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Journal of Economic Integration 2006 March;21(1) :64-98.
Measuring Services Trade Liberalization and Its Impact on Economic Growth: An Illustration

Aaditya Mattoo Randeep Rathindran Arvind Subramanian 

The World Bank
HDR Inc.
International Monetary Fund
Copyright ©2006 Journal of Economic Integration

The paper has three purposes. First, it explains how the impact of liberalization of service sectors on output growth differs from that of liberalization of trade in goods. Second, it suggests a policy-based rather than outcome-based measure of the openness of a country’s services regime. Such openness measures are constructed for two key service sectors, basic telecommunications and financial services. Finally, it provides 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 . Our estimates suggest that countries with fully open telecom and financial services sectors grow up to 1.5 percentage points faster than other countries.

JEL classifications: F13, F43, G2, G28

Keywords: Liberalization | Economic Growth | Services | Regulation
1. Baldwin, Robert E. (1989) Measuring Non-Tariff Trade Policies, Working Paper No. 2978, NBER Working Paper Series, Cambridge, MA.
2. Barro, Robert J. (1997) Determinants of Economic Growth: A Cross-Country Empirical Study, Cambridge, MA, MIT Press.
3. Barro, Robert J. and Jong-Wha Lee (1997) Losers and Winners in Economic Growth, Proceedings of the World Bank Annual Conference on Development Economics, World Bank.
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