Services Trade Restrictiveness and Manufacturing Productivity: The Role of Institutions

37 Pages Posted: 21 Sep 2015

See all articles by Cosimo Beverelli

Cosimo Beverelli

World Trade Organization (WTO); European University Institute

Matteo Fiorini

European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS)

Bernard Hoekman

Robert Schuman Centre for Advanced Studies; European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS); Centre for Economic Policy Research (CEPR)

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Date Written: September 2015

Abstract

We study the effect of services trade restrictiveness on manufacturing productivity for a broad cross-section of countries at different stages of economic development. Decreasing services trade restrictiveness has a positive indirect impact on the manufacturing sectors that use services as intermediate inputs in production. We identify a critical role of local institutions in shaping this effect: countries with high institutional capacity benefit the most from services trade policy reforms in terms of increased productivity in downstream industries. We argue that this reflects the characteristics of many services and services trade and provide a theoretical framework to formalize our suggested mechanisms.

Keywords: institutions, productivity, services, trade policy

JEL Classification: F14, F15, F61, F63

Suggested Citation

Beverelli, Cosimo and Fiorini, Matteo and Hoekman, Bernard, Services Trade Restrictiveness and Manufacturing Productivity: The Role of Institutions (September 2015). CEPR Discussion Paper No. DP10834. Available at SSRN: https://ssrn.com/abstract=2663432

Cosimo Beverelli (Contact Author)

World Trade Organization (WTO) ( email )

Rue de Lausanne 154
Geneva, 1202
Switzerland

European University Institute ( email )

Villa Schifanoia
133 via Bocaccio
Firenze (Florence), Tuscany 50014
Italy

Matteo Fiorini

European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS) ( email )

Villa La Fonte, via delle Fontanelle 18
50016 San Domenico di Fiesole
Florence, Florence 50014
Italy

Bernard Hoekman

Robert Schuman Centre for Advanced Studies ( email )

Fiesole, Tuscany
Italy

European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS) ( email )

Villa La Fonte, via delle Fontanelle 18
50016 San Domenico di Fiesole
Florence, Florence 50014
Italy

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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