Measuring Services Trade Liberalization and its Impact on Economic Growth: An Illustration

36 Pages Posted: 20 Apr 2016

See all articles by Aaditya Mattoo

Aaditya Mattoo

World Bank - Development Research Group (DECRG)

Randeep Rathindran

World Bank

Arvind Subramanian

International Monetary Fund (IMF); Center for Global Development

Date Written: August 2001

Abstract

Countries that fully liberalize their telecommunications and financial services sectors may be able to expect economic growth rates up to 1.5 percentage points higher than rates in other countries. Mattoo, Rathindran, and Subramanian explain how the output growth effect from liberalizing the service sectors differs from the effect from liberalizing trade in goods. They also suggest using a policy-based rather than outcome-based measure of the openness of a country's services regime. They construct such openness measures for two key service sectors' basic telecommunications and financial services.

Finally, the authors provide some econometric evidence - relatively strong for the financial sector and less strong, but nevertheless statistically significant, for the telecommunications sector - that openness in services influences long-run growth performance. Their estimates suggest that growth rates in countries with fully open telecommunications and financial services sectors are up to 1.5 percentage points higher than those in other countries.

This paper - a product of Trade, Development Research Group - is part of a larger effort in the group to assess the implications of liberalizing trade in services.

Keywords: Liberalization, Economic Growth, services, regulation

JEL Classification: F13, F43, G2, G28

Suggested Citation

Mattoo, Aaditya and Rathindran, Randeep and Subramanian, Arvind, Measuring Services Trade Liberalization and its Impact on Economic Growth: An Illustration (August 2001). World Bank Policy Research Working Paper No. 2655. Available at SSRN: https://ssrn.com/abstract=632723

Aaditya Mattoo (Contact Author)

World Bank - Development Research Group (DECRG) ( email )

1818 H Street, N.W.
Room MC 3-327
Washington, DC 20433
United States
202-458-8047 (Phone)
202-676-9810 (Fax)

HOME PAGE: http://econ.worldbank.org/staff/amattoo

Randeep Rathindran

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

Arvind Subramanian

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Center for Global Development

2055 L St. NW
5th floor
Washington, DC 20036
United States

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