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Economic benefits of an Integrated European Market for Services

  • de Bruijn, Roland
  • Kox, Henk
  • Lejour, Arjan

A Single Market for Services in the European Union is not yet a reality. The European Commission launched proposals that would remove some negative trade impacts caused by national regulation differences. We apply a general equilibrium model (WorldScan) to assess what economic benefits the proposed Services Directive may have throughout the European Union. The simulations show that European GDP and consumption could rise substantially. Most of the new accession countries will experience larger than average gains, because their services trade is now still hampered by relatively severe regulatory barriers. The Commission proposals cause a shift in industry specialisation. Some of the original EU Member States increase their relative specialisation in commercial services due to the more open borders. The new accession countries, however, reallocate more resources to their manufacturing activity where they have the strongest comparative advantage. We also assessed the effects of a policy variant that corresponds with the amended 2006 Services Directive without the 'country of origin' principle. Economic benefits are substantially smaller, implicitly showing the economic benefits of mutual recognition of regulatory standards.

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Article provided by Elsevier in its journal Journal of Policy Modeling.

Volume (Year): 30 (2008)
Issue (Month): 2 ()
Pages: 301-319

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Handle: RePEc:eee:jpolmo:v:30:y:2008:i:2:p:301-319
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505735

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  13. Arjan Lejour & Henk Kox & Roland de Bruijn, 2006. "The trade-induced effects of the Services Directive and the country of origin principle," CPB Document 108, CPB Netherlands Bureau for Economic Policy Analysis.
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