Impact of Services Liberalization on Productivity of Manufacturing Firms: Evidence from Ukrainian Firm-Level Data
39 Pages Posted: 12 Dec 2011
Date Written: December 5, 2011
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.
Keywords: services liberalization, productivity, trade
JEL Classification: F14, G28, L80
Suggested Citation: Suggested Citation
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