Services Liberalization in Preferential Trade Arrangements : The Case of Kenya
Given the growing importance of commitments to foreign investors in services in regional trade agreements, it is important to develop applied general equilibrium models to assess the impacts of liberalization of barriers to multinational service pr...
| Main Authors: | , |
|---|---|
| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
2012
|
| 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_20110131090808 http://hdl.handle.net/10986/3322 |
| Summary: | Given the growing importance of
commitments to foreign investors in services in regional
trade agreements, it is important to develop applied general
equilibrium models to assess the impacts of liberalization
of barriers to multinational service providers. This paper
develops a 55 sector applied general equilibrium model of
Kenya with foreign direct investment and Dixit-Stiglitz
productivity effects from additional varieties of
imperfectly competitive goods or services, and uses the
model to assess its regional and multilateral trade options,
focusing on commitments to foreign investors in services. To
assess the sensitivity of the results to parameter values,
the model is executed 30,000 times, and results are reported
as confidence intervals of the sample distributions. The
analysis reveals that a 50 percent preferential reduction in
the ad valorem equivalents of barriers in all business
services by Kenya with its African partners would be
somewhat beneficial for Kenya. If a preferential agreement
with African partners is combined with an agreement with the
European Union, the gains would more than triple the gains
of an Africa only agreement. Multilateral reduction of
services barriers, however, would yield gains about 12 times
the gains of an agreement with the Africa region alone.
These results suggest that preferential liberalization in
the region is a valuable first step, but wider
liberalization, with larger partners and liberal rules of
origin or multilaterally, will yield much larger gains due
to providing access to a much wider set of services
providers. The largest gains would come from domestic
regulatory reform in services, as this would almost triple
the gains of multilateral liberalization. |
|---|