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Trade in services and TFP: the role of regulation

van der Marel, Erik (2012) Trade in services and TFP: the role of regulation. World Economy, 35 (11). pp. 1530-1558. ISSN 0378-5920

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Identification Number: 10.1111/twec.12004


What determines total factor productivity (TFP) growth in services: is it services trade or services–trade regulation? To respond to this question, we use four indicators of international trade in services since 1990 to 2005, namely foreign direct investment (FDI) inward stock, services imports, domestic sales of foreign affiliates (FATS) and FDI inflows, to examine what type of services trade forms a direct determinant. Subsequently, we analyse what type of sector-specific regulation has played an inhibiting effect on services TFP growth. Such analysis contrasts with former studies in which mainly factor inputs and economy-wide regulation are used to explain services TFP. This paper provides evidence that neither trade nor entry barriers are robust determinants to explain cross-country differences. Instead, regulations on operational procedures affecting the variables costs structure of the firm seem to play a more important role in explaining TFP growth between countries, particularly in combination with information and communication technology (ICT) capital.

Item Type: Article
Official URL:
Additional Information: © 2012 Blackwell Publishing Ltd.
Divisions: International Relations
Subjects: H Social Sciences > HF Commerce
Date Deposited: 22 Oct 2012 08:31
Last Modified: 11 Jun 2024 17:51

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