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Regional trade policy options for Tanzania : the importance of services commitments

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  • Jensen, Jesper
  • Tarr, David G.

Abstract

Despite the growing importance of commitments to foreign investors in services in regional trade agreements, there are no applied general equilibrium models in the literature that assess these regional impacts. This paper develops a 52 sector applied general equilibrium model of Tanzania with foreign direct investment, and uses that model to assess Tanzania's regional and multilateral trade options. The model incorporates the features of the modern theory of international trade that has shown empirically that trade and foreign direct investment can increase productivity, and trade and foreign direct investment with technologically advanced countries is especially valuable for that purpose. To assess the sensitivity of the results to parameter values, the model is executed 30,000 times, and the results are reported as confidence intervals of the sample distributions. The analysis finds that a 50 percent preferential reduction in the ad valorem equivalents of barriers in all business services by Tanzania with respect to its African regional partners would be slightly beneficial for Tanzania. But wider liberalization, with larger partners or multilaterally, it will yield much larger gains due to providing access to a much wider set of service providers. Finally, the results show that the largest gains in services would be derived from reduction of regulatory barriers that are geographically non-discriminatory.

Suggested Citation

  • Jensen, Jesper & Tarr, David G., 2010. "Regional trade policy options for Tanzania : the importance of services commitments," Policy Research Working Paper Series 5481, The World Bank.
  • Handle: RePEc:wbk:wbrwps:5481
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    Cited by:

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    2. Zoryana Olekseyuk, 2015. "The EU-Ukraine Deep and Comprehensive Free Trade Agreement and the importance of FDI," EcoMod2015 8391, EcoMod.
    3. Christen, Elisabeth & Francois, Joseph & Hoekman, Bernard, 2013. "Computable General Equilibrium Modeling of Market Access in Services," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 1601-1643, Elsevier.
    4. Latorre, Maria C., 2014. "CGE analysis of the impact of foreign direct investment and tariff reform on female and male wages," Policy Research Working Paper Series 7073, The World Bank.
    5. Tarr, David G., 2013. "Putting Services and Foreign Direct Investment with Endogenous Productivity Effects in Computable General Equilibrium Models," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 303-377, Elsevier.
    6. Isabelle Rabaud, 2014. "Gains à l'échange de services pour les pays africains : mythe ou réalité ?," Revue française d'économie, Presses de Sciences-Po, vol. 0(2), pages 103-142.
    7. World Bank, . "Kazakhstan : Assessment of Costs and Benefits of the Customs," World Bank Other Operational Studies, The World Bank, number 12299.
    8. World Bank, . "Assessment of Costs and Benefits of the Customs Union for Kazakhstan," World Bank Other Operational Studies, The World Bank, number 2722.

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    Keywords

    Economic Theory&Research; Transport Economics Policy&Planning; Emerging Markets; Environmental Economics&Policies; Banks&Banking Reform;
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