Services Liberalization and Computable General Equilibrium Modeling: Beyond Tariff Equivalents

23 Pages Posted: 20 Jan 2010

See all articles by E. Tani Fukui

E. Tani Fukui

U.S. International Trade Commission

Christine A. McDaniel

George Mason University - Mercatus Center

Date Written: January 19, 2010

Abstract

The services sector is the next frontier in trade liberalization, and progress in this area is likely to bring enormous economic gain to developed and developing economies. A major impediment to its liberalization, however, is the lack of rigorous analytical work on the potential impact of services trade liberalization. Our aim in this paper is to propel the policy relevant research forward. Restrictions to services trade are far more complex than those on goods. While goods trade liberalization is relatively straightforward to model and its implications are fairly well understood, the same is not true for services. Services trade policy is often opaque and does not fit easily into computational models. Our survey of the current literature reveals a set of stylized facts that we hope will be useful in this area of computable general equilibrium modeling research: (1) barriers to trade in services are complex and heterogeneous across sectors; (2) services have significant effects on downstream industries; (3) market structure assumptions are crucial; (4) foreign presence is often necessary for services trade, and (5) many barriers are entry or fixed cost barriers that restrict foreign and domestic new entrants.

Suggested Citation

Fukui, E. Tani and McDaniel, Christine A., Services Liberalization and Computable General Equilibrium Modeling: Beyond Tariff Equivalents (January 19, 2010). Available at SSRN: https://ssrn.com/abstract=1538977 or http://dx.doi.org/10.2139/ssrn.1538977

E. Tani Fukui

U.S. International Trade Commission ( email )

United States
202-205-3220 (Phone)

Christine A. McDaniel (Contact Author)

George Mason University - Mercatus Center ( email )

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Arlington, VA 22201
United States
703-993-9228 (Phone)

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