Evaluation of service sector policy
Trade in services is a rapidly growing area of international trade. Cross-border trade in services represents about 20 per cent of total world exports. Services account for a significant share of world FDI flows.
However, significant restrictions exist that limit these transactions. Much of the analysis of services trade liberalisation thus far, which feeds into negotiations, is taking place with relatively unsophisticated data and analysis tools. And such tools are important for making informed policy decisions on how to best progress further services trade liberalisation. But this is not easy.
Measuring restrictions on trade in services is more difficult than measuring restrictions on trade in goods. International trade in goods involves an exchange of a product between a producer and consumer, and restrictions on such trade usually takes the form of a tariff. The effect of trade restrictions on the price of goods can be measured relatively easily by the amount of the tariff. In contrast, trade in services involves a less tangible exchange between the producer and the consumer, and restrictions usually take the form of government regulation.
Significant regulation in the service sector also applies to domestic suppliers and the extent of competition in markets depends on conditions applying to both foreign and domestic entrants. Assessment of the impact of policy requires attention to all measures affecting all suppliers.
Too much regulation by governments and its effect on the price of services is often difficult to identify and quantify. Information on government regulation for different economies with different regulatory regimes is difficult to collect and interpret. However, it is necessary to measure the extent of restrictions in the service sector to analyse the effects and benefits of their removal.
Sophisticated general equilibrium models can also be used to provide an insight into the projected real welfare gains from reform.
This project is designed to develop a comprehensive set of measures for regulatory measures in the services sector. It develops a framework that directly assess policy measures and it includes measures applying to domestic and foreign suppliers. It estimates their effect on the price and cost of services, and the projected real welfare gains from reform.
This work is undertaken jointly with colleagues at the Crawford School of Economics and Government at the ANU and is funded by a Linkage grant from the Australian Research Council, the partner in which is the Productivity Commission.
Research outputs will be made available in this page.
