FinkAnalysisModule - Empirical Analysis of Barriers to...

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Empirical Analysis of Barriers to International Services Transactions and the Consequences of Liberalization Carsten Fink Based on the presentation by Alan V. Deardorff and Robert M. Stern (University of Michigan) at the World Bank Trade in Services Course in Washington, DC, April 2004
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2 Purpose To understand the barriers that may interfere with trade in services, and to see how they may be measured, especially in the form of “tariff equivalents.”
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3 Outline Types of services Effects and types of barriers Methods of measurement of barriers Frequency indexes Price-based measures Quantity-based measures Other methods (financial performance analysis) Measuring consequences of liberalization Conclusion: Guidelines and Principles
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4 Types of Services Modes of Service Delivery: Mode 1: Separated, or cross-border Mode 2: Consumers move (tourism, etc.) Mode 3: Producers move (FDI) Mode 4: Movement of natural persons
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5 Mode 1 Cross-border Services Example: Jamaican company providing call center services to US customers. Barriers: Restrictions on business outsourcing Discriminatory taxes on operations Regulations on consumer protection Tariff equivalent: tax on sales that, replacing all other impediments, would have the same effects.
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6 Mode 2 Consumer-movement Services Examples: Tourism (visit to Taj Mahal), Education (MBA from Wharton School) No “world price” is possible Barriers: Restrictions on travel to country where service is offered Regulations on domestic recognition of foreign-earned degrees
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7 Mode 3 Producer-movement Services Examples: Almost anything provided through commercial presence and/or FDI Price comparisons possible but not meaningful, due to differences in costs Barriers: Restrictions on establishment Regulations on operations
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8 Mode 4 Movement of Natural Persons Examples: Temporary cross-border movement of managers, construction workers, etc.; guest workers. Barriers: Quotas on inflows of temporary workers Visa requirements Wage parity conditions Tariff equivalent may be inferred from wage differentials
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9 Effects of Barriers Conceptual Framework Three models (partial equilibrium): Homogeneous service, perfect competition Differentiated service Imperfect competition Role of barriers in each: Raises cost, and/or Restricts quantity …of foreign service providers
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10 Effects of Barriers Model 1: Homogeneous service Identical services provided by domestic and foreign firms Single price in domestic market Perfect competition Large numbers of both domestic and foreign providers
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11 P D Q Figure 1: Homogeneous Service, Perfect Competition D = Domestic demand for the service
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12 P D S D Q Figure 1: Homogeneous Service, Perfect Competition S D = Domestic supply
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13 P D S F S D Q Figure 1: Homogeneous Service, Perfect Competition S F = Foreign supply
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P D S F S D S
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This note was uploaded on 03/11/2012 for the course INTERNATIO various taught by Professor Mariolondoño during the Spring '12 term at Universidad de Antioquia.

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FinkAnalysisModule - Empirical Analysis of Barriers to...

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