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Services trade policy and manufacturing productivity: The role of institutions

Cosimo Beverelli (), Matteo Fiorini and Bernard Hoekman ()

Journal of International Economics, 2017, vol. 104, issue C, 166-182

Abstract: We study the effect of services trade restrictions on manufacturing productivity for a broad cross-section of countries at different stages of economic development. Decreasing services trade restrictiveness has a positive impact on the manufacturing sectors that use services as intermediate inputs in production. We identify a critical role of institutions in importing countries in shaping this effect. Countries with high institutional quality benefit the most from lower services trade restrictions in terms of increased productivity in downstream industries. We show that the conditioning effect of institutions operates through services trade that involves foreign establishment (investment), as opposed to cross-border arms-length trade in services.

Keywords: Services trade policy; Foreign direct investment; Institutions; Productivity (search for similar items in EconPapers)
JEL-codes: F14 F15 F61 F63 (search for similar items in EconPapers)
Date: 2017
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Related works:
Working Paper: Services Trade Policy and Manufacturing Productivity: The Role of Institutions (2016) Downloads
Working Paper: Services Trade Restrictiveness and Manufacturing Productivity: The Role of Institutions (2015) Downloads
Working Paper: Services Trade Restrictiveness and Manufacturing Productivity: The Role of Institutions (2015) Downloads
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