IDEAS home Printed from https://ideas.repec.org/p/wfo/wpaper/y2009i347.html
   My bibliography  Save this paper

Should Cross-border Services between Austria and Slovenia Still be Restricted? An Economic Assessment of the Existing Market Regulations

Author

Listed:
  • Thomas Döring
  • Birgit Aigner

    (Carinthia University of Applied Sciences)

Abstract

In 2004 the Republic of Slovenia entered the European Union and, as a matter of principle, was guaranteed the four freedoms (free trans-national mobility of goods, services, capital and labour). From an economic viewpoint, this guarantee should provide the required institutional framework to maximise social benefits within the internal market. However, with respect to cross-border services a set of temporary regulations exists, all of which initially for two years and subsequently for further three years, were implemented to restrict the free movement of services partially in order to protect Austrian regions against labour market disadvantages. The restrictions were extended in 2009 for two additional years (until 2011). These temporary restrictions indicate the familiar trade-off between expected efficiency and welfare gains of a completely integrated common market in the medium and long run, and – as a result of intensified transnational business activities – potential socioeconomic losses for certain regions or economic sectors in the short run. Against this background, the paper asks for the economic usefulness of the afore-mentioned restrictions of cross-border service activities between Austria and Slovenia. Thereby, the question whether these (temporary) regulations should have been continued until 2011 or be abolished immediately is of particular importance. To be able to provide an answer to this question, the topic is analysed in four steps: First, the expected welfare effects of cross-border service restrictions will be outlined by discussing the impact of such regulations on the efficient allocation of resources as well as the pace of economic change. Therefore, theoretical and empirical insights concerning the economic effects of international trade with services will be considered. Secondly, the paper analyses the empirical situation of cross-border trade in goods and services between Austria and Slovenia in order to argue that Austria has a "double dividend" with respect to the existing regulatory system. In part three, the question is asked to what extend a complete liberalisation of cross-border services would affect Austrian regions economically, if one takes into account the geographically limited market radius of the currently regulated service industries. Finally, the status-quo analysis of the existing restrictions of cross-border services between Austria and Slovenia provides a background to derive policy recommendations.

Suggested Citation

  • Thomas Döring & Birgit Aigner, 2009. "Should Cross-border Services between Austria and Slovenia Still be Restricted? An Economic Assessment of the Existing Market Regulations," WIFO Working Papers 347, WIFO.
  • Handle: RePEc:wfo:wpaper:y:2009:i:347
    as

    Download full text from publisher

    File URL: http://www.wifo.ac.at/wwa/pubid/37143
    File Function: Abstract
    Download Restriction: no

    References listed on IDEAS

    as
    1. Peter Huber & Michael Pfaffermayr & Yvonne Wolfmayr, 2011. "Are There Border Effects in the EU Wage Function?," DANUBE: Law and Economics Review, European Association Comenius - EACO, issue 2, pages 23-41, June.
    2. Daniel Münich & Jan Svejnar & Katherine Terrell, 2005. "Returns to Human Capital Under The Communist Wage Grid and During the Transition to a Market Economy," The Review of Economics and Statistics, MIT Press, vol. 87(1), pages 100-123, February.
    3. Chiquiar, Daniel, 2008. "Globalization, regional wage differentials and the Stolper-Samuelson Theorem: Evidence from Mexico," Journal of International Economics, Elsevier, pages 70-93.
    4. Fazia Pusterla & Laura Resmini, 2005. "Where do foreign firms locate in transition Countries? An empirical investigation," ISLA Working Papers 20, ISLA, Centre for research on Latin American Studies and Transition Economies, Universita' Bocconi, Milano, Italy, revised Sep 2005.
    5. Hartmut Egger & Peter Egger, 2002. "How international outsourcing drives up Eastern European wages," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), pages 83-96.
    6. Robert C. Feenstra & Gordon H. Hanson, 1995. "Foreign Investment, Outsourcing and Relative Wages," NBER Working Papers 5121, National Bureau of Economic Research, Inc.
    7. Marius Brülhart & Matthieu Crozet & Pamina Koenig, 2004. "Enlargement and the EU Periphery: The Impact of Changing Market Potential," The World Economy, Wiley Blackwell, pages 853-875.
    8. František Turnovec, 2001. "Regional reform in the czech republic and regional disparities in the extending european union," Prague Economic Papers, University of Economics, Prague.
    9. Barjak, Franz & Heimpold, Gerhard, 1999. "Development Problems and Policies at the German Border with Poland," ERSA conference papers ersa99pa136, European Regional Science Association.
    10. Annekatrin Niebuhr, 2008. "The impact of EU enlargement on European border regions," International Journal of Public Policy, Inderscience Enterprises Ltd, pages 163-186.
    11. Jim Airola & Chinhui Juhn, 2008. "Wage Inequality in Post-Reform Mexico," Journal of Income Distribution, Journal of Income Distribution, pages 110-134.
    12. Jan Fidrmuc, 2005. "Labor Mobility during Transition: Evidence from the Czech Republic," William Davidson Institute Working Papers Series wp767, William Davidson Institute at the University of Michigan.
    13. Pfluger, Michael, 2004. "A simple, analytically solvable, Chamberlinian agglomeration model," Regional Science and Urban Economics, Elsevier, vol. 34(5), pages 565-573, September.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    international trade; trade policy; Austria; Slovenia; services; economic integration; restrictions;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wfo:wpaper:y:2009:i:347. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ilse Schulz). General contact details of provider: http://edirc.repec.org/data/wifooat.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.