The Impact of Services Trade Restrictiveness on Export Flows

Abstract: Services trade is increasingly becoming more important in the international economy. However, barriers to trade in services remain more obstructive than those to trade in goods. This paper uses the OECD Services Trade Restrictiveness Index to analyze the relationship between restrictions to trade in services and cross-border service exports. The empirical analysis is carried through with the help of a gravity model with Poisson Pseudo-Maximum Likelihood (PPML) estimation and panel data. All 37 OECD countries are included in this analysis, as well as nine of their most important trading partners Brazil, China, Costa Rica, India, Indonesia, Malaysia, Russian Federation, South Africa and Thailand. Both disaggregated regressions divided into twelve service sectors are investigated along with aggregated data including a pooled sample of all the sectors. Results show that more restrictive countries both import and export less services. However, for some sectors the results tend to be positive or unsignificant.