Register  |  Login  |  Inquiries  |  Sitemap |  
Advanced Search
Journal of Economic Integration 2010 December;25(4) :644-675.
Modeling Services Liberalization: The Case of Tanzania

Jesper Jensen Thomas F. Rutherford David G. Tarr 

Teca Training
The Swiss Federal Institute of Technology
The World Bank
Copyright ©2010 Journal of Economic Integration

Despite economic theory and empirical literature that have shown that wide availability of business services contributes significantly to productivity gains and growth, economic modelers have been slow to meaningfully incorporate services into their models. This paper employs a 52-sector, small, open-economy computable general equilibrium model of the Tanzanian economy to assess the impact of the liberalization of regulatory barriers against foreign and domestic business service providers in Tanzania. The model incorporates foreign direct investment in services, and productivity effects in both goods and services markets endogenously through a Dixit-Stiglitz framework. The paper summarizes and builds on the surveys and policy notes of the regulatory regimes in business services in Tanzania, and estimates the ad valorem equivalent of barriers to foreign direct investment. The paper estimates significant gains to Tanzania from services reforms, especially in banking, maritime and road transportation. Decomposition exercises reveal that the largest gains will derive from liberalization of non-discriminatory regulatory barriers.

JEL Classification: C68; D58; F12; F13; F14

Keywords: Services Liberalization | General Equilibrium | Endogenous Productivity | Tanzania | Foreign Direct Investment | Imperfect Competition
1. Arnold, Jens, Aaditya Matoo and Beata Javorcik (2007), Does Services Liberalization Benefit Manufacturing Firms: Evidence from the Czech Republic, World Bank Policy and Research Working Paper 4109.
2. Baldwin, Richard and R. Forslid (1999), Putting Growth Effects in CGE Models, R. Baldwin and J. Francois (eds.), Dynamic Issues in Applied Commercial Analysis, The World Bank, Cambridge: Cambridge University Press.
3. Balistreri, Edward J., Thomas F. Rutherford and David G. Tarr (2009), Modeling Services Liberalization: the case of Kenya, Economic Modelling, 26, pp. 668-679.
Editorial Office
Center for Economic Integration, Sejong University, 209, Neungdong-Ro, Gwangjin-Gu,
Seoul, 05006, Korea
TEL : +82-2-3408-3338    FAX : +82-2-6935-2492   E-mail :,
Browse Articles |  Current Issue |  For Authors and Reviewers |  About
Copyright© by Center for Economic Integration.      Developed in M2PI