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EU services trade liberalization and economic regulation: Complements or substitutes?

Author

Listed:
  • Matteo Fiorini

    (European University Institute)

  • Bernard Hoekman

    (European University Institute and CEPR)

Abstract

This paper investigates how national economic regulation shape the impacts of reducing external barriers to services trade for a sample of European countries. Notwithstanding far-reaching integration of services markets there is significant heterogeneity in domestic regulation and governance across European economies. We show this affects the potential downstream productivity effects of external services trade policy. In some cases, liberalization can substitute for weak regulation; in others there is a complementary relationship. Thus, the productivity effects associated with services market access liberalization depend on the quality of domestic economic regulation. EU-specific measures to promote internal trade in services – proxied by implementation of the Services Directive – are found not to have such moderating effects. An implication of our findings is that EU governments should do more to assess how specific dimensions of domestic regulatory regimes influence the size and distribution of the effects of services trade reforms.

Suggested Citation

  • Matteo Fiorini & Bernard Hoekman, 2020. "EU services trade liberalization and economic regulation: Complements or substitutes?," The Review of International Organizations, Springer, vol. 15(1), pages 247-270, January.
    • Handle: RePEc:spr:revint:v:15:y:2020:i:1:d:10.1007_s11558-018-9333-4
    DOI: 10.1007/s11558-018-9333-4
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    3. Ziyu Yi & Long Wei & Xuan Huang, 2022. "Does Information-and-Communication-Technology Market Openness Promote Digital Service Exports?," Sustainability, MDPI, vol. 14(9), pages 1-19, April.

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    More about this item

    Keywords

    Services trade policy; Regulation; Economic governance; Foreign direct investment; EU;
    All these keywords.

    JEL classification:

    • F61 - International Economics - - Economic Impacts of Globalization - - - Microeconomic Impacts
    • L8 - Industrial Organization - - Industry Studies: Services
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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