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Dynamic effects of European services liberalisation: more to be gained

Author

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  • Kox, Henk L.M.
  • Lejour, Arjan

Abstract

Europe’s market for services is fragmented by many regulatory barriers. The Services directive proposed by the European Commission aims to integrate national services markets by reducing these barriers. Several studies indicate that bilateral trade and foreign direct investment in services could boost substantially. GDP and consumption could increase by 0.5% to about 1% on average in Europe. The effects for the Member States vary depending on the size of the barriers in their services markets and specialization. These results take account of scale effects, and forward and backward linkages in the economy, but ignore the effects of more competition on productivity and innovation in the long term. This paper assesses the channels though which an integrated European services market may generate these dynamic gains. Improved market access will stimulate competitive selection and productivity growth. Through trade and investment, knowledge spillovers will increase and innovation will be fostered. These channels are illustrated with quantitative evidence.

Suggested Citation

  • Kox, Henk L.M. & Lejour, Arjan, 2006. "Dynamic effects of European services liberalisation: more to be gained," MPRA Paper 3751, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:3751
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    File URL: https://mpra.ub.uni-muenchen.de/3751/1/MPRA_paper_3751.pdf
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    References listed on IDEAS

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    2. Henk Kox & Arjan Lejour, 2005. "Regulatory heterogeneity as obstacle for international services trade," CPB Discussion Paper 49, CPB Netherlands Bureau for Economic Policy Analysis.
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    Citations

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    Cited by:

    1. Fabienne Ilzkovitz & Adriaan Dierx & Viktoria Kovacs & Nuno Sousa, 2007. "Steps towards a deeper economic integration: the internal market in the 21st century," European Economy - Economic Papers 2008 - 2015 271, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    2. Gabriel Felbermayr & Benedikt Heid & Mario Larch & Erdal Yalcin, 2015. "Macroeconomic potentials of transatlantic free trade: a high resolution perspective for Europe and the world," Economic Policy, CEPR;CES;MSH, vol. 30(83), pages 491-537.
    3. Gabriel Felbermayr & Benedikt Heid & Mario Larch, 2015. "TTIP: Small Gains, High Risks?," CESifo Forum, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 15(4), pages 20-30, January.
    4. 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.
    5. Tingsong Jiang & Warwick McKibbin, 2009. "What Does a Free Trade Area of the Asia-Pacific Mean to China?," Chapters,in: China’s Integration with the Global Economy, chapter 5 Edward Elgar Publishing.
    6. Paul-Bogdan Zamfir, 2013. "Romania Alignment To Eu Requirements Concerning The Services Integration In The Internal Market," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 2, pages 329-334, April.

    More about this item

    Keywords

    trade openess; services; dynamic effects; European Union;

    JEL classification:

    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • L8 - Industrial Organization - - Industry Studies: Services
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • F15 - International Economics - - Trade - - - Economic Integration
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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