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Policy barriers to international trade in services : evidence from a new database

  • Borchert, Ingo
  • Gootiiz, Batshur
  • Mattoo, Aaditya

Surprisingly little is known about policies that affect international trade in services. Previous analyses have focused on policy commitments made by countries in international agreements but these commitments do not in many cases reflect actual policy. This paper describes a new initiative to collect comparable information on services trade policies for 103 countries, across a range of service sectors and the relevant modes of service delivery. The resultant database reveals interesting patterns in policy. Across regions, some of the fastest growing countries in Asia and the oil-rich Gulf states have the most restrictive policies in services, whereas some of the poorest countries are remarkably open. Across sectors, professional and transportation services are among the most protected in both industrial and developing countries, while retail, telecommunications and even finance tend to be more open. An illustrative set of results suggests that trade policies matter for investment flows and access to services. In particular, restrictions on foreign acquisitions, discrimination in licensing, restrictions on the repatriation of earnings and lack of legal recourse all have a significant and sizable negative effect, reducing the expected value of sectoral foreign investment by $2.2 billion over a 7-year period, compared with"open"policy regimes. In terms of access to services, credit as a share of gross domestic product is on average 3.3 percentage points lower in countries with major restrictions on the establishment of foreign banks as compared with those that only impose operational restrictions.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 6109.

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Date of creation: 01 Jun 2012
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Handle: RePEc:wbk:wbrwps:6109
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  1. Natalie Chen & Dennis Novy, 2012. "On the measurement of trade costs: direct vs. indirect approaches to quantifying standards and technical regulations," LSE Research Online Documents on Economics 51509, London School of Economics and Political Science, LSE Library.
  2. Darren Lubotsky & Martin Wittenberg, 2001. "Interpretation of Regressions with Multiple Proxies," Econometrics 0110005, EconWPA.
  3. Shepherd, Ben, 2007. "Product standards, harmonization, and trade : evidence from the extensive margin," Policy Research Working Paper Series 4390, The World Bank.
  4. Nora Dihel & Ben Shepherd, 2007. "Modal Estimates of Services Barriers," OECD Trade Policy Papers 51, OECD Publishing.
  5. Carsten Fink & Aaditya Mattoo & Ileana Cristina Neagu, 2002. "Trade in International Maritime Services: How Much Does Policy Matter?," World Bank Economic Review, World Bank Group, vol. 16(1), pages 81-108, June.
  6. Hummels, David & Lugovskyy, Volodymyr & Skiba, Alexandre, 2009. "The trade reducing effects of market power in international shipping," Journal of Development Economics, Elsevier, vol. 89(1), pages 84-97, May.
  7. Czubala, Witold & Shepherd, Ben & Wilson, John S., 2007. "Help or hindrance ? the impact of harmonized standards on african exports," Policy Research Working Paper Series 4400, The World Bank.
  8. Borchert, Ingo & Gootiiz, Batshur & Mattoo, Aaditya, 2012. "Guide to the services trade restrictions database," Policy Research Working Paper Series 6108, The World Bank.
  9. Borchert, Ingo & Gootiiz, Batshur & Grover, Arti & Mattoo, Aaditya, 2012. "Landlocked or policy locked ? how services trade protection deepens economic isolation," Policy Research Working Paper Series 5942, The World Bank.
  10. Kox, Henk L.M. & Nordås, Hildegunn Kyvik, 2007. "Services trade and domestic regulation," MPRA Paper 2116, University Library of Munich, Germany.
  11. Paul Conway & Giuseppe Nicoletti, 2006. "Product Market Regulation in the Non-Manufacturing Sectors of OECD Countries: Measurement and Highlights," OECD Economics Department Working Papers 530, OECD Publishing.
  12. Fink, Carsten & Mattoo, Aaditya & Rathindran, Randeep, 2001. "Liberalizing basic telecommunications : the Asian experience," Policy Research Working Paper Series 2718, The World Bank.
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