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Services liberalization and productivity of manufacturing firms

Author

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  • Oleksandr Shepotylo
  • Volodymyr Vakhitov

Abstract

type="main" xml:id="ecot12061-abs-0001"> Employing a unique database of Ukrainian firms in 2001–07, we use the external push for liberalization in the services sector as a source of exogenous variation to identify the effect of services liberalization on total factor productivity (TFP) of manufacturing firms. The results indicate that a standard deviation increase in services liberalization within a firm is associated with a 9.2 percent increase in TFP. The effect is stronger for firms with high productivity, bringing about a reallocation of resources within an industry. Industry-level results show that the effect of reallocation on industry productivity is almost as strong as the within-firm effect. The dynamic interaction of services liberalization and TFP through the investment channel reinforces the effect. The effect is robust to different estimation methods and to different sub-samples of the data. In particular, it is more pronounced for domestic and small firms.

Suggested Citation

  • Oleksandr Shepotylo & Volodymyr Vakhitov, 2015. "Services liberalization and productivity of manufacturing firms," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 23(1), pages 1-44, January.
  • Handle: RePEc:bla:etrans:v:23:y:2015:i:1:p:1-44
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    File URL: http://hdl.handle.net/10.1111/ecot.2015.23.issue-1
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    Cited by:

    1. Huynh, Kim P. & Jacho-Chávez, David T. & Kryvtsov, Oleksiy & Shepotylo, Oleksandr & Vakhitov, Volodymyr, 2016. "The evolution of firm-level distributions for Ukrainian manufacturing firms," Journal of Comparative Economics, Elsevier, vol. 44(1), pages 148-162.
    2. repec:bla:worlde:v:40:y:2017:i:12:p:2564-2591 is not listed on IDEAS
    3. Zoryana Olekseyuk, 2016. "Modeling of FDI in business services: Additional effects in case of Ukraine's European integration," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 25(7), pages 1010-1043, October.
    4. Iwasaki, Ichiro & Mizobata, Satoshi, 2017. "Post-Privatization Ownership and Firm Performance: A Large Meta-Analysis of the Transition Literature," CEI Working Paper Series 2016-13, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    5. Damijan, Jože & Kostevc, Črt & Marek, Philipp & Rojec, Matija, 2015. "Do Manufacturing Firms Benefit from Services FDI? – Evidence from Six New EU Member States," IWH Discussion Papers 5/2015, Halle Institute for Economic Research (IWH).
    6. Christoph Böhringer & Thomas F. Rutherford & David G. Tarr & Natalia Turdyeva, 2017. "Market Structure and the Environmental Implications of Trade Liberalization: Russia’s Accession to the World Trade Organization," World Scientific Book Chapters,in: Trade Policies for Development and Transition, chapter 20, pages 459-485 World Scientific Publishing Co. Pte. Ltd..
    7. Edward J. Balistreri & Zoryana Olekseyuk & David G. Tarr, 2017. "Privatisation and the unusual case of Belarusian accession to the WTO," The World Economy, Wiley Blackwell, vol. 40(12), pages 2564-2591, December.
    8. repec:spr:anresc:v:60:y:2018:i:1:d:10.1007_s00168-017-0851-4 is not listed on IDEAS

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