(Services are displacing old industries in importance)
Although they are part of a large and growing segment of world trade, services are often overlooked in trade negotiations. Yet countries with more open services markets benefit from higher growth rates and living standards, says Sallie James, a researcher with the Cato Institute.
While the extent of gains depends on the initial level of regulation and subsequent opening, the World Bank found that countries with fully open service sectors grow at a rate of up to 1.5 percentage points faster each year than other countries. Compounded over a couple of decades, that would make a huge impact on living standards, says James.
It is clear, then, that remaining impediments to growth of services trade are a limit on economic growth, explains James:
So, how to capture those gains? In many senses, services trade liberalisation and the benefits that flow from it will come automatically if government doesn’t get in the way of new businesses and technology. But there are still some areas where governments can take positive steps to eliminate harmful regulations; thus, encouraging other governments to open their markets to services imports, says James:
Source: Sallie James, A Service to the Economy: Removing Barriers to ‘Invisible Trade’, Center for Trade Policy Studies (Cato Institute), February 4, 2009.
For text: http://www.freetrade.org/node/930
For more on Trade Issues: http://www.ncpa.org/sub/dpd/index.php?Article_Category=42
FMF Policy Bulletin/ 10 March 2009
