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Services liberalization and productivity of manufacturing firms : evidence from Ukraine


  • Shepotylo, Oleksandr
  • Vakhitov, Volodymyr


This paper brings new evidence on the impact of services liberalization on the performance of manufacturing firms. Using a unique database of Ukrainian firms in 2001-2007, the authors utilize an external push for liberalization in the services sector as a source of exogenous variation to identify the impact of services liberalization on total factor productivity (TFP) of manufacturing firms. The 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 an even larger 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.

Suggested Citation

  • Shepotylo, Oleksandr & Vakhitov, Volodymyr, 2012. "Services liberalization and productivity of manufacturing firms : evidence from Ukraine," Policy Research Working Paper Series 5944, The World Bank.
  • Handle: RePEc:wbk:wbrwps:5944

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    Cited by:

    1. Oleksandr Shepotylo, 2014. "Deregulation and productivity: selection or within-firm effect?," ERSA conference papers ersa14p700, European Regional Science Association.
    2. Zoryana Olekseyuk, 2015. "The EU-Ukraine Deep and Comprehensive Free Trade Agreement and the importance of FDI," EcoMod2015 8391, EcoMod.
    3. Tarr, David, 2012. "Impact of services liberalization on industry productivity, exports and development : six empirical studies in the transition countries," Policy Research Working Paper Series 6023, The World Bank.
    4. Bernard Hoekman & Jesper Jensen & David Tarr, 2013. "A Vision for Ukraine in the World Economy. Defining a Trade Policy Strategy that Leverages Global Opportunities," RSCAS Working Papers PP 2013/25, European University Institute.
    5. Denis Ivanov, 2014. "Transition and path-dependence in knowledge-intensive industry location: Case of Russian professional services," ERSA conference papers ersa14p767, European Regional Science Association.
    6. International Monetary Fund, 2013. "France; Selected Issues," IMF Staff Country Reports 13/3, International Monetary Fund.

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    Economic Theory&Research; E-Business; Emerging Markets; ICT Policy and Strategies; Public Sector Corruption&Anticorruption Measures;

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