Modeling Services Liberalization: The Case of Kenya

46 Pages Posted: 20 Apr 2016

See all articles by Edward J. Balistreri

Edward J. Balistreri

Iowa State University

Thomas F. Rutherford

Centre for Energy Policy and Economics

David G. Tarr

International Trade Analysis

Date Written: March 1, 2008


This paper employs a 55 sector small open economy computable general equilibrium model of the Kenyan economy to assess the impact of the liberalization of regulatory barriers against foreign and domestic business service providers in Kenya. The model incorporates productivity effects in both goods and services markets endogenously, through a Dixit-Stiglitz framework. It estimates the ad valorem equivalent of barriers to foreign direct investment based on detailed questionnaires completed by specialists in Kenya. The authors estimate that Kenya will gain about 11 percent of the value of Kenyan consumption in the medium run (or about 10 percent of gross domestic product) from a full reform package that also includes uniform tariffs. The estimated gains increase to 77 percent of consumption in the long-run steady-state model, where the impact on the accumulation of capital from an improvement in the productivity of capital is taken into account. Decomposition exercises reveal that the largest gains to Kenya will derive from liberalization of costly regulatory barriers that are non-discriminatory in their impacts between Kenyan and multinational service providers.

Keywords: Transport Economics Policy &Planning, Economic Theory &Research, Banks &Banking Reform, Emerging Markets, Debt Markets

Suggested Citation

Balistreri, Edward J. and Rutherford, Thomas F. and Tarr, David G., Modeling Services Liberalization: The Case of Kenya (March 1, 2008). World Bank Policy Research Working Paper No. 4544, Available at SSRN:

Edward J. Balistreri

Iowa State University ( email )

260 Heady Hall
Ames, IA 50011
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Thomas F. Rutherford

Centre for Energy Policy and Economics ( email )

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+41 (0)44/632 1622 (Fax)


David G. Tarr (Contact Author)

International Trade Analysis ( email )

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