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Economic benefits of an Integrated European Market for Services

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

Abstract

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.

Suggested Citation

  • de Bruijn, Roland & Kox, Henk & Lejour, Arjan, 2008. "Economic benefits of an Integrated European Market for Services," Journal of Policy Modeling, Elsevier, vol. 30(2), pages 301-319.
  • Handle: RePEc:eee:jpolmo:v:30:y:2008:i:2:p:301-319
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    References listed on IDEAS

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    1. Giuseppe Nicoletti & Stefano Scarpetta & Olivier Boylaud, 2000. "Summary Indicators of Product Market Regulation with an Extension to Employment Protection Legislation," OECD Economics Department Working Papers 226, OECD Publishing.
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    8. 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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    Citations

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    Cited by:

    1. Lejour, Arjan & Rojas-Romagosa, Hugo & Verweij, Gerard, 2008. "Opening services markets within Europe: Modelling foreign establishments in a CGE framework," Economic Modelling, Elsevier, vol. 25(5), pages 1022-1039, September.
    2. Bas Straathof & Gert Jan Linders & Arjan Lejour & Jan Möhlmann, 2008. "The internal market and the Dutch economy: implications for trade and economic growth," CPB Document 168, CPB Netherlands Bureau for Economic Policy Analysis.
    3. Joseph Francois & Bernard Hoekman, 2010. "Services Trade and Policy," Journal of Economic Literature, American Economic Association, vol. 48(3), pages 642-692, September.
    4. Productivity Commission, 2009. "Review of Mutual Recognition Schemes," Research Reports, Productivity Commission, Government of Australia, number 32.
    5. Clemente, Jesús & Pueyo, Fernando & Sanz, Fernando, 2009. "Market potential, European Union and growth," Journal of Policy Modeling, Elsevier, vol. 31(5), pages 719-730, September.
    6. Hudson, John & Orviska, Marta, 2013. "Firms’ adoption of international standards: One size fits all?," Journal of Policy Modeling, Elsevier, vol. 35(2), pages 289-306.
    7. Bianka Dettmer, 2012. "The European Union's service directive: Contrasting ex ante estimates with empirical evidence," Jena Economic Research Papers 2012-019, Friedrich-Schiller-University Jena.
    8. Toulemonde, Eric, 2013. "A welfare analysis of the principle of mutual recognition," European Economic Review, Elsevier, vol. 60(C), pages 1-16.
    9. repec:kap:ejlwec:v:44:y:2017:i:3:d:10.1007_s10657-016-9536-1 is not listed on IDEAS
    10. Winchester, Niven, 2009. "Is there a dirty little secret? Non-tariff barriers and the gains from trade," Journal of Policy Modeling, Elsevier, vol. 31(6), pages 819-834, November.
    11. Paul de Boer & Richard Paap, 2009. "Testing non-nested demand relations: linear expenditure system versus indirect addilog," Statistica Neerlandica, Netherlands Society for Statistics and Operations Research, vol. 63(3), pages 368-384.
    12. Kitou, Elisavet & Philippidis, George, 2010. "An EU-Canada bilateral trade agreement: A DefraTAP application," 84th Annual Conference, March 29-31, 2010, Edinburgh, Scotland 91679, Agricultural Economics Society.
    13. Bianka Dettmer, 2012. "Business services outsourcing and economic growth: Evidence from a dynamic panel data approach," Jena Economic Research Papers 2012-049, Friedrich-Schiller-University Jena.

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