, Batshur & Mattoo, Aaditya, 2012. "Guide to the services trade restrictions database," Policy Research Working Paper Series 6108, The World Bank.
  10. Natalie Chen & Dennis Novy, 2012. "On the measurement of trade costs: direct vs. indirect approaches to quantifying standards and technical regulations," LSE Research Online Documents on Economics 51509, London School of Economics and Political Science, LSE Library.
  11. Nora Dihel & Ben Shepherd, 2007. "Modal Estimates of Services Barriers," OECD Trade Policy Papers 51, OECD Publishing.
  12. Shepherd, Ben, 2007. "Product standards, harmonization, and trade : evidence from the extensive margin," Policy Research Working Paper Series 4390, The World Bank.
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Citations

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Cited by:
  1. World Bank, 2012. "De-fragmenting Africa : Deepening Regional Trade Integration in Goods and Services," World Bank Other Operational Studies 12385, The World Bank.
  2. Minondo, Asier, 2012. "Trading firms in the Spanish services sector," MPRA Paper 43224, University Library of Munich, Germany.
  3. Bernard M. Hoekman, 2013. "The World Bank Group Trade Strategy: Fit for Purpose?," RSCAS Working Papers PP2013/04, European University Institute.
  4. Duggan, Victor & Rahardja, Sjamsu & Varela, Gonzalo, 2013. "Service sector reform and manufacturing productivity : evidence from Indonesia," Policy Research Working Paper Series 6349, The World Bank.
  5. Michalopoulos, Constantine & Ng, Francis, 2013. "Developing country trade policies and market access issues : 1990-2012," Policy Research Working Paper Series 6463, The World Bank.
  6. Nizar Jouini & Nooman Rebei, 2013. "The Welfare Implications of Services Liberalization in a Developing Country," IMF Working Papers 13/110, International Monetary Fund.
  7. De la Medina Soto, Christian & Ghossein, Tania, 2013. "Starting a foreign investment across sectors," Policy Research Working Paper Series 6707, The World Bank.
  8. Crozet, M. & Milet, E. & Mirza, D., 2013. "The Discriminatory Effect of Domestic Regulations on International Trade in Services: Evidence from Firm-Level Data," Working papers 451, Banque de France.
  9. Bernard M. Hoekman, 2013. "Multilateral Institutions and African Economic Integration," RSCAS Working Papers 2013/67, European University Institute.
  10. Arvind Subramanian & Martin Kessler, 2013. "The Hyperglobalization of Trade and Its Future," Working Paper Series WP13-7, Peterson Institute for International Economics.
  11. Shepherd, Ben, 2012. "Services firms in the developing world: An empirical snapshot," MPRA Paper 41732, University Library of Munich, Germany.
  12. Bernard M. Hoekman & Aaditya Mattoo, 2013. "Liberalizing Trade in Services: Lessons from Regional and WTO Negotiations," RSCAS Working Papers 2013/34, European University Institute.
  13. van der Marel, Erik & Shepherd, Ben, 2013. "International tradability indices for services," Policy Research Working Paper Series 6712, The World Bank.
  14. Cusolito, Ana Paula & Hollweg, Claire H., 2013. "Trade policy barriers: an obstacle to export diversification in Eurasia," Policy Research Working Paper Series 6434, The World Bank.
  15. Marine George, 2013. "Does cross-border regulation really influence cross-border trade? Evidence from the Services Trade Restrictions Index," Post-Print dumas-00909960, HAL.
  16. Minondo, Asier, 2012. "The relationship between export status and productivity in services: A firm-level analysis for Spain," MPRA Paper 43225, University Library of Munich, Germany.

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