Institutional similarities and bilateral trade in services

Mardi | 2015-11-17
Sully 5 de 16h00 à 17h20

Isabelle RABAUD

Experts are expecting huge gains from liberalization of trade in services, due to the importance of impediments to trade and to the size of the tertiary sector. Insofar as barriers to trade are closely related to domestic regulations, institutions matter. Focusing on three service activities (Business services, Finance and Insurance), in a cross-section estimation for the mean of years 2010 and 2011 based on the database by Francois and Pindyuk (2013), our paper aims at identifying the institutions that should be improved first. The originality of our contribution lies on the analyses of the impact of differences of institutions on bilateral trade in sectoral services. We show that commercial presence and cross-border trade are complement for other business services, while they are substitute in total service and finance, and do not impact on insurance. If total services trade decreases with differences in the six institutions reported by Kaufman et al. (2010), and other business services also appear sensitive to institutional quality, neither insurance nor finance are impacted.