Services Trade Policies and Economic Integration: New Evidence for Developing Countries

43 Pages Posted: 17 Dec 2019

See all articles by Bernard Hoekman

Bernard Hoekman

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

Ben Shepherd

Developing Trade Consultants Ltd

Multiple version iconThere are 2 versions of this paper

Date Written: December 2019

Abstract

This paper provides the first quantitative evidence on the restrictiveness of services policies in 2016 for a sample of developing countries, based on recently released regulatory data collected by the World Bank and WTO. We use machine learning to recreate to a high degree of accuracy the OECD's Services Trade Restrictiveness Index (STRI), which takes account of nonlinearities and dependencies across measures. We use the resulting estimates to extend the OECD STRI approach to 23 additional countries, producing what we term a Services Policy Index (SPI). Converting the SPI to ad valorem equivalent terms shows that services policies are typically much more restrictive than tariffs on imports of goods, in particular in professional services and telecommunications. Developing countries tend to have higher services trade restrictions, but less so than has been found in research using data for the late 2000s. We show that the SPI has strong explanatory power for bilateral trade in services at the sectoral level, as well as for aggregate goods and services trade.

JEL Classification: F13, F15, O24

Suggested Citation

Hoekman, Bernard and Shepherd, Ben, Services Trade Policies and Economic Integration: New Evidence for Developing Countries (December 2019). CEPR Discussion Paper No. DP14181, Available at SSRN: https://ssrn.com/abstract=3504610

Bernard Hoekman (Contact Author)

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

Ben Shepherd

Developing Trade Consultants Ltd ( email )

United States

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