OECD Trade Policy Papers

This series is designed to make available to a wider readership selected trade policy studies prepared for use within the OECD.

NB. No. 1 to No. 139 were released under the previous series title OECD Trade Policy Working Papers.


Services trade costs

Tariff equivalents of services trade restrictions using gravity estimation

Estimates for ad valorem tariff equivalents of services trade restrictions for cross-border trade in six services sectors are presented in this paper. These equivalents are found to be very big in several service sectors with estimates ranging as high as 2000% when trade flows are relatively inelastic, as opposed to between 20% and 300% in most other sectors. The results indicate that trade costs may even increase less than proportionally as the degree of services trade restrictiveness rises. In addition, the paper shows that services trade liberalisation has the largest effect on trade flows in smaller markets. The estimates presented in this Paper are based on a gravity framework using data on both bilateral trade flows and on the value of domestic production. Production values are used to construct measures for the domestic consumption of domestic services in each country, which enables country-specific trade restrictions to be identified, while controlling for multilateral resistance using fixed effects.


Keywords: trade costs, Trade in services, trade liberalisation, services trade restrictions
JEL: F68: International Economics / Economic Impacts of Globalization / Economic Impacts of Globalization: Policy; F13: International Economics / Trade / Trade Policy; International Trade Organizations; F15: International Economics / Trade / Economic Integration; F14: International Economics / Trade / Empirical Studies of Trade
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