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Services trade costs: Tariff equivalents of services trade restrictions using gravity estimation

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  • Sebastian Benz

    (OECD)

Abstract

Estimates for ad valorem tariff equivalents of services trade restrictions for cross-border trade in six services sectors are presented in this paper. These equivalents are found to be very big in several service sectors with estimates ranging as high as 2000% when trade flows are relatively inelastic, as opposed to between 20% and 300% in most other sectors. The results indicate that trade costs may even increase less than proportionally as the degree of services trade restrictiveness rises. In addition, the paper shows that services trade liberalisation has the largest effect on trade flows in smaller markets. The estimates presented in this Paper are based on a gravity framework using data on both bilateral trade flows and on the value of domestic production. Production values are used to construct measures for the domestic consumption of domestic services in each country, which enables country-specific trade restrictions to be identified, while controlling for multilateral resistance using fixed effects.

Suggested Citation

  • Sebastian Benz, 2017. "Services trade costs: Tariff equivalents of services trade restrictions using gravity estimation," OECD Trade Policy Papers 200, OECD Publishing.
    • Handle: RePEc:oec:traaab:200-en
    DOI: 10.1787/dc607ce6-en
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    Citations

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    Cited by:

    1. Lili Yan Ing & Dani Rodrik (ed.), 2022. "New Normal, New Technologies, New Financing," Books, Economic Research Institute for ASEAN and East Asia (ERIA), number 978-602-5460-41-8, October.
    2. Benz, Sebastian & Jaax, Alexander, 2019. "Quantifying the costs of regulatory barriers to trade in services: New estimates of ad valorem equivalents based on the OECD STRI," Conference papers 333096, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    3. Hoekman, Bernard & Shepherd, Ben, 2021. "Services Trade Policies and Economic Integration: New Evidence for Developing Countries," World Trade Review, Cambridge University Press, vol. 20(1), pages 115-134, February.
    4. Raza, Werner G. & Tröster, Bernhard & von Arnim, Rudi, 2018. "ASSESS_TISA: Assessing the claimed benefits of the Trade in Services Agreement (TiSA) [TISA: Ökonomische Bewertung der prognostizierten Effekte des Abkommens über den Handel mit Dienstleistungen]," Research Reports 6/2018, Austrian Foundation for Development Research (ÖFSE).
    5. Manoj pant & Sugandha Huria, 2019. "Quantification of Services Trade Restrictions - A new Approach," Working Papers 1940, Indian Institute of Foreign Trade.
    6. Philipp Lamprecht & Sébastien Miroudot, 2020. "The value of market access and national treatment commitments in services trade agreements," The World Economy, Wiley Blackwell, vol. 43(11), pages 2880-2904, November.
    7. Benz, Sebastian & Jaax, Alexander, 2022. "The costs of regulatory barriers to trade in services: New estimates of ad valorem tariff equivalents," Economics Letters, Elsevier, vol. 212(C).
    8. Tamar Khachaturian & Sarah Oliver, 2023. "Intangible trade: Understanding the relationship between trade barriers and mode of supply in services sectors," The World Economy, Wiley Blackwell, vol. 46(5), pages 1189-1234, May.
    9. Richard Baldwin & Dmitry Grozoubinski, 2022. "Strengthening the Multilateral Trading System: the ‘WTO Rising’ Imperative," Chapters, in: Lili Yan Ing & Dani Rodrik (ed.), New Normal, New Technologies, New Financing, chapter 12, pages 141-152, Economic Research Institute for ASEAN and East Asia (ERIA).
    10. Van Der Marel,Erik Leendert & Shepherd,Ben, 2020. "Trade Facilitation in Services : Concepts and Empirical Importance," Policy Research Working Paper Series 9234, The World Bank.
    11. Sebastian Benz & Dorothée Rouzet & Francesca Spinelli, 2020. "Firm heterogeneity in services trade: Micro‐level evidence from eight OECD countries," The World Economy, Wiley Blackwell, vol. 43(11), pages 2905-2931, November.
    12. Ziyu Yi & Long Wei & Xuan Huang, 2022. "Does Information-and-Communication-Technology Market Openness Promote Digital Service Exports?," Sustainability, MDPI, vol. 14(9), pages 1-19, April.
    13. Sebastian Benz & Janos Ferencz & Hildegunn K. Nordås, 2020. "Regulatory barriers to trade in services: A new database and composite indices," The World Economy, Wiley Blackwell, vol. 43(11), pages 2860-2879, November.

    More about this item

    Keywords

    services trade restrictions; trade costs; Trade in services; trade liberalisation;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F68 - International Economics - - Economic Impacts of Globalization - - - Policy

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