Abstract
This paper examines how the applied multi-sector computable general
equilibrium (CGE) literature has moved into quantification of the impacts
of greater market access for services. This includes discussion of multisector
linkages to the service sector, as well both measuring barriers to
trade and investment (generally with a mix of firm surveys, price comparisons,
and econometrics), and how changes in these barriers, however
measured, have been implemented in the CGE literature. Three challenges
are highlighted. The first is identification of how trade in services takes
place and how market access is therefore affected by policy. The second is
to finnd data sufficiently robust for modeling purposes. The third, linked to
the data problem, is to quantify the barriers to be examined. Significant
progress has been made in modeling foreign direct investment and linking
this to productivity, which turns out to be important. The paper also
provides an example of modeling productivity linkages to openness and
domestic regulation, with an applied CGE model of Italy. This illustrates
cross-sector linkages and the integration of economic data and policy measures
to define service sector experiments. Priorities for future research
include better modeling of market structure, the linkages between sectors
and the complementarities between different modes of supplying services.
Keywords: Trade in services, nontariff measures, nontariff barriers, regulation,
FDI, productivity, liberalization, CGE.
JEL codes: F10