The Impact of Services Trade Restrictiveness on Trade Flows

29 Pages Posted: 8 Jun 2017

See all articles by Hildegunn Kyvik Nordås

Hildegunn Kyvik Nordås

Organization for Economic Co-Operation and Development (OECD)

Dorothee Rouzet

Harvard University

Date Written: June 2017

Abstract

This paper uses recent OECD data on services trade restrictions (STRI) to analyse the relationship between services trade policies and cross‐border trade in services. A standard gravity model is enhanced by the STRI indices in a cross‐section regression analysis. Services trade restrictions are negatively associated with both imports and exports of services. The surprisingly strong effect on services exports is probably explained by a negative relationship between the STRIs and sector performance indicators. Consequently, services suppliers from less open countries are less competitive abroad. Bilateral differences in regulation are also found to curtail services trade over and above the impact of the trade liberalisation level. At the margin, regulatory differences have a larger effect on trade flows the lower the level of the STRI.

Suggested Citation

Nordås, Hildegunn Kyvik and Rouzet, Dorothee, The Impact of Services Trade Restrictiveness on Trade Flows (June 2017). The World Economy, Vol. 40, Issue 6, pp. 1155-1183, 2017. Available at SSRN: https://ssrn.com/abstract=2982705 or http://dx.doi.org/10.1111/twec.12424

Hildegunn Kyvik Nordås (Contact Author)

Organization for Economic Co-Operation and Development (OECD) ( email )

2 rue Andre Pascal
Paris Cedex 16, 75775
France

Dorothee Rouzet

Harvard University ( email )

1875 Cambridge Street
Cambridge, MA 02138
United States

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