The impacts of policy restrictions on trade in services

Wei-Chih Chen

Applied Economics, 2025, vol. 57, issue 39, 6166-6181

Abstract: The objective of this paper is to estimate how different types of policy restrictions affect trade in services. We employ the Service Trade Restrictiveness Index (STRI) database and the International Trade in Services Statistics (ITSS) provided by the OECD to compile a sample encompassing 15 service sectors across 48 countries for the period from 2014 to 2018. The estimated results indicate that more restrictive regulations impede international service trade in terms of both the value of trade (intensive margin) and the probability of trade (extensive margin). We also find that the negative impact of policy restrictions on trade does not always increase with increasing restrictiveness. While moderate policy restrictions can facilitate international trade in services, stricter regulations impede it. Finally, the impact of policy regulations on service trade depends on the type and objective of restrictions. Regulations that are discriminatory or target foreign firms tend to reduce trade values, whereas non-discriminatory regulations related to policy transparency enhance service trade between countries.

Date: 2025
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DOI: 10.1080/00036846.2024.2381835

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