Assessing the Barriers to Trade in Services in South Asia
Posted: 14 Sep 2011
Date Written: September 14, 2011
This study aims to assess barriers to service trade in the education, health, telecom, transport and travel and tourism sectors of selected South Asian economies such as India, Sri Lanka, Pakistan, Nepal and Bangladesh, including both trade and domestic restrictions. The analysis is focused on computation of aggregate and modal service trade restrictiveness indexes (STRIs) by sector, drawing on information gathered based on detailed questionnaires. The conclusions highlight that while significant regulatory reforms have taken place in certain (for example Telecom) service sectors over the last decade, a broad range of restrictions still remain. The most significant change in these service sectors has been the lifting or softening of the constraints imposed on foreign equity participation.
Interestingly, the economies in terms of regulatory reforms are more open to non-South Asian economies and not so much open to each other. However, reforms have had varying degrees of impact on market structure depending on the country and the sector. Based on findings of the study it is possible to argue that industrialisation is not the only route to economic development. Overall, technological changes (with the help of splintering and disembodiment of services) have made many services tradable as happened in the case of manufactured goods. Therefore, adequate reforms may not only remove the barriers to services trade but also generate higher services trade in the region, through which the region may achieve higher income and employment.
Keywords: Trade in services, SAARC region, service trade, restrictiveness, trade reform, service trade restrictiveness index (STRI)
JEL Classification: F13, F15, F22
Suggested Citation: Suggested Citation