Services Policy Reforms Research Articles

Services policy reform and manufacturing employment: Evidence from transition economies

AbstractPolicy reforms targeting the services sectors are a neglected dimension of the process of structural transformation and economic development. The effects of such reforms on employment across industries as a function of their use of services as intermediate inputs are theoretically ambiguous and remain largely understudied. This paper uses sector‐level data for 24 transition economies for the 1990–2012 period to assess the impacts of services policy reforms on downstream manufacturing employment. We find a negative effect of services reforms on manufacturing sector employment. This is mostly associated with the process of transition to a market‐based economy. Controlling for transition‐specific dynamics, the data suggest a neutral effect of progress towards adopting “best practice” policies for upstream services on employment in downstream manufacturing. Furthermore, in line with the extant literature, we confirm that services policy reforms enhance productivity of downstream manufacturing industries. Finally, we find that the negative effects on downstream employment are mitigated in countries with better economic governance and human capital.

Services Policy Reform and Manufacturing Employment: Evidence from Transition Economies

The performance of services sectors can have significant impacts on industries that use services as intermediate inputs. In this paper we complement the literature analyzing the productivity effects of services trade policies by investigating the relationship between services policy reforms and employment in manufacturing industries. Using a panel of sector-level data for 24 transition economies for the 1990-2012 period, we find find that moving towards best practice services policies is associated with an economically significant reduction of manufacturing employment. This negative effect is mitigated or disappears for countries with high levels of economic governance and human capital. The decline in manufacturing employment is observed only in the first decade of transition, with the major driver being reforms in the utilities sector. The estimated negative effect of policy reforms is of a contemporaneous nature; it does not persist along the lag structure.

Policy restrictions and services performance: Evidence from 32 countries

The impact of services trade and investment policy which affects the performance of the service sector is the topic of this paper. The performance indicator is not the services share of total output but the services shares in the gross value of goods exports. We find that a more restrictive environment for services delivery is associated with a lower services share in exports, but with a diminishing effect. The results remain robust even after extra measures of the ease of doing business (such as number of documents to export, number of days to export and "rank of trading across borders") are included. There is a significant relationship between policy and the share of services from domestic origin, including those from foreign invested firms, in exports, but not with the share of services from offshore sources. This result indicates that at present the more important impact of services policy reforms is via the establishment of new providers, rather than via trade across borders. This causal channel has important consequences for the political economy of reforms in services.

Services Policy Reform in the People’s Republic of China: Before and After the Global Financial Crisis

Adverse effects of the global financial crisis on international trade include falling demand, increased trade protectionism, and drying up of trade finance. Much attention has focused on the impact of the crisis on goods trade; however literature on its impact on services trade is limited, especially on the services trade in the People’s Republic of China (PRC). This paper analyzes the impact of the global financial crisis on the PRC’s services trade, discusses the government’s policy responses, and raises policy suggestions.

Services Policy Reform and Economic Growth in Transition Economies

Major changes have occurred in the structure of former centrally planned economies, including a sharp rise in the share of services in GDP, employment, and international transactions. However, large differences exist across transition economies with respect to services intensity and services policy reforms. We find that reforms in policies toward financial and infrastructure services, including telecommunications, power, and transport, are highly correlated with inward FDI. Controlling for regressors commonly used in the growth literature, we find that measures of services policy reform are statistically significant explanatory variables for the post-1990 economic performance of transition economies. These findings suggest services policies should be considered more generally in empirical analyses of economic growth.

Services Policy Reform and Economic Growth in Transition Economies, 1990-2004

Major changes have occurred in the structure of former centrally planned economies, including a sharp rise in the share of services in GDP, employment, and international transactions. However, large differences exist across transition economies with respect to services intensity and services policy reforms. The authors find that reforms in policies toward financial and infrastructure services, including telecommunications, power, and transport, are highly correlated with inward foreign direct investment. Controlling for regressors commonly used in the growth literature, they find that measures of services policy reform are statistically significant explanatory variables for the post-1990 economic performance of transition economies. These findings suggest services policies should be considered more generally in empirical analyses of economic growth