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Services liberalization and productivity of manufacturing firms : evidence from Ukraine

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  • Shepotylo, Oleksandr
  • Vakhitov, Volodymyr

Abstract

This paper brings new evidence on the impact of services liberalization on the performance of manufacturing firms. Using a unique database of Ukrainian firms in 2001-2007, the authors utilize an external push for liberalization in the services sector as a source of exogenous variation to identify the impact of services liberalization on total factor productivity (TFP) of manufacturing firms. The results indicate that a standard deviation increase in services liberalization is associated with a 9 percent increase in TFP. Allowing services liberalization to dynamically influence TFP through the investment channel leads to an even larger effect. The effect is robust to different estimation methods and to different sub-samples of the data. In particular, it is more pronounced for domestic and small firms.

Suggested Citation

  • Shepotylo, Oleksandr & Vakhitov, Volodymyr, 2012. "Services liberalization and productivity of manufacturing firms : evidence from Ukraine," Policy Research Working Paper Series 5944, The World Bank.
    • Handle: RePEc:wbk:wbrwps:5944
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    2. Damijan, Jože & Kostevc, Črt & Marek, Philipp & Rojec, Matija, 2015. "Do Manufacturing Firms Benefit from Services FDI? – Evidence from Six New EU Member States," IWH Discussion Papers 5/2015, Halle Institute for Economic Research (IWH).
    3. Fida Karam & Chahir Zaki, 2020. "A new dawn for MENA firms: service trade liberalization for more competitive exports," Applied Economics, Taylor & Francis Journals, vol. 52(1), pages 19-35, January.
    4. Yaghoob Jafari & David G. Tarr, 2017. "Estimates of Ad Valorem Equivalents of Barriers Against Foreign Suppliers of Services in Eleven Services Sectors and 103 Countries," The World Economy, Wiley Blackwell, vol. 40(3), pages 544-573, March.
    5. Oleksandr Shepotylo, 2014. "Deregulation and productivity: selection or within-firm effect?," ERSA conference papers ersa14p700, European Regional Science Association.
    6. Salamatu Bellah Conteh & Yuan Yijun & Brima Sesay, 2021. "Economic Growth Effects of the Interaction of Trade Openness and Institutions Quality: Empirical Evidence from Sub-Saharan Africa," International Journal of Economics and Financial Issues, Econjournals, vol. 11(1), pages 34-48.
    7. World Bank, 2016. "Assessing the Impact of WTO Accession on Belarus," World Bank Publications - Reports 24698, The World Bank Group.
    8. International Monetary Fund, 2013. "France: Selected Issues," IMF Staff Country Reports 2013/003, International Monetary Fund.
    9. Zoryana Olekseyuk, 2015. "The EU-Ukraine Deep and Comprehensive Free Trade Agreement and the importance of FDI," EcoMod2015 8391, EcoMod.
    10. Tarr, David, 2012. "Impact of services liberalization on industry productivity, exports and development : six empirical studies in the transition countries," Policy Research Working Paper Series 6023, The World Bank.
    11. Zoryana Olekseyuk, 2016. "Modeling of FDI in business services: Additional effects in case of Ukraine's European integration," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 25(7), pages 1010-1043, October.
    12. Bernard Hoekman & Jesper Jensen & David Tarr, 2013. "A Vision for Ukraine in the World Economy. Defining a Trade Policy Strategy that Leverages Global Opportunities," RSCAS Working Papers PP 2013/25, European University Institute.
    13. Denis Ivanov, 2014. "Transition and path-dependence in knowledge-intensive industry location: Case of Russian professional services," ERSA conference papers ersa14p767, European Regional Science Association.

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    Keywords

    Economic Theory&Research; E-Business; Emerging Markets; ICT Policy and Strategies; Public Sector Corruption&Anticorruption Measures;
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