Trade Balance Effects of Infrastructure Services Liberalization and of Their Regulation

During the 1990s, in most regions of the world, governments restructured their infrastructure sectors to facilitate some form of private participation in the operation and financing of the sector. These reforms, generally associated with other macroeconomic reforms which included the liberalization of international capital, goods and services flows have often initially produced significant flows of foreign direct investments flows to small countries. Overtime however they have also been associated with reversed flows, first of profits and later, as international financial crisis exploded, of capital repatriation that often put pressure on the service trade balances. These facts contribute to explain why trade in services are now at the top of the WTO agenda forum and point to the need to try to improve our understanding of the interactions between the privatisation of infrastructure monopolies and associated trade flows.