Landlocked or Policy Locked? How Services Trade Protection Deepens Economic Isolation
A new cross-country database on services policy reveals a perverse pattern: many landlocked countries restrict trade in the very services that connect them with the rest of the world. On average, telecommunications and air-transport policies are si...
| Main Authors: | , , , |
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
2012
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| Subjects: | |
| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20120110105432 http://hdl.handle.net/10986/3227 |
| Summary: | A new cross-country database on services
policy reveals a perverse pattern: many landlocked countries
restrict trade in the very services that connect them with
the rest of the world. On average, telecommunications and
air-transport policies are significantly more restrictive in
landlocked countries than elsewhere. The phenomenon is most
starkly visible in Sub-Saharan Africa and is associated with
lower levels of political accountability. This paper finds
evidence that these policies lead to more concentrated
market structures and more limited access to services than
these countries would otherwise have, even after taking into
account the influence of geography and incomes, and the
possibility that policy is endogenous. Even moderate
liberalization in these sectors could lead to an increase of
cellular subscriptions by 7 percentage points and a
20-percent increase in the number of flights. Policies in
other countries, industrial and developing alike, also limit
competition in international transport services. Hence,
"trade-facilitating" investments under various
"aid-for-trade" initiatives are likely to earn a
low return unless they are accompanied by meaningful reform
in these services sectors. |
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