Services Trade Policy and Manufacturing Productivity: The Role of Institutions

Cosimo Beverelli (), Matteo Fiorini and Bernard Hoekman

No 1012, Working Papers from Economic Research Forum

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.

Pages: 31
Date: 2016-06, Revised 2016-06
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Related works:
Journal Article: Services trade policy and manufacturing productivity: The role of institutions (2017)
Working Paper: Services Trade Restrictiveness and Manufacturing Productivity: The Role of Institutions (2015)
Working Paper: Services Trade Restrictiveness and Manufacturing Productivity: The Role of Institutions (2015)
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