Working Paper: CEPR ID: DP14181
Authors: Bernard Hoekman; Ben Shepherd
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.
Keywords: international trade; trade in services; machine learning; services policies; restrictiveness indicators
JEL Codes: F13; F15; O24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| restrictiveness of services policies (L88) | trade and income impacts (F69) |
| liberalizing services policies (L88) | trade volumes (F10) |
| Services Policy Index (SPI) (C43) | bilateral trade in services (F10) |
| restrictiveness of services policies (L88) | trade volumes (F10) |
| higher restrictiveness (F55) | trade (F19) |
| Services Policy Index (SPI) (C43) | OECD's Services Trade Restrictiveness Index (STRI) (L88) |