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Impact of services liberalization on productivity of manufacturing firms: evidence from Ukrainian firm-level data

  • Oleksandr Shepotylo


    (Kyiv School of Economics, Kyiv Economic Institute)

  • Volodymyr Vakhitov


    (Kyiv School of Economics, Kyiv Economic Institute)

This paper brings new evidence on the impact of services liberalization on performance of manufacturing firms. Using a unique database of Ukrainian firms in 2001-2007, we utilize an external push for liberalization in services sector as a source of exogenous variation to identify the impact of services liberalization on total factor productivity (TFP) of manufacturing firms. Results indicate that a standard deviation increase in services liberalization is associated with a 9 percent increase in TFP. Allowing services liberalization to dynamically influence TFP through the investment channel leads to even higher 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.

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Paper provided by Kyiv School of Economics in its series Discussion Papers with number 45.

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Date of creation: Dec 2011
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Handle: RePEc:kse:dpaper:45
Note: Submitted to Review of Economics and Statistics
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