Dynamic effects of European services liberalisation: more to be gained

Kox, Henk L.M. and Lejour, Arjan (2006): Dynamic effects of European services liberalisation: more to be gained. Published in: Globalisation Challenges for Europe, Secretariat of the Economic Council, Prime Minister's Office, Helsinki , Vol. Vol. 1, (September 2006)

Abstract

Europe’s market for services is fragmented by many regulatory barriers. The Services directive proposed by the European Commission aims to integrate national services markets by reducing these barriers. Several studies indicate that bilateral trade and foreign direct investment in services could boost substantially. GDP and consumption could increase by 0.5% to about 1% on average in Europe. The effects for the Member States vary depending on the size of the barriers in their services markets and specialization. These results take account of scale effects, and forward and backward linkages in the economy, but ignore the effects of more competition on productivity and innovation in the long term. This paper assesses the channels though which an integrated European services market may generate these dynamic gains. Improved market access will stimulate competitive selection and productivity growth. Through trade and investment, knowledge spillovers will increase and innovation will be fostered. These channels are illustrated with quantitative evidence.

• Item Type: MPRA Paper
• Institution: CPB Netherlands Bureau for Economic Policy Analysis
• Language: English
• Keywords: trade openess; services; dynamic effects; European Union
• Subjects: F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance; L - Industrial Organization > L8 - Industry Studies: Services; F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F43 - Economic Growth of Open Economies; F - International Economics > F1 - Trade > F15 - Economic Integration; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L11 - Production, Pricing, and Market Structure ; Size Distribution of Firms

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