Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/222675
Authors: 
Shepherd, Ben
Year of Publication: 
2018
Series/Report no.: 
ADBI Working Paper Series No. 908
Abstract: 
This paper uses a structural gravity model to show the effects of services policies on manufacturing exports. Whereas the previous literature has focused on indirect effects of policies - flowing through productivity effects in domestic services markets - we look at direct effects, namely the ability of domestic manufacturers to access services inputs on world markets at competitive prices. Our results show that discriminatory barriers to services trade have a significant negative effect on manufacturing exports. We use theory-consistent counterfactual simulations to show that the trade and real output effects of a 10% reduction in services trade restrictiveness are in fact much larger than those of a 10% reduction in tariffs. On a policy level, our results suggest that an additional argument for liberalizing services markets is that it in fact aids manufacturing sector development, due to the intimate links between the two.
Subjects: 
services
manufacturing
gravity model
JEL: 
F13
F14
O24
Creative Commons License: 
https://creativecommons.org/licenses/by-nc-nd/3.0/igo/
Document Type: 
Working Paper

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