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Impact of services liberalization on productivity of manufacturing firms: evidence from Ukrainian firm-level data

Author

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  • Oleksandr Shepotylo

    (Kyiv School of Economics, Kyiv Economic Institute)

  • Volodymyr Vakhitov

    (Kyiv School of Economics, Kyiv Economic Institute)

Abstract

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

  • Oleksandr Shepotylo & Volodymyr Vakhitov, 2011. "Impact of services liberalization on productivity of manufacturing firms: evidence from Ukrainian firm-level data," Discussion Papers 45, Kyiv School of Economics.
    • Handle: RePEc:kse:dpaper:45
    Note: Submitted to Review of Economics and Statistics
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    Cited by:

    1. Sonia Mukherjee, 2018. "Services Outsourcing and Productivity Growth," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 19(2), pages 192-209, September.
    2. Fida Karam & Chahir Zaki, 2020. "A new dawn for MENA firms: service trade liberalization for more competitive exports," Applied Economics, Taylor & Francis Journals, vol. 52(1), pages 19-35, January.
    3. Yaghoob Jafari & David G. Tarr, 2017. "Estimates of Ad Valorem Equivalents of Barriers Against Foreign Suppliers of Services in Eleven Services Sectors and 103 Countries," The World Economy, Wiley Blackwell, vol. 40(3), pages 544-573, March.
    4. 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.
    5. World Bank, 2016. "Assessing the Impact of WTO Accession on Belarus," World Bank Publications - Reports 24698, The World Bank Group.
    6. International Monetary Fund, 2013. "France: Selected Issues," IMF Staff Country Reports 2013/003, International Monetary Fund.
    7. 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.

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    More about this item

    Keywords

    services liberalization; productivity; trade;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • L80 - Industrial Organization - - Industry Studies: Services - - - General

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