Landlocked or policy locked ? how services trade protection deepens economic isolation

Ingo Borchert, Batshur Gootiiz (), Arti Grover and Aaditya Mattoo

No 5942, Policy Research Working Paper Series from The World Bank

Abstract: A new cross-country database on services policy reveals a perverse pattern: many landlocked countries restrict trade in the very services that connect them with the rest of the world. On average, telecommunications and air-transport policies are significantly more restrictive in landlocked countries than elsewhere. The phenomenon is most starkly visible in Sub-Saharan Africa and is associated with lower levels of political accountability. This paper finds evidence that these policies lead to more concentrated market structures and more limited access to services than these countries would otherwise have, even after taking into account the influence of geography and incomes, and the possibility that policy is endogenous. Even moderate liberalization in these sectors could lead to an increase of cellular subscriptions by 7 percentage points and a 20-percent increase in the number of flights. Policies in other countries, industrial and developing alike, also limit competition in international transport services. Hence,"trade-facilitating"investments under various"aid-for-trade"initiatives are likely to earn a low return unless they are accompanied by meaningful reform in these services sectors.

Keywords: Transport Economics Policy&Planning; Markets and Market Access; Public Sector Corruption&Anticorruption Measures; Economic Theory&Research; ICT Policy and Strategies (search for similar items in EconPapers)
Date: 2012-01-01
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Citations: View citations in EconPapers (19)

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