The Impact of Liberalizing Barriers to Foreign Direct Investment in Services: The Case of Russian Accession to the World Trade Organization

25 Pages Posted: 17 Jul 2007  

Jesper Jensen

TECA Training ApS

Thomas F. Rutherford

Centre for Energy Policy and Economics

David G. Tarr

International Trade Analysis

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Abstract

In this paper a computable general equilibrium model of the Russian economy is used to assess the impact of accession to the World Trade Organization (WTO), which encompasses improved market access, Russian tariff reduction, and reduction of barriers against multinational service providers. It is assumed that foreign direct investment in business services is necessary for multinationals to compete well with Russian business services providers, but cross-border service provision is also present. The model incorporates productivity effects in both goods and services markets endogenously, through a Dixit-Stiglitz framework. It is estimated that Russia will gain about 7.2% of the value of Russian consumption in the medium term from WTO accession and up to 24% in the long run. It is also estimated that the largest gains to Russia will derive from liberalization of barriers against multinational service providers. Piecemeal and systematic sensitivity analysis shows that the results are robust.

Suggested Citation

Jensen, Jesper and Rutherford, Thomas F. and Tarr, David G., The Impact of Liberalizing Barriers to Foreign Direct Investment in Services: The Case of Russian Accession to the World Trade Organization. Review of Development Economics, Vol. 11, No. 3, pp. 482-506, August 2007. Available at SSRN: https://ssrn.com/abstract=1000706 or http://dx.doi.org/10.1111/j.1467-9361.2007.00362.x

Jesper Jensen (Contact Author)

TECA Training ApS ( email )

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Thomas F. Rutherford

Centre for Energy Policy and Economics ( email )

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United States
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David G. Tarr

International Trade Analysis ( email )

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United States
5172242796 (Phone)

HOME PAGE: http://https://sites.google.com/site/davidgtarr/

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