1887

OECD Economics Department Working Papers

Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.

The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.

English, French

The Benefits of Liberalising Product Markets and Reducing Barriers to International Trade and Investment

The Case of the United States and the European Union

This paper provides an assessment of the impact of a package of structural reforms in the European Union and the United States on long-run trade and output gains accruing to OECD countries. The package includes reforms that reduce competition-restraining regulations, cut tariff barriers and ease restrictions on foreign direct investment to “best practice” levels in the OECD area. The analysis, which is based on earlier OECD studies, indicates that such reforms could lead to gains in GDP per capita in both transatlantic areas of up to 3 to 3 ½ per cent. Moreover, due to trade linkages, the benefits of reforms in the United States and the European Union would spread to other OECD countries, with an estimated increase in GDP per capita of up to 1½ per cent. As the analysis is confined to a relatively narrow set of policies and abstracts from potential dynamic effects from reform-induced increase in innovation, the overall gains from broad reforms could be significantly higher than reported in the paper.

English

Keywords: regulation, international trade, foreign direct investment, productivity and growth
JEL: F21: International Economics / International Factor Movements and International Business / International Investment; Long-term Capital Movements; F13: International Economics / Trade / Trade Policy; International Trade Organizations; O4: Economic Development, Innovation, Technological Change, and Growth / Economic Growth and Aggregate Productivity; K2: Law and Economics / Regulation and Business Law
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