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OECD Expert Meeting on the Services Trade Restrictiveness Index, Paris 2-3 July 2009 STRI for professional services - Discussion and suggestions -. Henk Kox CPB Netherlands Bureau for Economic Policy Analysis. Praise.
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OECD Expert Meeting on the Services Trade Restrictiveness Index, Paris 2-3 July 2009STRI for professional services- Discussion and suggestions - Henk Kox CPB Netherlands Bureau for Economic Policy Analysis
Praise • STRI is result of a large research effort • Builds on latest developments in international trade literature and econometric methods • Flexible, can be extended to: • More countries • Other time periods • More services sectors (trade, transport, financial services?) • STRI for professional services yields plausible gravity estimates
1. Mode-choice neutrality of regulation • STRI represents progress compared to generic trade-restrictiveness indicators by considering impacts on different services supply modes • Impact of regulation on supply modes is now classified in a static way (Table 2): either mode 1, or mode 3, or cross-modal • The cross-modal category is not very informative • My suggestion is to add instead the element of mode-choice neutrality: does a policy tilt the mode-choice of firms • Towards mode 1 ? • Towards mode 3 ? • This can be done quite easily by reclassifying the mode-choice impacts in the very central Table 2
1. Mode-choice neutrality of regulation • Table 2 Classification of Trade barriers in my view under-rates regulatory impactson mode 1 • In at least 18 cases I would have classified a ' Yes' for the mode-1 impact • Impact regulation on the choice of trade mode is complex and deserves a broad-shot approach to capture all relevant impacts
2. Bilateral aspects in trade costs • Bilateral policy heterogeneity causes fixed adaptation costs for firms in professional services • Have to be absorbed up-front, upon entry in foreign market • affect mode 1 and mode 3 • have big impact on SME
Fixed domestic qualification costs for could be source for scale economies through trade
..but different national qualification costs for PS firm are entry obstacles , protect national markets
2. Bilateral aspects in trade costs • Bilateral policy heterogeneity causes fixed adaptation costs for firms in professional services • Bilateral policy differences important for understanding services trade between OECD countries and developing countries • Why not consider bilateral STRI indicators, per country pair? • could capture fixed adaptation costs for firms in professional services (mode 1+3)
3. Origin country policies • Origin-country policies are blind spot in present STRI, but do affect services trade • E.g. trade facilitation policies, subsidies, public involvement, extra-territorial operation of a country's regulations • now only captured in broad country x time dummy • can we do better?
4. Data sources • Selection of indicators in database: no use of World Bank 'Cost of Doing Business' data • organisational chauvinism? • DB data well-researched, available for many non-OECD countries • includes formal rules plus implementation efficiency • possibly useful elements in Enforcing contracts, Employing Workers, Starting a Business, Getting Licenses