The purpose of this paper is to provide an overview and discussion of current works that analyze the economic gains of the liberalization of trade in services. Liberalization of services sectors is different from trade in goods because the former invo...
The purpose of this paper is to provide an overview and discussion of current works that analyze the economic gains of the liberalization of trade in services. Liberalization of services sectors is different from trade in goods because the former involves factor mobility and technology spillover as well as enhanced competition.
According to the analyses on individual services sectors, the trade liberalization of telecommunication and financial services contribute meaningfully to the economic performance and bring relatively greater benefits to developing countries than those to developed countries.
Measuring the economic-wide impact of trade liberalization requires a global, general equilibrium framework which captures both the inter-sectoral effects in each economy and the links among countries. The literature overview shows that liberalization of services trade generates overall welfare gains under all modelling assumptions. Large gains are indicated by studies assuming imperfect competition in the service markets. The empirical exploration also shows that the potential importance of technical externalities transmitted through trade in services is significant, contributing large shares to the trade liberalization gains.